Editing Gramm–Leach–Bliley Act (section)

==Effect on usury law==
Section 731 of the GLB, codified as subsection (f) of {{usc|12|1831u}}, contains a unique provision aimed at [[Arkansas]], whose [[usury]] limit was set at five percent above the [[Discount window|Federal Reserve discount rate]] by the [[Arkansas Constitution]] and could not be changed by the [[Arkansas General Assembly]]. When the [[Office of the Comptroller of the Currency]] ruled that interstate banks established under the [[Riegle–Neal Interstate Banking and Branching Efficiency Act of 1994]] could use their home state's usury law for all branches nationwide with minimal restrictions,<ref>{{cite web|url=http://www.occ.gov/interp/mar98/int822.pdf|title=Licensing: Interpretations and Actions|date=29 December 2010|website=www.occ.gov|access-date=4 May 2018|url-status=live|archive-url=https://web.archive.org/web/20100528142716/http://www.occ.gov/interp/mar98/int822.pdf|archive-date=28 May 2010}}</ref> Arkansas-based banks were placed at a severe competitive disadvantage to Arkansas branches of interstate banks; this led to out-of-state takeovers of several Arkansas banks, including the sale of First Commercial Bank (then Arkansas' largest bank) to [[Regions Financial Corporation]] in 1998.

Under Section 731, all banks headquartered in a state covered by that law may charge up to the highest usury limit of any state that is headquarters to an interstate bank which has branches in the covered state. Therefore, since Arkansas has branches of banks based in [[Alabama]], [[Georgia (U.S. state)|Georgia]], [[Mississippi]], [[Missouri]], [[North Carolina]], [[Ohio]], and [[Texas]],<ref>{{cite web |url=http://www.arkansas.gov/bank/authority.html |title=Out of State Banks |access-date=2008-10-23 |url-status=live |archive-url=https://web.archive.org/web/20081210180908/http://www.arkansas.gov/bank/authority.html |archive-date=2008-12-10 }}</ref> any loan that is legal under the usury laws of any of those states may be made by an Arkansas-based bank under Section 731. The section does not apply to interstate banks with branches in the covered state, but headquartered elsewhere; however, Arkansas-based interstate banks like [[Arvest Bank]] may export their Section 731 limits to other states.

Due to Section 731, it is generally regarded that Arkansas-based banks now have no usury limit for [[credit card]]s or for any loan of greater than $2,000 (since Alabama, Regions' home state, has no limits on those loans), with a limit of 18% (the minimum usury limit in Texas) or more on all other loans.<ref>{{cite web |url=http://www.arkbar.com/Ark_Lawyer_Mag/Articles/UsuryWinter04.html |title=Arkansas Bar Association &#124; Publications |access-date=2008-10-23 |url-status=dead |archive-url=https://web.archive.org/web/20090109212056/http://www.arkbar.com/Ark_Lawyer_Mag/Articles/UsuryWinter04.html |archive-date=2009-01-09 }}</ref> However, once [[Wells Fargo]] fully completed its purchase of Century Bank (a Texas bank with Arkansas branches), Section 731 did away with all usury limits for Arkansas-based banks since Wells Fargo's main bank charter is based in [[South Dakota]], which repealed its usury laws many years ago.

Though designed for Arkansas, Section 731 may also apply to [[Alaska]] and [[California]] whose constitutions provide for the same basic usury limit, though unlike Arkansas their legislatures can (and generally do) set different limits. If Section 731 applies to those states, then all their usury limits are inapplicable to banks based in those states, since Wells Fargo has branches in both states.