T he banking industry plays a critical role in the United States economy, channeling funds from savers to borrowers and thereby facilitating economic activity. Among other things, banks provide loans to businesses, help individuals finance purchases of cars and homes, and offer services such as checking and savings accounts, debit cards, and ATMs. As of December 2017, there were 888 nationally chartered banks in the United States holding a total of slightly less than $11 trillion in assets, and 4,040 state-chartered banks holding a total of slightly more than $5 trillion in assets. Banking has also played a central role in American political culture, from President Jackson's criticism of the Second Bank of the United States to the "Occupy Wall Street" movement, making banking regulation an issue of perennial interest to Congress. Many commentators regard banking regulation as essential to the protection of depositors and consumers, the maintenance of macroeconomic stability, and the promotion of an efficient and competitive financial system. More specifically, observers have argued that bank regulation is warranted to correct for a number of market failures, including, among other things: (1) the risk of bank failures, which impose externalities on the financial system when they cause depositors to withdraw their assets from solvent banks; (2) the possibility that access to government deposit insurance, central bank liquidity, and government bailouts will cause banks to take on excessive risk (a problem often referred to as "moral hazard"); and (3) the possibility that consumers at times lack sufficient information or expertise to make sound choices regarding financial products and services (a problem often referred to as "asymmetric information"). To address these risks, regulators have, among other things, restricted the activities that banks may engage in, required that banks maintain minimum levels of capital and government deposit insurance, and enacted consumer protection measures related to usury, predatory lending, home foreclosures, debt collection, and mandatory disclosures in lending. This complex regulatory apparatus has raised important issues concerning the division of authority between the federal government and the states, and the related question of how to treat cases where federal and state regulations overlap. This report provides an overview of the respective roles of the federal and state governments in regulating banking. The report begins by providing a general overview of the doctrine of federal preemption, before discussing the American "dual banking system." It then addresses several key areas where preemption issues have arisen with respect to banking law, including (1) the standard for implied preemption of state laws that interfere with the powers of national banks adopted by the Supreme Court in Barnett Bank of Marion County, N.A. v. Nelson ; (2) the Court's decisions in two cases concerning "visitorial powers" over national banks, Watters v. Wachovia Bank, N.A. and Cuomo v. Clearing House Association, L.L.C. ; and (3) interpretive letters and rules concerning federal preemption issued by the Office of the Comptroller of the Currency (the OCC). The report also discusses the provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) concerning preemption of state consumer protection laws, and their interpretation by courts and the OCC. Finally, the report concludes by discussing issues that are likely of interest to the 115th Congress concerning preemption, including provisions in the Financial CHOICE Act of 2017 concerning which entities may benefit from National Bank Act (NBA) preemption of state usury laws. The doctrine of federal preemption is grounded in the Supremacy Clause of Article VI of the Constitution, which provides that "the Laws of the United States . . . shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding." The Supreme Court has explained that "under the Supremacy Clause . . . any state law, however clearly within a State's acknowledged power, which interferes with or is contrary to federal law, must yield." Disputes over the desirability of broad federal preemption implicate a range of values. Proponents of broad preemption often cite the benefits of uniform national regulations and the concentration of expertise in federal agencies. Opponents of broad preemption, by contrast, often appeal to the importance of policy experimentation and the enhanced democratic accountability that they believe accompanies state and local regulation. The Supreme Court has identified two general ways in which federal law can preempt state law. Federal law can preempt state law expressly where a federal statute or regulation contains explicit preemptive language—that is, where a clause in the relevant federal law explicitly provides that it displaces certain categories of state law. For example, the Employee Retirement Income Security Act of 1974 contains an express preemption clause providing that some of the Act's provisions "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan" described elsewhere in the statute. Federal law can also preempt state law impliedly , "when Congress' command is . . . implicitly contained in" the relevant federal law's "structure and purpose." The Court has identified two subcategories of implied preemption. First, "field preemption" occurs "where the scheme of federal regulation is so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it." Second, "conflict preemption" occurs where "compliance with both federal and state regulations is a physical impossibility," or where state law "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." In Hines v. Davidowitz , for example, the Court held that a federal law imposing registration requirements on aliens ages 14 and over—but not going so far as to impose a fee for registration or require that aliens carry an identification card—preempted a state statute that did impose those latter requirements. The Court reasoned that the state statute stood as an obstacle to the accomplishment of the federal statute's purpose to "protect the personal liberties of law-abiding aliens through one uniform national registration system, and to leave them free from the possibility of inquisitorial practices and police surveillance. . . ." The Court has repeatedly noted that in both implied preemption cases like Hines and express preemption cases, "the purpose of Congress" is the "ultimate touchstone" of its analysis. As will be discussed in more detail below, some federal banking laws expressly preempt state laws, while others do so impliedly. The OCC, an independent bureau within the Department of the Treasury that serves as the primary regulator for federally chartered banks, has promulgated broad rules that expressly preempt certain categories of state laws concerning federally chartered banks. And the Supreme Court has held that the NBA impliedly preempts state laws that "significantly interfere with" a national bank's exercise of the powers conferred by that Act. Federal preemption of state banking law raises particularly thorny questions in part because of the American "dual banking system," which divides chartering and regulatory authority over banks between the federal government and the states. This system has its origins in the National Currency Act of 1863 and the NBA, enacted one year later. Since that time, banks have had the option of applying for a national charter from the OCC or a state charter from a state's primary banking regulator. Existing banks may also convert from a state charter to a national charter and vice versa. The considerations that lead a bank to choose a national or state charter are varied and have changed over time as the regulatory landscape has shifted. A bank may select a national charter in order to benefit from federal preemption of certain unfavorable state regulations, to secure the greater simplicity of uniform national regulation when it operates in multiple states, or because of aggressive legal actions taken by certain state regulators. In contrast, a bank may select a state charter to avoid the generally higher supervisory fees charged by the OCC or because it perceives federal regulation as being more onerous than state regulation. A bank's "choice of chartering authority is also a choice of primary regulator," as the OCC serves as the primary regulator of national banks, and state banking authorities serve as the primary regulators for state-chartered banks. The NBA grants the OCC broad powers to regulate the organization, examination, and operation of national banks. National banks must also become members of the Federal Reserve System (the FRS), the central bank of the United States, which conducts the nation's monetary policy and is responsible for regulating the safety and soundness of the financial system. Membership in the FRS entails supervision by the Federal Reserve Board. Federal law also requires national banks to obtain deposit insurance from the Federal Deposit Insurance Corporation (the FDIC), and the FDIC examines all insured institutions. National banks "possess only those powers conferred upon them by Congress." Section 24 of the NBA lists the powers granted to national banks, which include: (1) "discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences of debt," (2) "receiving deposits," (3) "buying and selling exchange, coin, and bullion," (4) "loaning money on personal security," and (5) "obtaining, issuing, and circulating notes." Section 24 also grants national banks "all such incidental powers as shall be necessary to carry on the business of banking." Federal court and administrative rulings have identified roughly 80 specific activities that fall within the "incidental powers" of national banks. Despite receiving their authorities from federal law, national banks are not wholly immune from state law.