High Court Rules States Have Power to Police National Bank Lending
The U.S. Supreme Court has ruled that federal law does not preclude states from suing over discriminatory lending practices of national banks.
Justice Antonin Scalia wrote the majority opinion in the case, and was joined by liberal Justices Ruth Bader Ginsburg, David H. Souter, John Paul Stevens and Stephen G. Breyer, SCOTUSblog reports.
The Office of the Comptroller of the Currency had argued that the National Bank Act prevents states from examining lending practices of national banks suspected of charging higher mortgage interest rates to minorities. In an opinion turning on statutory construction and Supreme Court precedent, Scalia found no pre-emption of state efforts.
At issue, Scalia wrote, is whether a regulation purporting to bar state law enforcement efforts is a reasonable interpretation of the National Bank Act. A provision in the federal law bars federal banks from being subjected to “visitorial powers.” Scalia said the phrase, although slightly ambiguous, did not include a ban on ordinary enforcement of state law. Regulations purporting to pre-empt such state actions went too far, he wrote.
“We can discern the outer limits of the term ‘visitorial powers’ even through the clouded lens of history. They do not include, as the Comptroller’s expansive regulation would provide, ordinary enforcement of the law,” Scalia said in today’s opinion (PDF).
“Our cases have always understood ‘visitation’ as this right to oversee corporate affairs, quite separate from the power to enforce the law,” Scalia said.
The opinion said New York Attorney General Andrew Cuomo may bring court enforcement actions, but is barred from issuing subpoenas apart from enforcement suits.
The case is Cuomo v. The Clearing House Association.
