Bank's Online Auction Format Being Reviewed by Treasury

The Office of the Comptroller of the Currency at the U.S. Treasury is seeking comments on whether a Pennsylvania statute regulating auctioneers applies to a national bank that uses an online auction format to market and sell certificates of deposit.

"This is the first case where a bank is using the Internet to ask for some kind of pre-emption," said OCC spokesman Kevin Muckri, who declined to reveal the name of the bank.

The case involves a national bank headquartered in Pennsylvania that uses an auction format to market and sell CDs over the Internet. The bank maintains a Web site that features a link to its auction program, where it periodically posts a notice of upcoming online CD auctions.

A Pennsylvania statute requires that all auctioneers be licensed and subjects them to examination and inspection by the state. The bank submitted a written request to the OCC on whether federal law pre-empts the application of the statute to its online auction program.

The OCC is required to publish a notice in the Federal Register for the banking industry before issuing a final written opinion on pre-emptive law in four areas: community reinvestment, consumer protection, fair lending and the establishment of interstate branches. However, it is unclear if any of those applies to the Pennsylvania statute.

The bank has asserted that federal law authorizes it to conduct online auctions based on an OCC regulation that "authorizes national banks to perform, provide or deliver through electronic means any authorized product or service." Along with that, it also cited a 1996 Supreme Court case (Barnett Bank of Marion County, N.A. v. Nelson) that supported the position that a state may not regulate an activity that a national bank is federally authorized to conduct.

Comments must be received by Feb. 14, but there is no timetable for when a final decision will be made, Muckri said.

Comments may be submitted electronically to regs.comments@occ.treas.gov, or by mail to Docket No. 00-01, Communications Division, Third Floor, Office of the Comptroller of the Currency, 250 E St. S.W., Washington, D.C. 20219. The notice seeking comments was printed in the Federal Register on Jan. 14.