I 
109TH CONGRESS 
1ST SESSION H. R. 3426 
To clarify the applicability of State law to national banks and Federal savings 
associations, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 26, 2005 
Mr. GUTIERREZ (for himself, Mr. FRANK of Massachusetts, Ms. LEE, and 
Mrs. MCCARTHY) introduced the following bill; which was referred to the 
Committee on Financial Services 
A BILL 
To clarify the applicability of State law to national banks 
and Federal savings associations, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Preservation of Fed-
eralism in Banking Act’’. 
TITLE I—NATIONAL BANKS 
SEC. 101. STATE LAW PREEMPTION STANDARDS FOR NA-
TIONAL BANKS CLARIFIED. 
(a) IN GENERAL.—Chapter One of title LXII of the 
Revised Statutes of the United States (12 U.S.C. 21 et
seq.) is amended by inserting after section 5136B the fol-
lowing new section: 
‘‘SEC. 5136C. STATE LAW PREEMPTION STANDARDS FOR NA-
TIONAL BANKS AND SUBSIDIARIES CLARI-
FIED. 
‘‘(a) STATE CONSUMER LAWS OF GENERAL APPLI-
CATION.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of Federal law, any consumer protection in 
State consumer law of general application (including 
any law relating to unfair or deceptive acts or prac-
tices, any consumer fraud law and repossession, 
foreclosure, and collection) shall apply to any na-
tional bank. 
‘‘(2) NATIONAL BANK DEFINED.—For purposes 
of this section, the term ‘national bank’ includes any 
Federal branch established in accordance with the 
International Banking Act of 1978. 
‘‘(b) STATE LAWS RELATED TO LAWS USED BY NA-
TIONAL BANKS FOR THEIR BENEFIT.—When a national 
bank avails itself of a State law for its benefit, all related 
consumer protections in State law shall apply. 
‘‘(c) STATE BANKING LAWS ENACTED PURSUANT TO 
FEDERAL LAW.—
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of Federal law and except as provided in 
paragraph (2), any State law that— 
‘‘(A) is applicable to State banks; and 
‘‘(B) was enacted pursuant to or in accord-
ance with, and is not inconsistent with, an Act 
of Congress, including the Gramm-Leach-Bliley 
Act, the Consumer Credit Protection Act, and 
the Real Estate Settlement Procedures Act, 
that explicitly or by implication, permits States 
to exceed or supplement the requirements of 
any comparable Federal law, 
shall apply to any national bank. 
‘‘(2) EXCEPTIONS.—Paragraph (1) shall not 
apply with respect to any State law if— 
‘‘(A) the State law discriminates against 
national banks; or 
‘‘(B) State law is inconsistent with provi-
sions of Federal law other than this title LXII, 
but only to the extent of the inconsistency (as 
determined in accordance with the provision of 
the other Federal Law). 
‘‘(d) STATE LAWS PROTECTING AGAINST PREDA-
TORY MORTGAGE LOANS.—To the extent not otherwise 
addressed in this section, State laws providing greater pro-
tection in high cost mortgage loans, however denominated, 
both in coverage and content, than is provided under the 
Truth in Lending Act (including the provisions amended 
by the Home Ownership and Equity Protection Act of 
1994) shall apply to any national bank. 
‘‘(e) COMPARABLE
FEDERAL
REGULATION
RE-
QUIRED.—In relation to the regulation of consumer credit 
and deposit transactions, the Comptroller may preempt 
State law pursuant to this title only when there is a com-
parable Federal statute, or regulations pursuant to a Fed-
eral statute other than this title, expressly governing the 
activity, except in relation to interest pursuant to section 
5197. 
‘‘(f) NO NEGATIVE IMPLICATIONS
FOR APPLICA-
BILITY OF OTHER STATE LAWS.—No provision of this 
section shall be construed as altering or affecting the ap-
plicability, to national banks, of any State law which is 
not described in this section. 
‘‘(g) EFFECT OF TRANSFER OF TRANSACTION.—A 
transaction that is not entitled to preemption at the time 
of the origination of the transaction does not become enti-
tled to preemption under this title by virtue of its subse-
quent acquisition by a national bank. 
‘‘(h) DENIAL OF PREEMPTION NOT A DEPRIVATION 
OF A CIVIL RIGHT.—The preemption of any provision of
the law of any State with respect to any national bank 
shall not be treated as a right, privilege, or immunity for 
purposes of section 1979 of the Revised Statutes of the 
United States (42 U.S.C. 1983). 
‘‘(i) DEFINITION.—For purposes of this section, the 
terms ‘includes’ and ‘including’ have the same meaning 
as in section 3(t) of the Federal Deposit Insurance Act.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for chapter One of title LXII of the Revised Statutes of 
the United States is amended by inserting after the item 
relating to section 5136B the following new item: 
‘‘5136C. State law preemption standards for national banks and subsidiaries 
clarified.’’. 
SEC. 102. VISITORIAL STANDARDS. 
Section 5136C of the Revised Statutes of the United 
States (as added by section 101(a) of this Act) is amended 
by adding at the end the following new subsections: 
‘‘(j) VISITORIAL POWERS.—No provision of this title 
which relates to visitorial powers or otherwise limits or re-
stricts the supervisory, examination, or regulatory author-
ity to which any national bank is subject shall be con-
strued as limiting or restricting the authority of any attor-
ney general (or other chief law enforcement officer) of any 
State to bring any action in any court of appropriate juris-
diction—
‘‘(1) to enforce any applicable Federal or State 
law, as authorized by such law; or 
‘‘(2) on behalf of residents of such State, to en-
force any applicable provision of any Federal or 
State law against a national bank, as authorized by 
such law, or to seek relief and recover damages for 
such residents from any violation of any such law by 
any national bank. 
‘‘(k) ENFORCEMENT ACTIONS.—The ability of the 
Comptroller to bring an enforcement action under this 
title or section 5 of the Federal Trade Commission Act 
does not preclude private parties from enforcing rights 
granted under Federal or State law in the courts.’’. 
SEC. 103. CLARIFICATION OF LAW APPLICABLE TO STATE- 
CHARTERED NONDEPOSITORY INSTITUTION 
SUBSIDIARIES. 
Section 5136C of the Revised Statutes of the United 
States (as added by section 101(a) of this Act) is amended 
by inserting after subsection (k) (as added by section 102) 
the following new subsection: 
‘‘(l) CLARIFICATION OF LAW APPLICABLE TO NON-
DEPOSITORY INSTITUTION SUBSIDIARIES
AND AFFILI-
ATES OF NATIONAL BANKS; DEFINITIONS.— 
‘‘(1) IN GENERAL.—No provision of this title 
shall be construed as preempting the applicability of