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- Title
THE U.S. DUAL BANKING SYSTEM AND INTEREST RATE EXPORTATION: CHALLENGING THE VALID-WHEN-MADE DOCTRINE IN CALIFORNIA V. OFFICE OF THE COMPTROLLER OF THE CURRENCY.
- Authors
Stephenson, Todd P.
- Abstract
The structure of American federalism has given rise to a peculiar system of banking, known as the dual banking system, wherein banks are subjected to either state or federal regulatory frameworks, or both simultaneously. Since the 1970s, this legal structure has given rise to a particular phenomenon in American banking known as interest rate exportation, a legally enshrined financial practice where both national- and state-chartered banks can charge their home state's permissible interest rates in other states, even where those rates exceed the local usury laws. This circumvention of local interest rate regulations has led to financial interest groups taking particular interest in this legal anomaly, because, according to these groups, it allows for an extension of what was originally a practice exclusive to banks to third-party nonbank entities by means of a legal concept commonly referred to as the valid-when-made doctrine. This Comment intends to show how that extension unfolded and received both administrative and judicial support with the Office of the Comptroller of the Currency (OCC) promulgation of its own valid-when-made rule and its subsequent challenge in the 2022 court case California v. OCC.
- Subjects
CALIFORNIA; BANKING industry; INTEREST rates; HARD currencies; FEDERAL government
- Publication
Georgia State University Law Review, 2024, Vol 40, Issue 3, p825
- ISSN
8755-6847
- Publication type
Article