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Monday, June 29, 2009

National Bank Act does not prevent state enforcement: Supreme Court
Andrew Morgan at 11:51 AM ET

[JURIST] The US Supreme Court [official website; JURIST news archive] on Monday ruled [opinion, PDF] 5-4 in Cuomo v. Clearing House Association [Cornell LII backgrounder; JURIST report] that the National Bank Act (NBA) [12 USC § 484(a) text] and 12 CFR § 7.4000 [text] do not prevent a state from enforcing fair lending laws against national banks. The Office of the Comptroller of Currency (OCC) [official website] had interpreted § 484(a) defining "visitorial powers" to preempt state enforcement of state laws against national banks, and brought suit to prevent the New York Attorney General [official website] from seeking the voluntary release of bank information under threat of subpoena. Finding that visitorial powers "include any form of administrative oversight that allows a sovereign to inspect books and records on demand," the Court found that when:


a state attorney general brings suit to enforce state law against a national bank, he is not acting in the role of sovereign-as-supervisor, but rather in the role of sovereign-as-law-enforcer. Such a lawsuit is not an exercise of "visitorial powers" and thus the Comptroller erred by extending the definition of "visitorial powers" to include "prosecuting enforcement actions" in state courts.

The Court also found that the executive authority to issue subpoenas granted to the Attorney General by New York Executive Law § 63 [text] was not an enforcement power "vested in the courts of justice" as required by the NBA, and therefore upheld part of a lower court injunction preventing the issuance of executive subpoenas, while allowing the commencement of judicial proceedings.

The Clearing House Association [industry website], a banking trade group, and the OCC brought suit after then-New York attorney general Elliot Spitzer [JURIST news archive] sent "letters of inquiry" "in lieu of subpoenas" to banks operating in New York. Spitzer was seeking to determine if mortgage data released by the Federal Reserve [official website] in 2005, showing a that minority borrowers had disproportionately high percentage of high-interest home mortgage loans, showed that banks had violated state consumer protection and anti-discrimination laws.





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