The Federal Deposit Insurance Corporation approved a proposed rule that would align the treatment of out-of-state state banks with national banks under host state laws. When a host state law does not apply to an out-of-state national bank, it would likewise not apply to services provided by an out-of-state state bank, whether or not the state bank maintains a branch there. The law of the state bank’s chartering state would apply instead. The proposal responds to legal uncertainty arising from litigation over Illinois restrictions on payment card interchange fees and data use, particularly for state banks serving customers through online, mobile or other nonbranch channels. It would not itself determine that any particular state law is federally preempted and would not affect loan interest rates, which remain governed by section 27 of the Federal Deposit Insurance Act. The FDIC estimates that 3,185 state banks could be affected in the Illinois example and could avoid about USD 308 million in one-time compliance costs and USD 6.7 million in annual costs.
2026-09-17Federal Deposit Insurance Corporation
Federal Deposit Insurance Corporation proposes parity for state banks operating across state lines
The Federal Deposit Insurance Corporation proposed applying host state laws to out-of-state state banks on the same basis as national banks, regardless of whether services are provided through a branch. Chartering state law would apply when host state law does not apply, while loan interest rate rules would remain unchanged.