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Proposed Rule2026-19310

State Bank Parity

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Published

September 22, 2026

Issuing agencies

Federal Deposit Insurance Corporation

Abstract

The FDIC is proposing amendments to its regulations to recognize parity between out-of-State State banks and national banks concerning the application of host State laws when State banks provide services outside of their chartering State. Under the proposed rule, when host State laws do not apply to a national bank, those laws would similarly not apply to an out-of-State State bank providing services in the host State with or without a branch. Specifically, the amendments would provide that, for purposes of section 24(j) of the Federal Deposit Insurance Act, the laws of a host State apply to any branch in the host State of, or any services provided in the host State by, an out-of-State State bank to the same extent such State laws apply to a branch in the host State of, or any services provided in the host State by, an out-of-State national bank.

Full Text

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<title>Federal Register, Volume 91 Issue 182 (Tuesday, September 22, 2026)</title>
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[Federal Register Volume 91, Number 182 (Tuesday, September 22, 2026)]
[Proposed Rules]
[Pages 60018-60026]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-19310]

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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 331

RIN 3064-AG34

State Bank Parity

AGENCY: Federal Deposit Insurance Corporation.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The FDIC is proposing amendments to its regulations to
recognize parity between out-of-State State banks and national banks
concerning the application of host State laws when State banks provide
services outside of their chartering State. Under the proposed rule,
when host State laws do not apply to a national bank, those laws would
similarly not apply to an out-of-State State bank providing services in
the host State with or without a branch. Specifically, the amendments
would provide that, for purposes of section 24(j) of the Federal
Deposit Insurance Act, the laws of a host State apply to any branch in
the host State of, or any services provided in the host State by, an
out-of-State State bank to the same extent such State laws apply to a
branch in the host State of, or any services provided in the host State
by, an out-of-State national bank.

DATES: Comments must be received no later than November 23, 2026.

ADDRESSES: You may submit comments on the notice of proposed
rulemaking, identified by RIN 3064-AG34, using any of the following
methods:
<bullet> FDIC website: <a href="https://www.fdic.gov/federal-register-publications">https://www.fdic.gov/federal-register-publications</a>. Follow the instructions for submitting comments on the
agency website.
<bullet> Email: <a href="/cdn-cgi/l/email-protection#91d2fefcfcf4ffe5e2d1f7f5f8f2bff6fee7">[email&#160;protected]</a>. Include RIN 3064-AG34 on the
subject line of the message.
<bullet> Mail: Jennifer M. Jones, Deputy Executive Secretary,
Attention: Comments--RIN 3064-AG34, Federal Deposit Insurance
Corporation, 550 17th Street NW, Washington, DC 20429.
<bullet> Hand Delivery to FDIC: Comments may be hand-delivered to
the guard station at the rear of the 550 17th Street NW building
(located on F Street NW) on business days between 7 a.m. and 5 p.m.
<bullet> Public Inspection: Comments received, including any
personal information provided, may be posted without change to <a href="https://www.fdic.gov/federal-register-publications">https://www.fdic.gov/federal-register-publications</a>. Commenters should submit
only information that the commenter wishes to make available publicly.
The FDIC may review, redact, or refrain from posting all or any portion
of any comment that it may deem to be inappropriate for publication,
such as irrelevant or obscene material. The FDIC may post only a single
representative example of identical or substantially identical
comments, and in such cases will generally identify the number of
identical or substantially identical comments represented by the posted
example. All comments that have been redacted, as well as those that
have not been posted, that contain comments on the merits of the
proposed rule will be retained in the public comment file and will be
considered as required under all applicable laws. All comments may be
accessible under the Freedom of Information Act.
This proposal, all comments received, and a summary of not more
than 100 words of the proposed rule pursuant to the Providing
Accountability Through Transparency Act of 2023 are available at
<a href="https://www.fdic.gov/federal-register-publications">https://www.fdic.gov/federal-register-publications</a>.

[[Page 60019]]

FOR FURTHER INFORMATION CONTACT: James Watts, Counsel, 202-898-6678,
<a href="/cdn-cgi/l/email-protection#d0baa7b1a4a4a390b6b4b9b3feb7bfa6">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:

I. Policy Objectives

The United States has a system of dual banking that allows banks to
be chartered by either the States or the Federal Government. Congress
has demonstrated a desire to maintain a strong and vibrant dual banking
system by periodically enacting legislation to achieve parity between
State-chartered banks (State banks) and national banks.\1\ The FDIC, as
the primary Federal regulator of State banks that are not members of
the Federal Reserve System, has likewise long sought to maintain a
level playing field between State banks and national banks.
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\1\ For example, the McFadden Act of 1927 allowed national banks
to establish branches within the city or town in which the bank was
situated to the same extent permissible for State banks under
relevant State law. See sec. 7, Public Law 69-639, 44 Stat. 1228.
Another example is the Depository Institutions Deregulation and
Monetary Control Act of 1980, which allowed State banks to charge
interest on their loans at the rates permissible for national banks.
See sec. 521, Public Law 96-221, 94 Stat. 164.
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Recent litigation involving an Illinois law concerning payment card
transactions has created uncertainty as to the application of the laws
of States to State-chartered banks which offer services outside their
home State. This uncertainty will negatively affect State banks and may
result in substantial disruption and confusion for the merchants
relying on payment card transactions and the consumers they serve. This
uncertainty also creates a competitive imbalance between national and
State banks.
This rulemaking would address this legal uncertainty and recognize
parity between out-of-State State banks (State banks that are chartered
by their home State but doing business in a host State) and national
banks doing business in another State (a host State) without
establishing a branch in such host State. The rule would clarify that
when host State law does not apply to national banks, then host State
law would not apply to out-of-State State banks offering services in
the host State with or without a branch. Instead, the chartering
State's law would apply to such banks offering services in the host
State regardless of whether they branch into the host State.
In addition to achieving parity between out-of-State State banks
and national banks, the proposed rule also would enhance consistency in
the application of host State law among State banks that offer services
outside their chartering States. Under the proposed rule, out-of-State
State banks that offer services in a host State without a branch would
be treated the same as out-of-State State banks that perform the same
services through a branch.

