Supreme Court upholds state enforcement of banking laws
The U.S. Supreme Court has upheld New York’s power to enforce state banking laws against nationally chartered banks.
The U.S. Supreme Court has upheld New York’s power to enforce state banking laws against nationally chartered banks.
Although the case dealt with a dispute over enforcement of New York’s fair-lending laws, the decision is important for investor protection, state securities regulators said.
The decision is “a plus on the state side,” said Fred Joseph, Colorado’s securities commissioner and president of the North American Securities Administrators Association Inc. of Washington.
He said state securities administrators have had a number of disputes with federal banking regulators over attempts to pre-empt state actions.
NASAA filed an amicus brief with the Supreme Court in favor of New York.
The case arose out of a 2005 request from then New York Attorney General Eliot Spitzer to several banks asking for information about lending practices.
The Office of the Comptroller of the Currency and the Clearing House Association LLC of New York, a banking trade group that provides settlement services, filed a lawsuit to stop the state’s inquiry.
The Supreme Court ruled yesterday that while federal banking law prevents states from examining and supervising national banks, it does not prohibit the “ordinary enforcement of state law.”
In a statement, Comptroller of the Currency John Dugan said the OCC is disappointed with the decision but that the banking regulator is committed to working with the states to enforce lending laws.
“We are pleased that the injunction we sought was upheld but are disappointed that the principle of uniformity in national bank enforcement has been breached,” the Clearing House said in a statement.
Spokesmen for the New York attorney general’s office did not immediately respond to requests for comment.
Learn more about reprints and licensing for this article.
