Supreme Court to Decide AGs' Power over Banks

The Supreme Court has decided to review a decision by the Second Circuit Court of Appeals that essentially frees national banks from all state scrutiny and pits 50 state attorneys general against the Comptroller of the Currency. The appeals court ruled that four national banks did not have to respond to former New York AG Eliot Spitzer's request for information about their mortgage lending practices. Mr. Spitzer wanted information to determine if they unfairly placed minorities into higher cost mortgages. The circuit judges ruled 2-1 that the AG's action represented an "unlawful exercise of visitorial powers" as defined by the Comptroller and previous court decisions. The circuit judges reaffirmed that state officials are not allowed to investigate or interfere with the business or conduct of national banks. But current New York AG Andrew Cuomo and 49 other AGs contend it is inappropriate to defer to the Comptroller's interpretation of visitorial powers when "sensitive issues of federalism are at stake" involving possible discrimination against citizens of New York. The appeals court also erred by failing to consider the Comptroller's "agency bias and a self-serving preemption agenda," the 49 AGs argue in their filing. The Supreme Court will probably hear arguments in Cuomo v. Clearing House Association this spring. The association represents the four national banks.