OCC Pushes for Bank Exemption

U.S. Senate hearing room podium with microphone — Photo: Katherine Welles / Shutterstock

Federal bank regulators warned California that its new climate-disclosure rules could collide with federal law and push national banks to rethink doing business in the state.

Story Highlights

The Office of the Comptroller of the Currency asked California to exempt nationally chartered banks from two climate-disclosure laws.
California Air Resources Board materials describe the laws as covering large companies that do business in the state, including banks.
The clash centers on whether state rules can burden federally authorized banking powers.
Consumers could face fewer choices or higher costs if major banks scale back operations, according to industry warnings reported elsewhere.

What sparked the fight between Washington and Sacramento

The Office of the Comptroller of the Currency sent a letter on October 29 urging the California Air Resources Board to exempt national banks and federal savings associations from two climate-disclosure laws. The letter argues that forcing these banks to comply raises serious legal and policy issues and may be preempted by federal banking law. The agency asked California to clarify that these banks are not covered as it writes the final rules and enforces them.

California’s regulator, the California Air Resources Board, has published slides and workshop materials describing which companies must report. The materials say the greenhouse gas disclosure program applies to United States businesses with over one billion dollars in annual revenue that do business in California. The materials list banking and finance among affected sectors. They do not list national banks as an excluded group in the summaries cited here.

How the climate-disclosure laws reach banks

California’s framework sets reporting based on size and activity rather than a company’s charter type. The program focuses on corporate greenhouse gas disclosure and climate risk reporting by large companies that operate in California. The state’s materials define a reporting entity by formation in the United States, revenue thresholds, and doing business in the state. This approach sweeps in large banks if they meet those triggers, alongside nonfinancial companies.

Several summaries of compliance carveouts list nonprofits, certain insurance businesses, government entities, majority government-owned companies, and firms whose only state activity is wholesale electricity trades. These summaries, as cited, do not identify national banks or federal savings associations as excluded. That omission, paired with sector lists that include banking, is why the federal banking regulator pressed for a clear exemption or statement from California officials.

Why federal preemption is the core legal question

National-bank preemption is a long-standing doctrine. Courts have held that states cannot pass laws that prevent or significantly interfere with powers granted to national banks by Congress. The Supreme Court has framed this principle in cases such as Barnett Bank. The Office of the Comptroller of the Currency often cites this line of cases when arguing that state rules cannot burden core banking activities or impose oversight that resembles “visitorial powers”.

The @USOCC just told California that two of its climate disclosure laws should not reach national banks.

In a letter to @AirResources, Comptroller Jonathan Gould (@USComptroller) argued the laws would be "inconsistent with OCC regulation and safety and soundness" and would… https://t.co/f09GsqGAsT

— Chris Nobili (@chrisnobili) October 30, 2026

The Office of the Comptroller of the Currency’s letter signals it may formalize a preemption stance if California does not adjust. If the state keeps banks in scope, the next step could be a legal challenge or a federal determination that blocks application to national banks. That path would test whether climate disclosures function like general corporate reporting or unlawfully interfere with banking powers, such as lending, risk management, and nationwide customer relationships.

What this means for customers and the economy

Bank leaders warn that clashing rules raise costs, create legal risk, and may force them to limit products in California or pass costs to customers. Trade coverage says banks fear duplicative reporting systems, conflicts with federal risk models, and pressure on customer data. Those changes could mean fewer lenders, slower credit approvals, or higher fees for families and small businesses. The federal regulator argues that stable and uniform rules help keep credit flowing nationwide.

The shared concern behind the headlines

Many Americans see this as another case of leaders fighting while regular people pay the bill. Supporters of the California rules want stronger climate accountability by large firms. Critics fear a complex mandate that hits consumers through banking costs. Both sides worry about concentrated power and policy made far from the people it affects. Clear, uniform standards would reduce confusion. Transparent rulemaking with public input could protect the climate and the economy at the same time.