II. Background

Recent Developments and Need for Rulemaking

As noted above, recent litigation involving an Illinois law
concerning payment card transactions has resulted in uncertainty as to
the application of host State laws to out-of-State State banks. The
litigation concerns the Illinois Interchange Fee Prohibition Act
(IFPA), a law enacted by the State of Illinois in 2024.\2\ The IFPA
includes provisions that: (1) prohibit card issuer banks, card
networks, acquirer banks, and other participants in a payment card
transaction from charging or receiving interchange fees on the portion
of the transaction that constitutes a tax or gratuity (Interchange Fee
Prohibition); and (2) make it unlawful for entities other than the
merchant involved in a card transaction to distribute, exchange,
transfer, disseminate, or use the associated data, subject to certain
exceptions (Data Usage Limitation). By its terms, the IFPA's
application is not limited to Illinois-chartered banks.
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\2\ 815 Ill. Comp. Stat. 151/10-1 et seq. The statute was
originally set to go into effect July 1, 2025, but the effective
date has subsequently been delayed by the legislature to July 1,
2027.
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Shortly after the IFPA's enactment, several trade associations and
other parties responded by filing suit against the Illinois Attorney
General, arguing that various Federal laws preempted the IFPA.\3\ In
addition, the Comptroller of the Currency, the regulator of national
banks, issued for comment an interim final order concluding that
Federal law preempts the IFPA,\4\ as well as an interim final rule
clarifying that national banks' power to charge non-interest charges
and fees includes the power to collect non-interest charges and fees,
including interchange fees from credit and debit card operations.\5\
The district court has determined that the interim final rule expressly
conflicts with the Interchange Fee Prohibition, and thus granted a
permanent injunction preventing Illinois from enforcing the Interchange
Fee Prohibition against national banks, Federal savings associations,
payment card networks, and banks chartered by States other than
Illinois ``that are subject to Riegle-Neal, 12 U.S.C. 1831a(j)(1).''
\6\
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\3\ See Ill. Bankers Ass'n v. Raoul, 760 F. Supp. 3d 636 (N.D.
Ill. 2024).
\4\ 91 FR 23150 (Apr. 29, 2026) (interim final order).
\5\ 91 FR 22989 (Apr. 29, 2026). The interim final rule further
clarified that such charges or fees may be set by, or in
consultation with, third parties.
\6\ Ill. Bankers Ass'n v. Raoul,--F. Supp. 3d--, 2026 WL
1534350, at *12 (N.D. Ill. June 1, 2026). The district court's
opinion and order also granted a permanent injunction prohibiting
enforcement of the Data Usage Limitation against the same entities.
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The parties to the litigation have disagreed as to which State-
chartered banks are ``subject to Riegle-Neal'' (i.e., subject to
section 24(j) of the Federal Deposit Insurance Act (FDI Act)). While
the plaintiffs asserted that section 24(j) of the FDI Act extends
national bank preemption broadly to out-of-State State banks,\7\ the
Illinois Attorney General argued that section 24(j) of the FDI Act
extends such preemption only to out-of-State State banks' branches
``physically located'' in Illinois,\8\ which would potentially leave
aspects of many State banks' operations subject to the IFPA. State
banks doing business in Illinois without branches in Illinois therefore
face substantial legal uncertainty as to the application of the IFPA to
their operations. This proposed rule would remove that uncertainty.
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\7\ See Pls.' Mem. Supp. Mot. Summ. J., Raoul, 2025 WL 2223710
(Mar. 17, 2025).
\8\ See Def.'s Mem. Opp. Pls.' Mot. Summ. J., Raoul, 2025 WL
2223714 (Apr. 23, 2025).
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Given the IFPA's significant penalties for non-compliance,\9\ banks
may consider options for mitigating this risk, including potentially
rejecting payment card transactions in Illinois.\10\ Such measures
would cause substantial disruption and confusion for both merchants and
consumers. Moreover, a number of other States are considering
legislation similar to the IFPA,\11\ meaning that legal uncertainty in
the application of State laws to out-of-State State banks may become a
more widespread concern.
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\9\ The IFPA provides for civil penalties of $1,000 per
electronic payment transaction.
\10\ See OCC Interim Final Rule, 91 FR 22989, 22993 (Apr. 29,
2026).
\11\ The district court's decision notes that since enactment of
the IFPA, eleven other States have begun pursuing similar
legislation. See Raoul, 2026 WL 1534350, at *1 (N.D. Ill. June 1,
2026).
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III. Statutory Authority

[[Page 60020]]

provision of the FDI Act, and no other regulatory agency has been
expressly or exclusively granted the authority to issue rules or
regulations, or to define terms, with respect to section 24(j) of the
FDI Act. Consequently, the FDI Act expressly grants the FDIC the
authority to issue rules with respect to section 24(j) of the FDI Act.
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\12\ 12 U.S.C. 1819(a)(Tenth), 1820(g).
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Section 24(j) of the FDI Act was added to the statute by the
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
(Riegle-Neal).\13\ While section 24(j) of the FDI Act expressly
addresses the application of State laws to a ``branch'' in a host State
of an out-of-State State bank, the FDIC believes the provision must be
read in the context of the statutory framework. At the time of Riegle-
Neal's enactment, banks generally conducted banking activities, such as
receiving deposits and making loans, through branches. Thus, branches
were the central mechanism against which State laws could discriminate
against out-of-State banks, and were, naturally, expressly referenced
in the Act.
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\13\ Pub. L. 103-328.
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In the years since Riegle-Neal's enactment, it has become more
common for banks to serve their customers through non-branch channels
such as online banking and mobile banking. As a result, many State
banks serve customers in other States without branches in those
States--and may not even maintain branches at all. If a branch was a
prerequisite to protection under Riegle-Neal, State banks would either
lose parity with national banks with respect to the application of host
State laws or be forced into the costly and counterintuitive exercise
of establishing branches in host States in order to gain protection
from host States' laws, something not required of national banks.\14\
As explained below, this would create an irrational result that cannot
be squared with the structure of section 24(j) of the FDI Act or
congressional intent.
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\14\ State banks would only gain protection from a host State's
laws through branching to the extent such laws do not apply to
branches of national banks in the host State. 12 U.S.C. 1831a(j)(1).
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2005 Rulemaking

In 2005, the FDIC proposed a regulation implementing section 24(j)
of the FDI Act to clarify the application of host State laws to out-of-
State State banks.\15\ The 2005 proposal responded to a petition for
rulemaking that focused on establishing parity in the application of
host State laws to State banks' operating subsidiaries. The scope of
the 2005 proposal was limited only to activities conducted at branches
of out-of-State banks in the host State and suggested that section
24(j) of the FDI Act only applies to State banks with interstate
branches.
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\15\ 70 FR 60019 (Oct. 14, 2005).
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The 2005 proposal was never finalized, and importantly, focused on
parity in the application of host State laws to operating subsidiaries
rather than parity between banks with branches in a host State and
those without such branches. Furthermore, the 2005 proposal's
interpretation of section 24(j) of the FDI Act does not reflect the
broader purpose and structure of the statute, particularly in light of
the migration of banking activity away from branches to non-branch
channels. Indeed, since 2007 when the first iPhone was released, mobile
banking has become commonplace, and banks and other financial
institutions commonly provide financial services through mobile
applications. The rule now being proposed by the FDIC, discussed in
further detail below, adheres to the structure and purpose of section
24(j) of the FDI Act and provides necessary regulatory clarity.

