In Another Blow to Federal Preemption, States Can Enforce Unfair Lending Laws Against National Banks

July 2009

By: Matthew I. Kaplan and Anne Swoboda Cruz

The United States Supreme Court has again clawed back the breadth of federal preemption in the 2008-2009 term. On June 29, 2009, the Court issued a decision in Cuomo v. Clearing House Association, L.L.C., et al., 08-453, 2009 WL 1835148, ruling that while states cannot conduct oversight investigations of national banks under the National Bank Act, states can sue to enforce their own laws. The Supreme Court also rejected regulations issued by the Office of the Comptroller of the Currency (“OCC”) in favor of an expansive reading of state power, stating they do “not comport with the statute.” This result falls in line with the current era of increased scrutiny on banking practices and the Obama Administration’s push to revise and increase the regulation of the financial services industry.   Read more...

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