Wild Card Statutes, Parity, and National Banks - The Renascence of State Banking Powers

Abstract:     
The United States has a dual banking system in which banks can be charted either as a National Bank under the National Bank Act or a State Bank under any one of fifty different state banking laws. State Banks have often led the way in banking innovations and developing new approaches for regulating and examining financial institutions. However, in the past decade, State Banks have experienced difficulties in remaining competitive with National Banks, primarily because of the increasingly broad powers granted to National Banks by the Office of the Comptroller of the Currency. Some states have responded by enacting "wild card" or "parity" statutes that enable a state banking regulator to grant a State Bank the same banking powers enjoyed by a National Bank. However, neither state legislators nor regulators have taken full advantage of the wild card statutes. This article proposes that judicious use of "wild card" statutes would provide state banking regulators with the powers necessary to enable their State Banks to compete on an equal footing with National Banks without endangering the institutions' safety and soundness.

Keywords: banking regulation, bank, bank statute, bankings system, financial institutions

JEL Classifications: E60,E61,E62,G21,G28

Accepted Paper Series