Payment of Interest on Escrow Accounts

We are an OCC regulated bank in NY. We currently comply with NYS Banking Law, which require us to pay interest on escrow accounts. Someone in senior management does not think this is required because we are OCC regulated.

I thought that state law regardless of who you are regulated by supercedes other laws if the state requires more? Is this true?

If this is indeed the case, can you point me to a source that can help me? I need to find support other then what I have found so far...

Thanks,
Jenny

The OTS issued a legal opinion that said that the OTS occupies the field of lending for federal savings associations. This meant that the federal savings association does not need to comply with any state laws regarding lending activities. It doesn't matter if the state law provided more protection. I believe the OCC came out with a rule in 2004 regarding preemption. Here is a link to a January 2004 Reed Smith article that may lead you to the information you need. http://www.reedsmith.com/_db/_documents/bull0401.pdf

OCC Banks are not required to pay interest on escrow accounts, while we state chartered banks are required to pay interest. We are hoping the "Wild Card" law with the help of our Banking organizations to allow state chartered to compete on a level field.