National bankers today hailed a ruling that upholds the federal government’s role as the primary regulator of national banks.
In Office of the Comptroller of the Currency v. Eliot Spitzer, the U.S. district court for the southern district of New York ruled that the OCC was correct in asserting that federal law prevents states from enforcing non-preempted state laws that impact banking activities at national banks.
The OCC case, along with another lawsuit, The Clearinghouse Association v. Eliot Spitzer, was brought when New York Attorney General Eliot Spitzer sought to obtain lending data from national banks. These cases raised the question of whether and in what circumstances state authorities can exercise “visitorial powers” to enforce state laws.
Brad Maione, spokesperson for Spitzer’s office, said he would appeal the decision.
“Today’s decisions validate the OCC’s position as the primary regulator for national banks. Their impact will be far reaching. Not only do the decisions address whether a state attorney general can exercise its visitorial powers over national banks, they affirm the OCC’s preemption regulations,” commented Edward L. Yingling, president and CEO, American Bankers Assocition, in a statement.
“It’s important to remember that these cases did not question the applicability of a state’s consumer protection laws to national banks; they simply answered the question of who can and should enforce the laws,” Yingling added.
In the OCC decision, the court writes: “The OCC has read…the limitation on visitorial powers in light of the basic objectives of the National Bank Act: to create a uniform system of national banks, comprehensively and exclusively regulated by federal law. The available legislative history does not contravene the OCC’s conclusion that even as states are free to enact legislation substantively governing national banks’ banking activity, the enforcement of those laws is properly vested in the OCC, not in state officials.”
Spitzer was looking into the fairness of interest rates being charged to minority homeowners and trying to enforce the state’s fair lending laws against the national banks. But the OCC and The Clearinghouse argued that he had no such authority to interfere with what is esentially their responsibility under the federal Fair Housing Act.
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