IV. Proposed Rule

Section 24(j) of the FDI Act expressly addresses the application of
host State laws to out-of-State State banks that have branched into a
host State. The statute provides that host State laws apply to a branch
of an out-of-State State bank to the same extent they apply to a branch
in the host State of an out-of-State national bank. In other words, if
the host State law has been preempted and does not apply to a national
bank, then host State law similarly does not apply to the branch of an
out-of-State State bank; instead, the chartering State's law applies.
The statute does not, however, explicitly address the application
of host State laws where out-of-State State banks provide services in a
host State without the establishment of a branch. But it is clear from
the statutory scheme that when host State law would not apply to an
out-of-State State bank's branch in the State (because State law has
been preempted), host State law should similarly not apply to an out-
of-State State bank providing services without a branch. Instead, home
State law should apply. This is the only result consistent with the
structure of section 24(j) of the FDI Act.
Conversely, requiring an out-of-State State bank to establish a
branch in a host State to ensure application of its chartering's State
law would run contrary to the structure and apparent intent of the 1997
amendments to Riegle-Neal, which was to reestablish parity between
interstate State banks and interstate national banks.\16\ Thus, the
proposed rule ensures consistency with the structure and purpose of
section 24(j) of the FDI Act.
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\16\ The sponsor of the Riegle-Neal Amendments Act of 1997
stated that ``[t]he essence of this legislation is to provide parity
between State-chartered banks and national banks.'' 143 Cong. Rec.
H3088-89 (May 21, 1997) (statement of Rep. Marge Roukema); see also
143 Cong. Reg. H3090 (May 21, 1997) (letter from Independent Bankers
Association of America, noting that ``[t]he Riegle-Neal
Clarification Act clarifies that generally, state chartered banks
will operate under the laws of their chartering state wherever they
do business, up to the powers of national banks''). See sec. 2, Pub.
L. 105-24, 111 Stat. 238.
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The proposed rule provides that for purposes of section 24(j) of
the FDI Act, the laws of a host State, including laws regarding
community reinvestment, consumer protection, fair lending, and
establishment of intrastate branches, shall apply to any branch in the
host State of, or any services provided in the host State by, an out-
of-State State bank to the same extent as such State laws apply to a
branch in the host State of, or any services provided in the host State
by, an out-of-State national bank. Accordingly, host State laws
inapplicable to branches of out-of-State national banks or to services
provided by out-of-State national banks would not apply to branches of
out-of-State State banks or to services provided by an out-of-State
State bank in the host State without a branch. In all of these cases,
the law of the State bank's chartering State would apply. The proposed
rule also includes a conforming edit to the current definition of
``host State'' to reflect that for purposes of part 331, a host State
would be a State, other than a State bank's home State, in which the
State bank maintains a branch or provides services.

No Effect on State Banks' Loan Interest Rates

The proposed rule would not affect the interest rates State banks
are permitted to charge with respect to any of their loans, which are
governed by section 27 of the FDI Act.\17\ The proposed rule would
apply section 24(j) of the FDI Act, which was added to the statute by
Riegle-Neal. Section 111 of Riegle-Neal expressly disclaimed any effect
on the application of section 27, stating:
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\17\ 12 U.S.C. 1831d.

No provision of this title and no amendment made by this title
to any other provision of law shall be construed as affecting in any
way . . . the applicability of section 5197 of the Revised Statutes
or section 27 of the Federal Deposit Insurance Act.\18\
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\18\ 12 U.S.C. 1811 note.

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[[Page 60021]]

Accordingly, section 27 and the FDIC's implementing regulations in
the remainder of part 331 would continue to govern the interest rates
that State banks are permitted to charge with respect to their loans.

No Determination that Particular State Laws Are Preempted

The proposed rule would not constitute a determination by the FDIC
that any particular host State law is preempted by Federal law, though
preemption of a host State law would be relevant in determining which
State's law applies. The proposed rule would merely clarify the
application of State law under section 24(j) of the FDI Act in
instances where an out-of-State State bank provides services in a host
State.

