Released: April 18, 2007

States can’t regulate national bank mortgage subsidiaries

Source: Robert Barnes and Dina ElBoghdady, Washington Post (Free Registration)

The Supreme Court ruled yesterday that states may not regulate the mortgage-lending subsidiaries of national banks, in a case that pitted all 50 states and consumer groups against banks and their federal overseers.

The national banks had argued that their subsidiaries were subjected to an unduly burdensome patchwork of state rules and regulations when Congress had made it clear they should be regulated by the U.S. Office of the Comptroller of the Currency (OCC). The states had argued that their role was lawful and necessary to protect consumers from predatory lending practices and other potential violations.

“We have repeatedly made clear that federal control shields national banking from unduly burdensome and duplicative state regulation,” Justice Ruth Bader Ginsburg wrote in an opinion joined by Justices Samuel A. Alito Jr., Stephen G. Breyer, Anthony M. Kennedy and David H. Souter.

Read Full Article: States can’t regulate national bank mortgage subsidiaries