First National Bank of Eastern Arkansas v. Taylor
United States Court of Appeals for the Eighth Circuit
907 F.2d 775 (1990)
First National Bank of Eastern Arkansas (First National) (plaintiff) offered its customers debt-cancellation loans, which would be cancelled at the time of the borrower’s death. A federal regulation authorized national banks’ use of debt-cancellation loans. The Arkansas Insurance Department (the department) determined that the debt-cancellation loans were the same as credit-life-insurance policies and therefore were subject to state insurance laws. The department asked First National to stop offering the loans because it was not an insurance company. First National sought a declaration from a federal district court that the department’s authority was preempted by the National Banking Act. However, the department argued that because the debt-cancellation loans were effectively credit-life-insurance contracts, they were under the exclusive authority of the state pursuant to the McCarran-Ferguson Act, which exempts companies in the business of insurance from certain federal regulations. The district court held in First National’s favor, and the department appealed.
Rule of Law
Holding and Reasoning (Lay, C.J.)
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