Our Take
The OCC is weaponizing a Civil War-era charter to protect bank profitability from state payment reform, even though swipe fees are set by card networks, not banks.
Why it matters
Swipe fees cost consumers and merchants nearly $200 billion annually (per the article). The OCC's willingness to preempt measures that don't regulate banks shows how federal authority has become a tool for blocking reform at the state level, regardless of legal merit.
Do this week
Finance: Document every OCC preemption action filed against your state payment reform initiative before the 2025 lobbying season closes, so you can map the pattern to Congress.
The OCC Blocks Illinois Swipe Fee Law Using Preemption Authority
This year, the Office of the Comptroller of the Currency moved to invalidate the Illinois Interchange Fee Prohibition Act, which bans card swipe charges on taxes and tips. The OCC claims this state measure falls under federal preemption powers granted by the National Bank Act of 1863.
The legal argument is thin. Swipe fees—totaling nearly $200 billion for debit and credit last year—are set by Visa and Mastercard, not by banks. Yet the OCC frames interchange as a "core activity" of national banks while simultaneously acknowledging that card networks control pricing. The agency is using preemption not to protect a bank-regulated function, but to shield payment network profitability from state oversight.
Current OCC Comptroller Jonathan Gould made the stakes explicit in recent remarks: "The parameters of preemption are all downstream from the political consensus that's necessary to maintain it." He urged banks to "educate" Congress—Washington shorthand for lobby—to preserve preemption's profit-enhancing reach. That statement, per the source, reveals preemption's boundaries rest on political power, not law.
Federal Preemption Has Become a Lobbying Tool, Not a Legal Principle
The National Bank Act originated as a Civil War financing mechanism, not a consumer protection framework. Congress required national banks to hold Treasury securities, creating a new market for federal debt. It also taxed state bank notes into obsolescence, cementing federal dominance. Lincoln's legacy is invoked by preemption defenders to disguise what was fundamentally a power grab dressed in patriotism.
The OCC has a history of weaponizing preemption when it suits big banks. In 2004, the agency swept away state predatory lending protections, a decision that contributed to conditions leading to the global financial crisis. The OCC has also lost litigation over preemption boundaries, yet continues to expand them.
What matters now: the OCC is preempting state measures that do not regulate banks at all. Payment network fee-setting is a non-bank function. By blocking state payment reform on the grounds of federal banking authority, the agency is redefining preemption to mean "anything that affects bank profitability," regardless of whether banks control the contested activity. That is a category error, and it signals the agency views its role as protecting big bank margins rather than interpreting law.
State Legislators and Payment Reform Advocates Must Reframe the Fight
Stop arguing about the National Bank Act. The OCC's own comptroller has conceded that preemption boundaries depend on political consensus, not legal interpretation. That admission collapses the agency's legal authority claim.
Instead, focus on three points: First, Illinois does not regulate banks; it regulates card network fee practices. The National Bank Act does not grant the OCC authority over non-bank payment networks. Second, the OCC's framing of interchange as a "core bank activity" contradicts the fact that banks do not set these prices. Third, preemption claims should be tested against the comptroller's own public standard: does Congress support the OCC's interpretation? Document every state reform blocked and present the pattern to relevant House and Senate committees.
The political consensus Gould referenced is not immutable. It can be rebuilt if state coalitions organize legislative testimony and independent economic analysis showing the cost of preemption to consumers and merchants. The OCC's overreach is now on record.