V. Expected Effects

The proposed rule would amend the FDIC's regulations at 12 CFR part
331 to recognize parity between out-of-State State banks and national
banks concerning the application of host State laws when State banks
provide services outside of their chartering State. The proposed rule
would apply to all ``State banks,'' as defined in the FDI Act. As of
the quarter ending December 31, 2025, there were 3,449 State banks.\19\
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\19\ Reports of Condition and Income (Call Reports), December
31, 2025. Data from December 2025 are used instead of more recent
data because certain information used in the analysis is only
reported every six months (in June and December) rather than
quarterly.
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The FDIC analyzed the proposed rule's expected effects on State
banks relative to a baseline in which 12 CFR part 331 remains
unchanged. The baseline further assumes that all current State laws and
regulations remain in effect and reflects the financial and economic
conditions of State banks as of December 31, 2025.
The proposed rule, if finalized, would primarily affect State banks
and their customers. As discussed above, it has become common in recent
years for banks to serve their customers outside of branches through
non-branch channels such as online banking and mobile banking.
Currently, the regulatory framework regarding applicability of host
State laws to these activities under section 24(j) of the FDI Act is
uncertain. Under the baseline, such uncertainty may impose costs on
State-chartered banks by either requiring establishment of a branch or
depriving them of parity in the absence of a branch, limiting the
availability of products and services to customers. For example,
litigation involving the IFPA has created uncertainty that is expected
to negatively affect State banks and may result in substantial
disruption and confusion for the merchants and consumers they serve
once the law takes effect. Although the OCC has preempted this State
law and a court has granted a permanent injunction preventing Illinois
from enforcing the IFPA against national banks, Federal savings
associations, payment card networks, and banks chartered by States
other than Illinois ``that are subject to Riegle-Neal, 12 U.S.C.Sec.
1831a(j)(1),'' State banks without Illinois branches could face
uncertainty in light of the Illinois' Attorney General's posture. This
uncertainty creates a competitive imbalance between national banks and
State banks under the baseline. By reducing this uncertainty, the
proposed rule would benefit State banks and their customers.
The precise effects of the proposed rule are subject to uncertainty
and may vary based upon changes to State laws and the actions of other
regulators that the FDIC cannot reasonably anticipate. The analysis
below focuses on the IFPA and assumes it will become effective for
State banks in July 2027. The FDIC's estimates rely on available Call
Report data, Summary of Deposits data, publicly available economic
data, and estimates submitted to the courts by the parties to
litigation concerning the IFPA. However, available regulatory data do
not comprehensively identify all services that State banks provide in
host States where they do not maintain branches, nor do they identify
the location of payment card transactions, the tax and gratuity
components of those transactions, or the operational arrangements used
by banks and third-party service providers to process such
transactions.
Scope
Of the 3,449 State banks in existence as of December 31, 2025, the
FDIC has identified 3,185 that may be affected by the proposed rule
upon the effective date of the IFPA.\20\ Of the 3,185 affected State
banks, the FDIC estimates that there are 111 acquirer banks (which
process card payments on behalf of a merchant) and 3,183 issuer banks
(which provide credit or debit cards to consumers); banks may be both
acquirers and issuers.\21\ These estimates are based on December 2025
data and may change before the IFPA takes effect in July 2027.
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\20\ Of the 3,449 State banks, 235 are headquartered in Illinois
and will be required to comply with the IFPA under both the baseline
and under the proposed rule. A further 29 are not headquartered in
Illinois but operate a physical branch in Illinois and will not be
subject to the IFPA under both the baseline and under the proposed
rule. Call Reports, December 31, 2025, and Summary of Deposits, June
30, 2025.
\21\ Call Reports, December 31, 2025. Banks with positive
balances for Merchant Credit Card Sales--Acquiring Bank (MCRCDACQ)
are assumed to be acquirer banks. Banks with positive balances for
domestic deposits are assumed to be issuer banks.
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Quantifiable Expected Benefits

As noted above, absent concrete examples, it is difficult to
quantify the expected effects of this proposal or its absence. However,
the Illinois law and ensuing litigation provide a useful example.
Although the OCC has preempted this State law and a court has granted a
permanent injunction preventing Illinois from enforcing the IFPA
against national banks, Federal savings associations, payment card
networks, and banks chartered by States other than Illinois ``that are
subject to Riegle-Neal, 12 U.S.C.Sec. 1831a(j)(1),'' State banks
without Illinois branches could face uncertainty in light of the
Illinois' Attorney General's posture. Under the baseline, both acquirer
banks and issuer banks lacking branches would expend significant
resources to update their payment processing systems to comply with the
IFPA's requirement to segregate the tax and gratuity portions of
transaction amounts in Illinois and exempt these amounts from
interchange fees. Under the proposed rule, State banks would not be
required to expend these resources because the IFPA has been determined
to be preempted with respect to national banks. Accordingly, these
foregone costs would be a benefit to State banks relative to the
baseline.
In order to estimate these foregone costs, the FDIC relies on
estimates from declarations submitted by acquirer and issuer banks to
the courts during litigation concerning the IFPA.\22\ Based on these
declarations, the FDIC estimates that: (1) acquirer banks that fully
operate their own systems would incur $16 million per bank to update
their systems; and (2) acquirer banks that partially operate their own
systems would incur $8 million per bank to update. For acquirer banks
that do not operate any of their own systems, the FDIC assumes that
system update costs will be absorbed by core payment service
providers.\23\ Based on Call Report data as of December 31, 2025, the

[[Page 60022]]

FDIC estimates three acquirer State banks fully operate their own
payment systems, and five partially operate their own payment systems,
with the remaining 103 State banks fully outsourcing these
operations.\24\
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\22\ See Declaration of Mark C. Williams ] 22 & 15, Ill. Bankers
Ass'n v. Raoul, No. 24-cv-07307 (N.D. Ill. Aug. 21, 2024) (Decl. M.
Williams); Declaration of Christopher Conrad ] 22 & 19, Ill. Bankers
Ass'n v. Raoul, No. 24-cv-07307 (N.D. Ill. Aug. 21, 2024) (Decl. C.
Conrad); and Declaration of Hope M. Garrett ] 16, Ill. Bankers Ass'n
v. Raoul, No. 24-cv-07307 (N.D. Ill. Aug. 21, 2024) (Decl. H.
Garrett).
\23\ These costs could be passed on to acquirer banks over time,
but the FDIC does not have sufficient information to estimate how or
when these costs would be passed on.
\24\ The FDIC identified State banks with in-house payment
systems by reviewing institutions within the FDIC's Large Bank
Supervision program and from the list of top 20 FDIC-supervised
merchant acquirers reported in the former RMS Quarterly Risk Book.
Banks in this group were categorized as fully operating, partially
operating, or outsourcing their payment systems based on
confidential supervisory information. It is possible that State
banks other than those reviewed have in-house payment systems.
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Issuer banks also would face costs to update their systems, which
the FDIC estimates (based on the same declarations) at $25 million per
issuer bank that fully operates its own systems, $12.5 million per
issuer bank that partially operates its own systems, $45,000 per issuer
bank that does not operate its own systems and offers both credit and
debit cards, and $22,500 per issuer bank that does not operate its own
systems and offers only debit cards. Of the estimated 3,183 issuer
State banks, 516 banks issue both credit and debit cards and 2,667
banks issue only debit cards.\25\ For those State banks that issue both
credit and debit cards, three fully operate their own payment systems
and five partially operate their own payment systems, with the
remainder fully outsourcing their systems. The resulting total upgrade
cost, combined for issuer banks and acquirer banks, is therefore
estimated at $308 million.\26\
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\25\ Call Reports, December 31, 2025. State banks with non-zero
credit card loans are assumed to issue credit cards, and State banks
with non-zero domestic deposits are assumed to issue debit cards.
There were no affected State banks with non-zero credit card loans
and zero domestic deposits.
\26\ (3 x $16 million) + (5 x $8 million) + (3 x $25 million) +
(5 x $1.25 million) + (508 x $45 thousand) + (2667 x $22.5 thousand)
= $308,368,000.
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In addition to system upgrade costs, State banks would incur costs
if merchants elect to submit tax documentation manually to acquirer or
issuer banks. The IFPA requires manual processing of this documentation
to determine what portion of the interchange fees must be rebated to
merchants, and these costs are likely to scale with volume of
transactions. One large acquirer bank with a total credit card sales
volume of approximately $2.379 trillion in 2025 estimated manual
documentation processing costs of up to $50 million annually, or a unit
cost of about 2.1 cents per thousand dollars of transactions.\27\
Across the 111 acquirer State banks affected by the proposed rule, the
total credit card sales volume in 2025 was approximately $305.4
billion, which would result in total annual costs to these banks of
$6.4 million under the IFPA at the same unit cost.28 29
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\27\ Decl. M. Williams, supra, ] 22.
\28\ Call Reports, December 31, 2025.
\29\ $305,413,825,000 x 0.000021 = $6,413,690.
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The FDIC also estimated manual tax documentation processing costs
to comply with the IFPA for issuer State banks. One large issuer bank
with credit card balances of approximately $215.9 billion estimated
that it would require at least 100 analysts to manually process tax
documentation, which the FDIC translates to a cost of $4.5 million per
year, or a unit cost of approximately 2.1 cents per thousand dollars in
transactions.\30\ Across the 3,183 issuer banks affected by the
proposed rule, total credit card balances as of December 2025 were
approximately $12.5 billion, which would result in estimated annual
costs of about $261,000 under the IFPA at the same unit
cost.31 32
---------------------------------------------------------------------------

