Opinion ID: 779698
Heading Depth: 2
Heading Rank: 2

Heading: The Home Owners' Loan Act Preempts the Ordinances.

Text: 24
25 The Home Owners' Loan Act of 1933 was enacted to restore the public's confidence in savings and loan associations at a time when 40% of home loans were in default. See Stein, 604 F.2d at 1257; see also S.Rep. No. 91, 73d Cong., 1st Sess., 2 (1933); H.R.Rep. No. 55, 73 Cong., 1st Sess., 2 (1933). Congress enacted the HOLA as a result of its dissatisfaction with state regulation of home financing. Stein, 604 F.2d at 1257. The OTS, an office of the Department of the Treasury, was thus created and vested with plenary authority to administer the HOLA. 4 26
27 The HOLA empowers the OTS, under such rules and regulations as [it] may prescribe — to provide for the organization, incorporation, examination, operation, and regulation of ... Federal savings associations ..., giving primary consideration of the best practices of thrift institutions in the United States. 12 U.S.C. § 1464(a). The HOLA authorizes the OTS to promulgate regulations appropriate to carry out [its] responsibilities. 12 U.S.C. § 1463(a)(2). Pursuant to this authorization, the OTS regulates, inter alia, the enforcement of laws, regulations, or conditions against such associations. 12 C.F.R. § 500.1(b). 28 The HOLA also permits federal savings associations to establish remote service units for the purpose of crediting savings or demand accounts, debiting such accounts, crediting payments on loans, and [disposing] of related financial transactions as provided in regulations prescribed by the[OTS]. 12 U.S.C. § 1464(b)(1)(F). The OTS authorizes federal savings associations to use electronic means or facilities to perform any function, or provide any product or service, as part of an authorized activity. 12 C.F.R. § 555.200(a). Electronic means or facilities include ATMs. Id. The OTS also permits federal savings associations to transfer, with or without fee, [their] customers' funds from any account... of the customer at the Federal savings association or at another financial intermediary to third parties or other accounts of the customer on the customer's order or authorization by any mechanism or device. 12 C.F.R. § 545.17. 29 A federal savings association's authority to conduct electronic fund transfers is not limited to its own depositors. Rather, it applies to any customer. Compare id. with 12 C.F.R. § 555.200(b) (authorizing the marketing and sale of electronic capacities and by-products to third-parties). The OTS further permits federal savings associations to charge fees for deposit and lending-related services. See 12 C.F.R. § 545.17 (authorizing transfer of funds with or without fee); 12 C.F.R. § 557.12(f) (authorizing service charges and fees for deposit-related activities); 12 C.F.R. § 560.2(b)(5) (authorizing loan-related fees, including ... servicing fees). It follows that a federal savings association may charge non-depositors for ATM services. 30
31 Having determined that the HOLA and OTS regulations permit federal associations to charge ATM fees to nondepositors, we also find that HOLA and OTS preempt the Ordinances. 32 Field preemption is implied when the scheme of federal regulation in a particular field is so pervasive as to leave no room for the States to supplement it. Rice, 331 U.S. at 230, 67 S.Ct. 1146. Federal regulations have no less pre-emptive effect than federal statutes. de la Cuesta, 458 U.S. at 153, 102 S.Ct. 3014. 33 Indeed, the regulation of federal savings associations by the OTS is so pervasive as to leave no room for state regulatory control. Stein, 604 F.2d at 1260. The Ordinances purport to regulate the operations, and the deposit and lending-related practices of federal savings banks. However, OTS regulations occupy these fields. See 12 C.F.R. § 545.2 (asserting field preemption of operations of federal associations); 12 C.F.R. § 557.11(b) (asserting field preemption of deposit-related practices of federal associations); 12 C.F.R. § 560.2(a) (asserting field preemption of lending-related practices of federal associations). 34 OTS Regulation 545 governs the operations of federal savings banks and expressly preempts contrary state law. Section 545.2 provides that the OTS has plenary and exclusive authority ... to regulate all aspects of the operations of Federal savings associations. 12 C.F.R. § 545.2. It also provides that the exercise of this authority is preemptive of any state law purporting to address the subject of the operations of a Federal savings association. Id. 35 The Cities illogically contend that the charging of ATM fees is not part of the operations of a federal savings association. However, operations include funds transfer services, which federal savings associations are authorized to provide with or without fee. 12 C.F.R. § 545.17. Moreover, federal associations are authorized to use electronic means or facilities to perform any function, or provide any product or service. 12 C.F.R. § 555.200(a). 36 Therefore, we hold that the HOLA and OTS regulations together preempt conflicting state limitations on the authority of federal savings associations to collect fees for provision of deposit and lending-related electronic services and that prohibition of ATM fees by the Ordinances is therefore invalid under the Supremacy Clause of the Constitution. Because the ordinances are preempted for attempting to regulate the operations of federal savings banks, we do not discuss the alternate justifications for preemption including field preemption of deposit and lending-related activities as well as conflict pre-emption. 37