Co-Plaintiffs Commend OCC Interim Final Actions Affirming Federal Preemption in New Comment Letters

In new comment letters filed today, the Illinois Bankers Association, Illinois Credit Union League, American Bankers Association and America's Credit Unions expressed strong support for both the Office of the Comptroller of the Currency's interim final rule on national bank non-interest charges and fees and the OCC's interim final order preempting the Illinois Interchange Fee Prohibition Act, noting that the actions eliminate "any possible doubt that the [IFPA] is an unlawful encroachment on the uniform national banking and payments system." The groups have an ongoing legal challenge against the IFPA.

In their letters, the groups applaud the OCC for acting to preserve a nationally uniform banking and payments system by confirming national banks' broad fee-collection authority - including interchange fees - and by making clear that the Illinois law is preempted under federal law. They note that interchange fees compensate issuers for administering credit and debit accounts, authorizing transactions, monitoring for fraud and supporting other services that enable card-based payments to function smoothly and securely.

The letter addressing the OCC's interim final rule emphasizes that, even before the OCC's recent actions, the National Bank Act already provides national banks the authority to charge and receive fees in the course of banking, including interchange fees in particular, and it plainly preempts the IFPA. The groups also stress that the interim final rule provides valuable regulatory clarity in light of recent litigation that created uncertainty around the scope of national banks' fee authority.

"The Associations appreciate this prompt action to preserve regulatory clarity, protect the integrity of the national banking and payments system, and prevent harmful fragmentation of the payments ecosystem," the letter states.

The groups warn that allowing the Illinois law to take effect would impose sweeping operational and compliance burdens, forcing stakeholders to attempt to replace a nationally uniform payments system with a fragmented patchwork reflecting jurisdiction-specific rules. The letters also note that similar legislation is under consideration in more than 25 other states and caution that additional state-by-state requirements would magnify costs and risks for financial institutions, merchants and consumers nationwide.

Second Letter Addresses OCC's Preemption Order

In a separate letter supporting the OCC's preemption order, the groups commend the agency for concluding that federal law preempts the IFPA with respect to both its interchange-fee restriction and its data-use provision. The letter explains that the Illinois law would significantly interfere with national banks' and federal savings associations' exercise of their powers by imposing extraordinary operational complexity and liability risk, including the prospect of steep penalties for noncompliance.

"The OCC's preemption order settles this point beyond any possible doubt-remedying confusion generated by the Illinois Bankers Association decision and helping shield national banks, federal savings associations, consumers, and the broader American economy from the costs of intrusive state legislation," the letter states.

The groups conclude by emphasizing that the OCC's actions will ensure durable regulatory certainty and deter state or local efforts that would disrupt nationwide payments by imposing inconsistent and unworkable rules.

Read the comment letter on the OCC's interim final rule on national bank non-interest charges and fees.

Read the comment letter supporting the OCC's order preempting the Illinois Interchange Fee Prohibition Act.

About the American Bankers Association
The American Bankers Association is the voice of the nation's $26.1 trillion banking industry, which is composed of small, regional and large banks that together employ over 2 million people, safeguard $20.5 trillion in deposits and extend $13.7 trillion in loans.

About the Illinois Bankers Association
The Illinois Bankers Association, the voice of Illinois' banking industry, is a full-service trade association dedicated to creating a positive business climate that benefits the entire banking industry and the communities they serve. Founded in 1891, the IBA brings together state and national banks and savings banks employing over 105,000 people in nearly 4,500 offices.

About America's Credit Unions
America's Credit Unions is the unified voice for not-for-profit credit unions, representing more than 96% of the industry's assets and their more than 146 million members nationwide. America's Credit Unions provides strong advocacy, resources and services to advance, empower, and protect credit unions and the people and communities they serve. For more information about America's Credit Unions, visit AmericasCreditUnions.org.

About the Illinois Credit Union League
The Illinois Credit Union League is the primary trade association for more than 200 state and federal credit unions in Illinois. It focuses on providing legislative and regulatory advocacy, compliance assistance and information, and a wide range of educational and training services to those credit unions, who serve about 4.1 million members. More information can be found at www.icul.com.

###

About the American Bankers Association

The American Bankers Association is the voice of the nation's $26.1 trillion banking industry, which is composed of small, regional and large banks that together employ over 2 million people, safeguard $20.5 trillion in deposits and extend $13.7 trillion in loans.