State regulators cannot interfere with the mortgage banking subsidiaries of national banks, according to a U.S. Supreme Court ruling that upholds the comptroller of the currency's exclusive authority over national banks and their subsidiaries.The 5-3 decision in Watters v. Wachovia Bank is a resounding defeat for state attorneys general and banking regulators who wanted to reassert their powers in providing consumer protection and regulating national bank subsidiaries. "The Conference of State Bank Supervisors is deeply disappointed," CSBS president Neil Milner said. "We see it as a setback for financial consumers and state efforts to battle predatory lending, abusive mortgage lending practices, and mortgage fraud." Comptroller John Dugan welcomed the decision, which culminates a long legal battle with the states. "We are pleased that the court's decision supports the ability of national banks to continue to conduct business activities through their operating subsidiaries as they are now doing," he said.
