The Wealth Effects of Preemption Announcements by the Office of the Comptroller of the Currency after the Passage of the Georgia Fair Lending Act

In 2004 the Office of the Comptroller of the Currency (OCC) concluded that federal law preempted anti-predatory lending statutes in Georgia and other states. The OCC asserted that preemption reduces compliance costs especially for smaller, multistate banking companies. Opponents countered that preemption disadvantages state banks endangering the dual banking system. Event study evidence is consistent with the OCC's assertion, but there is little support for the notion that preemption significantly disadvantages state bank-dominated companies. In fact, the excess returns of smaller state bank-dominated companies are generally positive and do not differ significantly from comparable national bank-dominated companies.