Statute, Court Case Stir OCC Debate

The use of a federal statute and a 1984 court case regarding the OCC's visitorial powers over national banks in recent court cases involving Wells Fargo and Wachovia were key topics of debate Sept. 7 in a New York federal courtroom.In the OCC and the Clearing House Association v. New York Attorney General Eliot Spitzer, U.S. District Judge Sydney Stein questioned attorneys from both sides as to whether the outcome of the cases spell trouble for the AG. "The use of [Chevron v. Natural Resources Defense Council (1984)] in the Second Circuit says federal law pre-empts state regulatory authority over a subsidiary," Judge Stein said. In its final rule, the Office of the Comptroller of the Currency has said that no national bank is subject to visitorial powers except as authorized by federal law. Dietrich Snell, deputy attorney general of New York, argued that federal Section 484 does not preclude the AG's fair-lending investigation of the 2004 Home Mortgage Disclosure Act data. Mr. Spitzer has maintained that data from Citibank, Wells Fargo, HSBC, and J.P. Morgan Chase show that minority borrowers are more likely to receive higher-interest loans that whites. "The action of a supervised state officer is to regulate and manage the business activity of banks," said Mr. Snell. "Based on what the courts have said, it's very clear that there is a safe harbor for the activity the attorney general wants to pursue."