\30\ Decl. C. Conrad, supra, ] 22.
\31\ Call Reports, December 31, 2025.
\32\ $12,529,233,000 x 0.000021 = $263,113.
---------------------------------------------------------------------------

Summing the potential foregone compliance costs for both issuer
banks and acquirer banks, the proposed rule's total estimated
quantifiable benefits would be approximately $308 million in one-time
benefits and $6.7 million in ongoing annual benefits.\33\ This implies
annualized benefits over a five-year horizon of $77 million at a 7
percent discount rate and $72 million at a 3 percent discount rate.
These costs would be avoided under the proposed rule because State
banks would have parity with national banks for which the IFPA has been
determined to be preempted.
---------------------------------------------------------------------------

\33\ Ongoing annual benefits of $6,413,690 + $263,113 =
$6,676,804.
---------------------------------------------------------------------------

Quantifiable Expected Transfers

If the IFPA were to take effect and apply to State banks, as is
assumed under the baseline, issuer State banks would experience a
decrease in interchange fee revenue for amounts that represent taxes
and gratuities. However, because the lost interchange fee revenue also
represents decreased costs from the perspective of merchants, who pay
those fees, the FDIC considers this a transfer rather than a cost or
benefit to the economy. The total amount of the transfer is comprised
of four amounts, each estimated below: (1) revenue from credit card
interchange fees on sales tax; (2) revenue from debit card interchange
fees on sales tax; (3) revenue from credit card interchange fees on
gratuities; and (4) revenue from debit card interchange fees on
gratuities.
To estimate these amounts for credit card purchases, the FDIC used
publicly available aggregate FR Y-14M data from the Federal Reserve,
adjusted to reflect that the proposed rule would only apply to a subset
of banks. According to the FR Y-14M data, credit card purchases through
large banks in 2025 in the United States totaled $3.72 trillion.\34\
This is scaled to the total market for credit card purchases based on
the reported share of credit card balances of four-fifths of total U.S.
bank card balances from the Federal Reserve Bank of Philadelphia,
yielding $4.65 trillion.35 36 Assuming Illinois's share of
U.S. Gross Domestic Product, 3.9 percent in 2025, is equal to its share
of credit card purchases, the FDIC estimates credit card purchases in
Illinois at about $181.4 billion per year.37 38 The State
banks affected by the proposed rule carried an aggregate of $12.5
billion in credit card balances in December 2025, or approximately 0.98
percent of the $1.28 trillion in credit card debt held by households in
December 2025.\39\ Multiplying 0.98 percent by the estimated $181.4
billion in credit card purchases in Illinois yields annual estimated
Illinois credit card purchases of $1.78 billion at the affected State
banks.\40\ The FDIC assumes that Illinois's sales tax of 6.25 percent
applies to all purchases and estimates interchange fees for credit card
purchases of 2 percent of the transaction amount, resulting in an
estimated annual transfer of $2.22 million of revenue on interchange
fees for taxes on credit card purchases under the baseline
scenario.41 42
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\34\ Federal Reserve Bank of Philadelphia, Large Bank Consumer
Credit Card Balances: Total Purchase Volume, <a href="https://fred.stlouisfed.org/series/RCCCBPURCHASETOT">https://fred.stlouisfed.org/series/RCCCBPURCHASETOT</a>, July 30, 2026.
\35\ Federal Reserve Bank of Philadelphia, FR Y-14M Data,
<a href="https://www.philadelphiafed.org/surveys-and-data/large-bank-credit-card-and-mortgage-data">https://www.philadelphiafed.org/surveys-and-data/large-bank-credit-card-and-mortgage-data</a>, July 30, 2026.
\36\ $3.72 trillion x 1.25 = $4.65 trillion.
\37\ See U.S. Bureau of Economic Analysis (BEA), SQGDP1 State
Quarterly Gross Domestic Product Summary (accessed July 30, 2026)
(indicating Illinois's share of the current United States dollar
Gross Domestic Product in 2025 is 3.9 percent).
\38\ $4.65 trillion x 0.039 = $181.35 billion.
\39\ Call Reports, December 31, 2025 and Federal Reserve Bank of
New York Consumer Credit Panel.
\40\ $181.4 billion x 0.00977 = $1.771 billion.
\41\ See 35 ILCS 105/1 to 105/22. This estimate does not account
for the local and excise taxes that are also subject to the IFPA.
\42\ $1.771 billion x 0.0625 x 0.02 = $2.214 million.
---------------------------------------------------------------------------

Assuming a ratio of debit card purchases to credit card purchases
of 82 percent, total annual debit card purchases in Illinois at
affected banks are estimated at $1.46 billion.\43\ Applying the 6.25
percent sales tax and

[[Page 60023]]

an interchange fee of 0.05 percent of the transaction amount results in
a total estimated annual transfer of $45,000 of revenue on interchange
fees for taxes on debit card purchases.\44\
---------------------------------------------------------------------------

\43\ $1.771 billion x 0.82 = $1.452 billion.
\44\ $1.452 billion x 0.0625 x 0.0005 = $45,382.
---------------------------------------------------------------------------

