Insight Center: Publications

Pennsylvania Changes its Banking Law: Why Does it Matter?

Client Alert


On October 25, 2012, Pennsylvania Gov. Tom Corbett signed into law a series of bills that legislators hope will modernize Pennsylvania’s banking laws. The amendments take effect on December 26, 2012.

House Bills 2368, 2369 and 2370 (the New Banking Law) intend to modernize Pennsylvania banking law by improving the viability of Pennsylvania-chartered banks and savings banks and furthering Pennsylvania’s competitive banking position to ensure that it is an increasingly appealing destination for banking institutions.

Examples of changes include:

  1. the insertion of mandatory Dodd-Frank lending limit language and the clarification that all consumer lending interest rates and fees are deregulated
  2. increased transparency with respect to violations of banking law, resulting from amendments to 71.P.S. 733-1 et seq. relating to maintaining confidentiality of enforcement proceedings, and
  3. repealing the requirement contained in the Loan Interest and Protection Law that required a Pennsylvania state law disclosure in addition to the required federal disclosure as it relates to adjustable rate mortgages.

Other changes contained in the New Banking Law include:

  • language providing for the right of rescission and the prohibition on waivers of certain provisions contained in the Federal Truth in Lending Act
  • new standards for liability for directors and officers of financial institutions and the financial institutions themselves, including suspending or fining individuals or institutions for wrongdoing, and
  • inserting the term “subsidiary” into provisions relating to the Department of Banking’s authority to demonstrate that it has authority, including examination authority, over bank subsidiaries.

We understand that the Department of Banking plans to issue a letter from the Secretary summarizing the New Banking Law, but does not plan to issue regulations regarding the provisions. The text of the New Banking Law can be found at the Pennsylvania General Assembly’s Web site by searching “HB 2368,” “HB 2369” and “HB 2370”:

Soon, we will publish a more detailed alert on the New Banking Law for our clients and friends, and we are planning a webinar on the changes that the New Banking Law makes to Pennsylvania law, including the new director and officer liability standard, and the advantages of converting from a federal banking charter to a Pennsylvania state banking charter.

Frank A. Mayer, III and Andrew R. Mavraganis

The material in this publication was created as of the date set forth above and is based on laws, court decisions, administrative rulings and congressional materials that existed at that time, and should not be construed as legal advice or legal opinions on specific facts. The information in this publication is not intended to create, and the transmission and receipt of it does not constitute, a lawyer-client relationship.