States Can Now Enforce Their Fair Lending Laws

Some news from The United States Supreme Court, Supreme Court Allows States to Enforce Fair-Lending Laws

A sharply divided U.S. Supreme Court has ruled that states can enforce their consumer protection and fair-lending laws against national banks.

Writing the 5-4 majority opinion, Justice Antonin Scalia said the federal National Bank Act does not prevent ordinary enforcement of state law.

His ruling affirms in part and reverses in part an appellate decision in favor of the federal Office of the Comptroller of the Currency in a lawsuit concerning former New York Attorney General Eliot Spitzer's investigation into alleged lending discrimination.

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Justice Scalia said the question at issue is whether the OCC's regulation preempting state law enforcement could be upheld as a reasonable interpretation of the National Bank Act.

The regulation cannot be upheld because a state's sovereign visitorial powers and its power to enforce the law are two different things, he said. The National Bank Act preempts the former but does not preempt the ordinary enforcement of state law.

When a state attorney general sues a national bank to enforce a state law, he or she is not acting as a supervising sovereign rather than as a law-enforcing sovereign, Justice Scalia said.

Thus, such a lawsuit is not an exercise of visitorial powers, the majority held.

Now let us see how much the states do.