NYC Predatory Law Ruled Invalid

New York City's anti-predatory-lending law was invalidated in a decision issued Monday by a Manhattan Supreme Court judge.Justice Michael D. Stallman, who permanently enjoined enforcement of Local Law 36, said the law is regulatory and therefore pre-empted by state and federal laws governing the banking industry. The plaintiffs argued that state banking law amply protects borrowers, because it imposes severe penalties for predatory lending practices -- the very conduct also targeted by Local Law 36 -- and in addition gives borrowers substantial legal rights and defenses in the face of unlawful high-cost home loans. Thomas L. McMahon, general counsel for the New York City Council, said the law "was not enacted as a regulatory measure, but as an exercise of the city's fundamental right to decide whom we do business with." The council is reviewing the decision, and over the next few days it will decide whether to appeal.