Supreme Court decision and President’s proposal give states more power
By Consumers Union on Wednesday, July 1st, 2009
The U.S. Supreme Court issued a decision this week in Clearing House Association v. Cuomo which overturns the Office of the Comptroller of the Currency’s interpretation that the National Bank Act preempts state enforcement against possible predatory mortgage lending by national banks.
The Cuomo case began in 2005, when the New York Attorney General launched an investigation into potential discrimination by national banks under New York’s anti-predatory lending laws. Mortgage lending data indicated that national banks had issued a significantly higher percentage of high-interest predatory loans to African-American and Hispanic borrowers than to white borrowers. The OCC went to court to stop the New York Attorney General’s investigation under the theory that the National Bank Act and subsequent Bush administration rules preempted such state efforts. Consumers Union joined an amicus brief filed by the Center for Responsible Lending, arguing against this theory in favor of states’ rights to enforce their own laws.
The case is important because it opens a door for states to play an important role in reigning in abusive practices by national banks.
• Grants state attorneys general the power to enforce consumer financial law.
• Ensures that state consumer protections be applied to national banks.
• Makes federal law the floor so that states’ can enact stronger laws.