On January 16, the U.S. Supreme Court agreed to hear a case involving the authority of states to examine the lending practices of national banks and their operating subsidiaries. National banks and their operating subsidiaries are regulated by the Office of the Comptroller of the Currency (OCC).
The case arose because of actions by the New York Attorney General’s office begun in 2005. At that time, then state Attorney General Eliot Spitzer began investigating evidence of possible racial discrimination in residential real estate lending by a variety of institutions, including national banks and their operating subsidiaries. According to the Attorney General’s office, data in required Home Mortgage Disclosure Act (HMDA) filings prompted the opening of such investigation.
In connection with the investigation, letters of inquiry were sent from the Attorney General’s office to certain mortgage lenders implicated in the HMDA data, including national banks and their operating subsidiaries. Thereafter, the OCC filed suit to prevent the investigation from continuing with respect to the entities it regulates. Both the U.S. District Court for the Southern District of New York and the U.S. Court of Appeals for the Second Circuit upheld the OCC’s interpretation of 12 USC 484, which provides generally that visitorial powers for national banks are vested exclusively in the OCC. Nonetheless, the Supreme Court, in granting a writ of certiorari, framed the question as follows: “The Office of the Comptroller of the Currency has issued a regulation (12 C.F.R. § 7.4000) interpreting § 484(a) to preempt state enforcement of state laws against national banks, even when the state laws are not substantively preempted.”
The case is set for expedited briefing.