Credit Union Regulatory Guidance Including: NCUA, CFPB, FDIC, OCC, FFIEC

Samantha: Hello, this is Samantha Shares.

This episode covers the Fair Credit
Reporting Act; Preemption of State Laws.

The following is an audio
version of that document.

This podcast is educational
and is not legal advice.

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And now, the Fair Credit Reporting
Act; Preemption of State Laws.

The Consumer Financial Protection Bureau
is issuing this interpretive rule to

clarify that the Fair Credit Reporting
Act broadly preempts state laws that

attempt to regulate credit reporting.

This action reflects Congress’s original
intent to create national standards

for the credit reporting system.

This interpretive rule replaces
an earlier Bureau rule from July

twenty twenty-two, which had taken
a narrower view of preemption.

That rule was withdrawn
in May twenty twenty-five.

The Fair Credit Reporting Act, or F C R
A, was enacted in nineteen seventy and

has been amended several times since.

It established a national system
for credit reporting and set

rules for consumer reports and
the use of consumer information.

From the beginning, the law
preempted state laws that were

inconsistent with its provisions.

In nineteen ninety-six, Congress
strengthened this preemption by

adding a new clause that barred
states from regulating in certain

specifically identified areas.

This was meant to avoid a
patchwork of conflicting rules.

Originally, this stronger preemption
was set to expire in two thousand

four, but in two thousand three,
Congress made it permanent.

The intent was clear: to preserve uniform
national standards and support the growth

of the national credit reporting system.

In July twenty twenty-two, the
Bureau published an interpretive

rule suggesting that section sixteen
eighty-one tee, subsection b,

paragraph one, had only a narrow sweep.

It concluded that many state laws
affecting consumer reports could

stand alongside federal law.

For example, it suggested that
state laws regulating medical debt,

rental history, or arrest records
could coexist with the F C R A.

That interpretation was controversial.

In May twenty twenty-five, the Bureau
withdrew that interpretive rule,

stating that it was unnecessary and
that agencies lack special authority

to interpret preemption unless
Congress specifically delegates it.

The Bureau also found that the twenty
twenty-two rule created confusion and

risked imposing higher compliance burdens.

The Bureau now clarifies that the
prior interpretation was flawed.

The F C R A’s preemption clause
was written in broad terms

and must be applied broadly.

The text of section sixteen eighty-one
tee, subsection b, paragraph one, uses

sweeping language: “No requirement
or prohibition may be imposed under

the laws of any State with respect
to any subject matter regulated

under” certain provisions of the Act.

Congress deliberately used
expansive phrases like “no

requirement or prohibition,” “with
respect to,” and “relating to.”

Read together, these show that
Congress meant to occupy the

field of consumer reporting.

The legislative history
supports this interpretation.

In the nineteen ninety-six amendments,
lawmakers stressed the need for

a uniform national credit system.

In two thousand three, Congress decided
to make preemption permanent, concluding

that the national credit reporting
system had expanded access to credit,

lowered costs, and accelerated decisions.

Allowing states to impose their own
requirements would fracture the system,

increase compliance costs, and undermine
the usefulness of credit reports.

Consumers would no longer be
able to take their credit history

with them as they moved, and
lenders would struggle to compare

creditworthiness across state lines.

The Bureau emphasizes that state
laws attempting to regulate core

areas of credit reporting—such as
prescreening, dispute procedures,

adverse action notices, or the content
of consumer reports—are preempted.

State efforts to ban certain categories
of information, such as medical debt

or rental arrears, are also preempted.

The Bureau explains that rules about how
long information may remain on a report

and whether it may appear in the first
place are points on the same continuum.

Allowing states to prohibit
categories outright would

contradict Congress’s intent.

For the financial services
industry, the rule restores clarity.

Credit bureaus, lenders, and providers
of consumer information can look

to federal law as the governing
standard without having to reconcile

fifty different state regimes.

For consumers, the effects are mixed.

A national standard supports broader
access to credit and ensures consistency.

But some advocates will argue
that state-level protections,

particularly around medical
debt, are now off the table.

This interpretive rule is guidance.

It does not have the force of law.

Courts remain the final arbiters
of preemption questions.

Still, the Bureau’s position is
clear: Congress intended broad federal

preemption under the Fair Credit
Reporting Act, and the national

credit reporting system depends on it.

This concludes the Fair Credit
Reporting Act; Preemption of State Laws.

If your credit union could use assistance
with your exam, reach out to Mark Treichel

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This is Samantha Shares, and
we thank you for listening.