NAIC To File Brief In W.Va. OCC Case

One of the issues, according to Shapo, is that the Senate report minimizes the significance of the Barnett case by implying it is just another legal case that addresses the issue of preempting state laws that interfere with a national banks privileges.

In fact, Shapo says, Barnett is a "seminal case."

The courts have used Barnett as a standard and Congress used the phrase from the Barnett decision–"prevent or significantly interfere"–when it crafted the Gramm-Leach-Bliley Act.

The report "twists the common understanding of the codification and legal understanding of the issue," he says.

Reviewing the OCC opinion, Shapo says he believes its preemption standard is "too low and does not conform with the controlling law."

The opinion, he continues, narrowly preserves state laws that have "only a small effect on national banks' exercise of power" and "broadly preempts state laws that condition or confine the exercise by a national bank of its express or incidental powers."

Shapo adds that the "broadly preemptive" language is inconsistent with the "significantly interfere" language in the Barnett case.

In an analysis, he adds that the opinions conclusion that GLB brings in any language in Barnett related to preemption is, in fact, subject to another interpretation: Congress meant only to address the standard of "prevent or significantly interfere."

Reproduced from National Underwriter Life & Health/Financial Services Edition, April 1, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.