Supreme Court Decides Preemption -- States Can Probe National Banks
In a highly anticipated decision, a divided U.S. Supreme Court authorized states to investigate national banks for lending discrimination, thus rejecting the OCC's position that its regulatory authority preempted states' enforcement powers. In the 5-4 opinion authored by Justice Scalia, the high court in Cuomo v. Clearing House Association, LLC held that federal banking regulations did not pre-empt states from enforcing their own fair-lending laws.
The ruling decided a dispute between the OCC and the
CNN reported the mixed reactions to the ruling. The American Bankers Association issued a statement contending that the ruling "changes over 140 years of settled law," and expressed concern that national banks will "face a patchwork of duplicative and conflicting federal and state regulation and enforcement actions." On the other hand, current New York Attorney General Cuomo said the ruling "reaffirms the vital role state attorneys general play in protecting consumers from illegal and improper practices by our country's biggest and most powerful banks." Similarly, the Lawyers' Committee for Civil Rights Under Law applauded the decision, stating in a press release that the the decision "will unshackle the oversight muscle of state attorneys general whose attempts to enforce fair lending laws against national banks were thwarted when most needed."