To estimate the transfer of revenue created by prohibiting
interchange fees on gratuities, the FDIC uses total reported income in
Illinois from occupations associated with tips, such as food services,
waiters and waitresses, bartenders, and taxi drivers, reported at $4.24
billion in May 2025.\45\ The FDIC assumes that approximately 55 percent
of this income is from tips and that 85 percent of those tips are paid
via a payment card, with 55 percent of card tips paid by credit cards
and 45 percent paid by debit cards (based on the ratio used above).
Affected State banks are assumed to have a 0.98 percent share of these
transactions, as calculated above. This calculation yields estimates of
$1.1 million in credit card tips and $873,000 in debit card tips
processed by the affected State banks.\46\ Assuming interchange fees of
2 percent of the transaction amount for credit cards and 0.05 percent
of the transaction amount for debit cards yields a total annual
transfer of $21,000 for credit card tips and $437 for debit card tips
for the affected State banks.\47\
---------------------------------------------------------------------------

\45\ Bureau of Labor Statistics, May 2025 State Occupational
Employment and Wage Estimates, <a href="https://data.bls.gov/oes/#/area/1700000/2025">https://data.bls.gov/oes/#/area/1700000/2025</a>.
\46\ $4.24 billion x 0.55 x 0.85 x 0.00977 x 0.55 = $1.065
million. $4.24 billion x 0.55 x 0.85 x 0.00977 x 0.45 = $871,474.
\47\ $1.065 million x 0.02 = $21,300. $871,474 x 0.005 = $436.
---------------------------------------------------------------------------

Summing these four figures together yields an estimated annual
total of $2.28 million in transfers between merchants and affected
banks under the baseline scenario if the IFPA applies to State
banks.\48\ The proposed rule would eliminate this transfer. And as
noted, this is but one example of the potential disruption caused by
the absence of this proposal.
---------------------------------------------------------------------------

\48\ $2.214 million + $45,382 + $21,300 + $436 = $2,281,118.
---------------------------------------------------------------------------

VI. Request for Comment

The FDIC seeks comment on all aspects of the proposed rule. The
FDIC also invites comment specifically on the following:
<bullet> Are there any other alternatives to the proposed rule,
consistent with the FDIC's policy goals described above, that should be
considered?
<bullet> Section 24(j) of the FDI Act, by its terms, governs the
application of ``[t]he laws of a host State, including laws regarding
community reinvestment, consumer protection, fair lending, and
establishment of intrastate branches.'' This broad language includes a
variety of host State laws. Would the proposed rule, which implements
section 24(j) of the FDI Act, affect settled applications of specific
types of host State laws to out-of-State State banks in a way that may
have unintended consequences? If so, please provide examples.
<bullet> As described above, section 27 of the FDI Act and the
implementing regulations in part 331 govern the interest rates State
banks are permitted to charge with respect to their loans, and,
consistent with the Riegle-Neal Act's provisions, the proposed rule
would not affect the application of these provisions to State banks.
Should the FDIC make any changes to the proposed rule to better reflect
this? If so, why?

VII. Administrative Law Matters

Regulatory Review

Executive Order 12866 directs agencies to assess the costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits.
This proposed rule was drafted and reviewed in accordance with
Executive Order 12866. Within OMB, the Office of Information and
Regulatory Affairs (OIRA) has determined that this rulemaking is a
``significant regulatory action'' under section 3(f)(1) of Executive
Order 12866. Accordingly, the draft rule was submitted to OIRA for
review.
As noted in other sections of the SUPPLEMENTARY INFORMATION of this
document, the FDIC has assessed the costs and benefits of this
rulemaking and has made a reasoned determination that the benefits of
this rulemaking justify its costs. Executive Order 14192, titled
``Unleashing Prosperity Through Deregulation,'' was issued on January
31, 2025. Section 3(a) of Executive Order 14192 requires an agency,
unless prohibited by law, to identify at least ten existing regulations
to be repealed when the agency publicly proposes for notice and comment
or otherwise promulgates a new regulation. In furtherance of this
standard, section 3(c) of Executive Order 14192 requires that the new
incremental costs associated with new regulations shall, to the extent
permitted by law, be offset by the elimination of existing costs
associated with at least ten prior regulations. This proposed rule, if
finalized as proposed, is expected to be a deregulatory action under
Executive Order 14192.

Paperwork Reduction Act

This notice of proposed rulemaking has been reviewed for compliance
with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et
seq.). In accordance with the PRA, the FDIC may not conduct or sponsor,
and an organization is not required to respond to, an information
collection unless the information collection displays a currently valid
Office of Management and Budget (OMB) control number. The FDIC has
reviewed the notice of proposed rulemaking and determined that it would
not introduce new information collection requirements pursuant to the
PRA.

Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) generally requires an agency,
in connection with a proposed rule, to prepare and make available for
public comment an initial regulatory flexibility analysis that
describes the impact of the proposed rule on small entities.\49\
However, an initial regulatory flexibility analysis is not required if
the agency certifies that the proposed rule will not, if promulgated,
have a significant economic impact on a substantial number of small
entities.
---------------------------------------------------------------------------

\49\ 5 U.S.C. 601 et seq.
---------------------------------------------------------------------------

The Small Business Administration (SBA) has defined ``small
entities'' to include banking organizations with total assets of less
than or equal to $850 million.\50\ Generally, the FDIC considers a
significant economic impact to be a quantified effect in excess of 5
percent of total annual salaries and benefits or 2.5 percent of total
noninterest expenses. The FDIC believes that effects in excess of one
or more of these thresholds typically represent significant economic
impacts for FDIC-supervised institutions.
---------------------------------------------------------------------------

\50\ The SBA defines a small banking organization as having $850
million or less in assets, where an organization's ``assets are
determined by averaging the assets reported on its four quarterly
financial statements for the preceding year.'' See 13 CFR 121.201
(as amended by 87 FR 69118, effective Dec. 19, 2022). In its
determination, the ``SBA counts the receipts, employees, or other
measure of size of the concern whose size is at issue and all of its
domestic and foreign affiliates.'' See 13 CFR 121.103. Following
these regulations, the FDIC uses an insured depository institution's
affiliated and acquired assets, averaged over the preceding four
quarters, to determine whether the insured depository institution is
``small'' for the purposes of RFA.
---------------------------------------------------------------------------

The FDIC believes that the proposed rule will not have a
significant economic impact on a substantial number of small entities.
In particular, the proposed rule of construction would not affect the
interest rates State banks are permitted to charge with respect to any
of their loans, which are governed by section 27 of the FDI Act as

[[Page 60024]]

previously discussed.\51\ The precise effects of the proposed rule are
subject to uncertainty and may vary based upon changes to State laws
and the actions of other regulators that the FDIC cannot reasonably
anticipate. Therefore, the FDIC is presenting an Initial Regulatory
Flexibility Act Analysis in this section. The analysis below focuses on
the IFPA and assumes it will become effective for State banks in July
2027.
---------------------------------------------------------------------------

\51\ 12 U.S.C. 1831d.
---------------------------------------------------------------------------

Reasons Why This Action is Being Considered

Recent litigation involving an Illinois law concerning payment card
transactions has created uncertainty as to the application of the laws
of States to State-chartered banks which offer services outside their
home State. For a more detailed discussion of the reason for the
proposed rule, please refer to Section I of this notice, ``Policy
Objectives'' and Section II, ``Background.''

