Court Upholds OCC on Pre-emption

The U.S. District Court for the Southern District of New York has ruled that the Office of the Comptroller of the Currency was correct in asserting that federal law prevents states from enforcing non-pre-empted state laws that affect banking activities of national banks.The case, Office of the Comptroller of the Currency v. Eliot Spitzer, along with The Clearing House Association v. Spitzer lawsuit, was brought when the attorney general of New York sought lending data from national banks after an analysis of 2004 Home Mortgage Disclosure Act data. The AG began a fair-lending investigation into the practices of certain banks, such as Citibank, Wells Fargo, HSBC, and J.P. Morgan Chase. The cases raised the question of whether, and in what circumstances, state authorities can exercise "visitorial powers" to enforce state laws. Greg Berardi, spokesman for the CHA, said the decision was thorough and conclusive. "It strongly supports The Clearing House's position that the OCC is the legally authorized oversight authority for national banks." Edward Yingling, president and chief executive officer of the American Bankers Association, said the decision is expected to have a far-reaching impact. "It's important to remember 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," he said. A spokesman for the AG's office said Mr. Spitzer plans to appeal the decision.