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GGD/OGC-00-51R 1 (2000-02-07)

handle is hein.gao/gaobadxfo0001 and id is 1 raw text is: ~GAO Accountability * Integrity * Reliability United States General Accounting Office General Government Division Washington, D.C. 20548 B-284372 February 7, 2000 The Honorable James A. Leach Chairman, Committee on Banking, Finance and Urban Affairs House of Representatives Dear Mr. Chairman: Subject: Role of the Office of Thrift Supervision and Office of the Comptroller of the Currency in the Preemption of State Law This letter responds to your September 21, 1999, request that we provide information on the Office of Thrift Supervision's (OTS) and the Office of the Comptroller of the Currency's (OCC) role in the preemption of state law. As agreed, our objectives were to (1) describe OTS's and OCC's authorities and processes for issuing preemption opinions and regulations, identifying any differences in their approaches; (2) describe how the Alternative Mortgage Transaction Parity Act of 1982 (Parity Act) preempts state law and provide the views of selected state officials on its effect; and (3) describe OTS's and OCC's disclosure procedures for communicating their preemption opinions to federally chartered financial institutions and affected states and the views of selected state officials on these procedures. This letter provides information on these issues.' Enclosure I provides a more detailed discussion of the legal framework for federal preemption and OTS's and OCC's approaches. Enclosure II provides a list of OTS and OCC opinions issued from 1994 through 1999, that concluded state laws were preempted. Background Preemption of state law is rooted in the Constitution's Supremacy Clause, which provides that federal law is the supreme law of the land. Because the federal and state governments both have roles in regulating financial institutions, questions can arise as to whether the governing federal statute preempts particular state laws. The courts ultimately are responsible for resolving conflicts between federal and state law; and over the years, they have developed a substantial body of precedent that has guided the analysis of whether any particular federal law or regulation overrides or preempts state law (referred to as preemption analysis). On November 12, 1999, the Gramm-Leach-Bliley Act, a comprehensive piece of financial services legislation, became law. The act contains preemption provisions relating to insurance and privacy. To date, the federal financial institution regulators have not addressed any preemption issue under the act. GAO/GGD/OGC-00-51R OTS and OCC Role in Preemption Page I

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