Policy Objectives

This rulemaking would address legal uncertainty and recognize
parity between out-of-State State banks and national banks doing
business in another State without establishing a branch in such host
State. For a more detailed discussion of the proposed rule's policy
objectives, please refer to Section I, ``Policy Objectives.''

Legal Basis

Congress has granted the FDIC the authority to prescribe rules and
regulations as it may deem necessary to carry out the provisions of the
FDI Act, as well as to define terms as necessary to carry out the FDI
Act, except to the extent that authority to issue such rules and
regulations has been expressly and exclusively granted to another
regulatory agency.\52\ For a more detailed discussion of the proposed
rule's legal basis, please refer to Section II, ``Background,'' Section
III, ``Statutory Authority,'' and Section IV, ``Proposed Rule.''
---------------------------------------------------------------------------

\52\ 12 U.S.C. 1819(a)(Tenth), 1820(g).
---------------------------------------------------------------------------

Description of the Rule

The proposed rule would provide that, for purposes of section 24(j)
of the FDI Act, the laws of a host State apply to any branch in the
host State of, or any services provided in the host State by, an out-
of-State State bank to the same extent such State laws apply to a
branch in the host State of, or any services provided in the host State
by, an out-of-State national bank. Under the proposed rule, when host
State laws do not apply to a national bank, those laws would similarly
not apply to an out-of-State State bank providing services in the host
State with or without a branch. For a more detailed description of the
proposed rule, please refer to Section IV, ``Proposed Rule.''

Small Entities Affected

As discussed above, as of the quarter ending December 31, 2025,
there were 3,449 State banks. Of these State banks, 2,432 were small
entities.\53\ Of these small State banks, the FDIC has identified 2,236
small State banks that may be affected by the proposed rule upon the
effective date of the IFPA.\54\ Of the 2,236 affected small banks, the
FDIC estimates that there are 42 acquirer banks (which process card
payments on behalf of a merchant) and 2,234 issuer banks (which provide
cards to consumers, including debit cards); banks may be both acquirers
and issuers.\55\ These estimates are based on December 2025 data and
may change before the IFPA takes effect in July 2027.
---------------------------------------------------------------------------

\53\ Call Reports, December 31, 2025.
\54\ Of the 2,432 small State banks, 193 are headquartered in
Illinois and will be required to comply with the IFPA under both the
baseline and under the proposed rule. A further three are not
headquartered in Illinois but operate a branch in Illinois and will
not be subject to the IFPA under both the baseline and under the
proposed rule. Call Reports, December 31, 2025, and Summary of
Deposits, June 30, 2025.
\55\ Call Reports, December 31, 2025. Banks are assumed to be
acquirers if they have a non-zero amount of acquirer bank merchant
credit card sales; banks are assumed to be issuers if they have a
non-zero amount of domestic deposits (as they are assumed to issue
at least debit cards).
---------------------------------------------------------------------------

Effects on Small Entities

The proposed rule, if adopted, would primarily affect State banks
and their customers. As discussed above, it has become more common in
recent years for banks to serve their customers through non-branch
channels such as online banking and mobile banking. Currently, the
applicability of host State laws to these activities under Section
24(j) of the FDI Act is uncertain. Under the baseline, such uncertainty
may impose costs on small State-chartered banks by either requiring
establishment of a branch or depriving them of parity in the absence of
a branch, limiting the availability of products and services to
customers. For example, litigation involving the IFPA has created
uncertainty that is expected to negatively affect small State banks and
may result in substantial disruption and confusion for the merchants
and consumers they serve once the law takes effect. This uncertainty
creates a competitive imbalance between national banks and State banks
that may incentivize State-chartered banks to convert to Federal
charters under the baseline. By reducing this uncertainty, the proposed
rule would benefit small State banks and their customers.
The precise effects of the proposed rule are subject to uncertainty
and may vary based upon changes to State laws and the actions of other
regulators that the FDIC cannot reasonably anticipate. The analysis
below focuses on the IFPA and assumes it will become effective for
small State banks in July 2027. The FDIC's estimates rely on available
Call Report data, Summary of Deposits data, publicly available economic
data, and estimates submitted to the courts by the parties to
litigation concerning the IFPA. However, available regulatory data do
not comprehensively identify all services that small State banks
provide in host States where they do not maintain physical branches,
nor do they identify the location of payment card transactions, the tax
and gratuity components of those transactions, or the operational
arrangements used by banks and third-party service providers to process
such transactions.
Under the baseline, both small acquirer banks and small issuer
banks may expend significant resources to update their payment
processing systems in order to be able to segregate the tax and
gratuity portions of payment card transactions in Illinois and exempt
these amounts from interchange fees. Under the proposed rule, small
State banks would not be required to expend these resources because the
IFPA has been determined to be preempted with respect to national
banks. Accordingly, these foregone costs would be a benefit to small
State banks relative to the baseline.
The FDIC estimates that none of the small acquirer or issuer banks
operate their own payment systems. Upgrade costs are therefore
estimated to be $45,000 for banks which offer both credit and debit
cards, and $22,500 for banks which only offer debit cards.\56\ The
benefits accruing to small banks from foregoing these costs fall well
under the threshold for a significant economic impact.
---------------------------------------------------------------------------

\56\ Decl. H. Garrett, supra, ] 16.
---------------------------------------------------------------------------

In addition to system upgrade costs, small State banks would incur
costs if merchants elect to submit tax documentation manually to
acquirer or processor banks. The IFPA requires manual processing of
this documentation to determine what portion of the interchange fees
must be rebated to merchants, and these costs are likely to scale with
volume of transactions. As explained in the

[[Page 60025]]

