The Office of the Comptroller of the Currency (OCC), as of July 21, 2011, issued its final rules on the initial phase of the agency’s integration of regulations affecting federally chartered thrifts that previously were issued by the soon-to-be-defunct Office of Thrift Supervision (OTS). (Click here to read our earlier legal alert on OCC’s May 19 Notice of Proposed Rulemaking.)  The rule also adheres to OCC’s controversial interpretation—with which main Treasury disagrees—of the preemption standards enacted in Section 1044 of  the Dodd-Frank Wall Street Reform and Consumer Protection Act. (See our earlier legal alert “Treasury Criticizes Proposed OCC Preemption Rule.”)


After considering all the comments favoring and opposing the proposed preemption rule, OCC has decided to adopt it essentially unchanged. In essence, OCC’s position is the following:

  • The “prevents or significantly interferes with” language from the Supreme Court’s 1996 Barnett decision is not the entirety of the “conflict preemption” approach taken by the Court in that case but is merely shorthand for the totality of the Court’s conflict preemption analysis therein.

  • “[B]ecause the Dodd-Frank Act preserves the Barnett conflict preemption standard, OCC’s rules and existing precedents (including judicial decisions and interpretations) consistent with that analysis are also preserved” (citing the OCC’s pre-Dodd-Frank Preemption Regulations and Acting Comptroller Walsh’s May 12, 2011, letter to Senators Thomas Carper and Mark Warner).

  • As Dodd-Frank contains no statement that Congress intended to apply “procedural” requirements (such as the case-by-case determination, the “substantial evidence” standard, and consultation with the Consumer Financial Protection Bureau) retroactively, those requirements do not undermine existing precedent and regulations (including the OCC’s pre-Dodd-Frank Preemption Regulations), and any such interpretation would be contrary to the presumption against retroactive legislation (relying on Landgraf v. USI Film Products, 511 U.S., 272-73 (1994)).

Final Rule on Initial Phase of OTS Regulations Integration

This is the first wave of OCC incorporation of OTS regulations into the OCC’s template.  The final rules adopted  are essentially identical to the rules as proposed on May 19.  Concepts melded from this batch of OTS regulations into OCC’s methodology will lead in due course to announced repeals of the former.

Additional waves in this fusion process will be forthcoming from OCC in future months.  This particular wave focuses primarily (but by no means exclusively) on ministerial matters. Representative examples include:

Reallocation of functions in OCC’s Washington Office and its District Offices. The Washington headquarters of OCC, in addition to being home to the Large Bank Supervision Department, will have direct supervision over the largest federal thrift institutions, which shall be housed within the same Department. OCC supervision of federal branches and agencies of foreign banks will likewise be housed in the same Department. Other federal thrift institutions will be supervised by the OCC District Offices, with assistance as appropriate from OCC field offices and duty stations.

Examinations. Prior practice will be observed, and federal thrifts, like national banks, will be examined once a year, except that certain smaller institutions (like smaller national banks) will be examined only once every 18 months.

FOIA Regulations and Protective Orders for Confidential Information will be extended to cover federal thrift institutions in pari materia with national banks.  This includes appropriate amendments to the Model Stipulation for a Protective Order and the Model Protective Order covering nonpublic OCC information, which are set forth in Appendix A to 12 C.F.R. pt. 4.

One-Year Restrictions on Post-Employment Activities of Senior National Bank Examiners will likewise be in pari materia for OTS examiners.

Assessments. OCC and OTS regulations governing assessments of their respective regulated depository institutions took very different approaches. The details of these differences are now of only historical interest, however, because, consistent with Dodd-Frank’s transfer of authorization from OTS to OCC to collect assessments for federal thrifts, OCC proposes to fold the latter into the OCC assessment structure for national banks.  See generally 12 C.F.R. pt. 8. While that structure might cause some thrifts to pay higher assessments than before and some lower, OCC proposes to mitigate these differences significantly at the outset in order to allow federal thrifts to phase into the new program.

CBCA Moratorium

Moratorium on Certain Change in Bank Control Notices. Effective upon enactment, Section 603 of Dodd-Frank established (subject to certain exceptions) a three-year moratorium on changes in control of credit card banks, industrial banks, and trust banks, where the acquisition of control will be directly or indirectly by a commercial firm.  Appropriate amendments to 12 C.F.R. § 5.50 have been adopted to implement this statutory requirement.

Uninsured Federal Branches

Retail Deposit-Taking By Uninsured Federal Branches of Foreign Banks. Under Section 6(b) of the International Banking Act of 1978 (IBA), as amended, 12 U.S.C. § 3104(b), uninsured branches of foreign banks are forbidden from accepting retail deposits. These are deposits totaling less than the dollar amount that is found by cross-referencing the definition of “standard maximum deposit insurance amount” (SMDIA) in Section 11(a)(1)(E) of the Federal Deposit Insurance Act, 12 U.S.C. § 1821(a)(1)(E). For most of the IBA’s existence, that dollar amount has been $100,000. As Dodd-Frank § 335 amended the FDI Act provision to change the SMDIA from $100,000 to $250,000, OCC is making a conforming change to its IBA regulation, 12 C.F.R. § 28.16(b), to replace the reference to $100,000 with a cross-reference to § 1821(a)(1)(E).

The Interim Final Rule

In a 1,158-page release, OCC has issued an interim final rule that republishes (with minor revisions) former OTS regulations affecting federally chartered thrift institutions (these regulations are currently found in Part V of Title 12 of the Code of Federal Regulations) as OCC regulations in Part I of Title 12.  These are regulations that, as a result of Dodd-Frank, OCC, as the new regulator of federal thrifts, will have the authority to enforce (and subsequently amend).  As republished, the regulations will supersede their former avatars in Part V.

OCC has not republished any OTS regulations subject to the jurisdiction of another agency (like the Federal Reserve with respect to savings and loan holding companies).  This decision encompasses consumer regulations that will come within the purview of the Bureau of Consumer Financial Protection for thrift institutions with $10 billion or more in assets, even though OCC has authority to enforce those rules with respect to federal thrift institutions with $10 billion or less in assets.

Although OCC has concluded to issue this as an interim final rule without prior notice and comment because it is being done pursuant to statutory mandate in Dodd-Frank, the agency is nonetheless inviting comments on any aspect of the redesignated regulations.  Any such comments are due 60 days after publication of the interim final rule in the Federal Register.

Ballard Spahr’s Consumer Financial Services Group is monitoring Dodd-Frank developments and counseling clients accordingly. The Group has been engaged by numerous national banks and federal thrifts to assist them in identifying state laws that are applicable to them. Our attorneys also assist in responding to proposed and final regulations, regulatory examinations and investigations, and state and federal enforcement proceedings. For more information on the subject of this e-alert, please contact Group Chair Alan S. Kaplinsky, 215.864.8544 or; Vice Chair Jeremy T. Rosenblum, 215.864.8505 or; or Keith R. Fisher, 202.661.2284 or

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