``Expected Effects'' section above, the FDIC estimates manual
documentation processing unit costs are about 2.1 cents per thousand
dollars of transactions.\57\ Across the 42 small acquirer State banks
affected by the proposed rule, the total credit card sales volume in
2025 was approximately $5.1 billion, which would result in total
combined annual costs to these banks of $106,480 at the same unit cost,
or $2,535 on average per small acquirer bank.58 59
---------------------------------------------------------------------------

\57\ Decl. M. Williams, supra ] 22.
\58\ Call Reports, December 31, 2025.
\59\ 5,070,491,000 x 0.000021 = $106,480. $106,480 / 42 =
$2,535.
---------------------------------------------------------------------------

The FDIC also estimates manual tax documentation processing costs
to comply with the IFPA for issuing State banks of approximately 2.1
cents per thousand dollars in transactions, as explained in the
``Expected Effects'' section above. Across the 2,234 small issuer State
banks affected by the proposed rule, total credit card balances in
December 2025 were approximately $8 million, which would result in
estimated annual costs to these banks of $167 at the same unit cost, or
an average of less than one dollar per bank.60 61 Both
processing costs would be small for small banks, so the benefit from
foregoing them would not be significant.
---------------------------------------------------------------------------

\60\ Call Reports, December 31, 2025.
\61\ $7.955 million x 0.000021 = $167. $167/2234 = $0.075.
---------------------------------------------------------------------------

Another potential effect on small State banks is foregone revenue
from lost interchange fees on tax and gratuity portions of transaction
amounts that are collected under the baseline. While it is not possible
to calculate the exact effect for small banks, the overall size of the
transfer for all affected banks combined is estimated to be $2.27
million per year.\62\ Averaged across the 3,185 affected State banks,
this would be $713 per bank per year, again a negligible effect even
for a small bank.\63\
---------------------------------------------------------------------------

\62\ See Section V, ``Expected Effects'' for this calculation.
\63\ $2.27 million / 3185 = $713.
---------------------------------------------------------------------------

As previously discussed, the proposed rule would not affect the
interest rates State banks are permitted to charge with respect to any
of their loans, which are governed by section 27 of the FDI Act.\64\
---------------------------------------------------------------------------

\64\ 12 U.S.C. 1831d.
---------------------------------------------------------------------------

Reporting, Recordkeeping, and Other Compliance Requirements

The proposed rule will not pose reporting, recordkeeping and other
compliance requirements on small, State banks.

Other Federal Rules

The FDIC has not identified any likely duplication, overlap, and/or
potential conflict between this proposed rule and any other Federal
rule.
The FDC invites comments on all aspects of the supporting
information provided in this RFA section, and in particular, whether
the proposed rule would have any significant effects on small entities
that the FDIC has not identified.

Riegle Community Development and Regulatory Improvement Act

Pursuant to section 302(a) of the Riegle Community Development and
Regulatory Improvement Act of 1994 (RCDRIA),\65\ in determining the
effective date and administrative compliance requirements for new
regulations that impose additional reporting, disclosure, or other
requirements on IDIs, each Federal banking agency must consider,
consistent with principles of safety and soundness and the public
interest, any administrative burdens that such regulations would place
on affected depository institutions, including small depository
institutions, and customers of depository institutions, as well as the
benefits of such regulations. In addition, section 302(b) of RCDRIA
requires new regulations and amendments to regulations that impose
additional reporting, disclosures, or other new requirements on insured
depository institutions generally to take effect on the first day of a
calendar quarter that begins on or after the date on which the
regulations are published in final form.\66\ The FDIC has reviewed the
notice of proposed rulemaking and determined that it would not impose
additional reporting, disclosure, or other requirements on IDIs
pursuant to RCDRIA. The FDIC welcomes any comments on the application
of RCDRIA.
---------------------------------------------------------------------------

\65\ 12 U.S.C. 4802(a).
\66\ 12 U.S.C. 4802(b).
---------------------------------------------------------------------------

Plain Language

Section 722 of the Gramm-Leach-Bliley Act \67\ requires the Federal
banking agencies to use plain language in all proposed and final
rulemakings published in the Federal Register after January 1, 2000.
The FDIC invites your comments on how to make this proposed rule easier
to understand, including the following:
---------------------------------------------------------------------------

\67\ 12 U.S.C. 4809.
---------------------------------------------------------------------------

<bullet> Has the FDIC organized the material to suit your needs? If
not, how could the proposed rule be more clearly stated?
<bullet> Are the requirements in the proposed rule clearly stated?
If not, how could the proposed rule be more clearly stated?
<bullet> Does the proposed rule contain language or jargon that is
not clear? If so, which language requires clarification?
<bullet> Would a different format (grouping and order of sections,
use of headings, paragraphing) make the proposed rule easier to
understand? If so, what changes to the format would make the proposed
rule easier to understand?
<bullet> What else could the FDIC do to make the proposed rule
easier to understand?

List of Subjects in 12 CFR Part 331

Banks, banking, deposits, foreign banking, interest rates.
For the reasons set out in the preamble, the Federal Deposit
Insurance Corporation's Board of Directors proposes to amend 12 CFR
part 331 as follows:

PART 331--FEDERAL INTEREST RATE AUTHORITY

0
1. The authority citation for part 331 is revised to read as follows:

Authority: 12 U.S.C. 1819(a)(Tenth), 1820(g), 1831a(j), 1831(d).

0
2. In Sec. 331.2, revise the definition of ``Host State'' to read as
follows:

Sec. 331.2 Definitions.

* * * * *
Host State means a State, other than the home State of a State
bank, in which the State bank maintains a branch or provides services.
* * * * *
0
3. Revise Sec. 331.3 to read as follows:

Sec. 331.3 Application of host State law.

For purposes of section 24(j) of the Federal Deposit Insurance Act,
the laws of a host State, including laws regarding community
reinvestment, consumer protection, fair lending, and establishment of
intrastate branches, shall apply to any branch in the host State of, or
any services provided in the host State by, an out-of-State State bank
to the same extent as such State laws apply to a branch in the host
State of, or any services provided in the host State by, an out-of-
State national bank. To the extent a host State's law is inapplicable
to an out-of-State State bank in such host State pursuant to section
24(j) of the Federal Deposit Insurance Act, the home State's law shall
apply.

[[Page 60026]]

Federal Deposit Insurance Corporation.

By order of the Board of Directors.

Dated at Washington, DC, on September 17, 2026.
Hanoi Veras,
Executive Secretary.
[FR Doc. 2026-19310 Filed 9-21-26; 8:45 am]
BILLING CODE 6714-01-P

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