Cuomo v. Clearing House Association: SupremeCourt Holds Invalid the OCC’s Prohibition of State Enforcement of Applicable State Laws; States May Bring Judicial Enforcement Actions Against National Bank

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Ober, Kaler, Grimes & Shriver | www.ober.com

Banking Law Alert

July 2, 2009

Cuomo v. Clearing House Association

SupremeCourtHoldsInvalidtheOCC’sProhibitionofStateEnforcementof

ApplicableStateLaws;StatesMayBringJudicialEnforcementActionsAgainst

NationalBanks



Inarulingthatsurprisedmany,onJune29,2009,theU.S.SupremeCourtreversedthe

CourtofAppealsfortheSecondCircuitandheldthattheOfficeoftheComptrollerof

theCurrency’s(“OCC”)regulationpreemptingstatelawenforcementofapplicablestate

lawsagainstnationalbankstobeinvalidasfarasastate’sprosecutionofenforcement

actionsagainstnationalbanks.Cuomov.ClearingHouseAssociation,L.L.C.,Et.Al.,557

U.S.____,Slip.Op.No.08‐453(2009).Indoingso,theCourtmadeadistinctionbetween

asovereign’s“visitorialpowers”anditspowertoenforcethelaw,andruledthatthe

NationalBankAct’s(“NBA”)prohibitionon“visitorialpowers”doesnotprohibit

“ordinaryenforcementofstatelaw.”However,suchenforcementislimitedto

enforcementpursuanttofilingsuitinacourtoflaw,anddoesnotextendtothestate’s

investigationofnationalbanksotherthanpursuanttoalawsuit,suchasissuing

subpoenasforinformationtonationalbankswithoutcourtapproval.



TheCuomocaseresultedfromtheefforts,beginningin2005,oftheNewYorkAttorney

General’s(thenElliotSpitzer,currentlyAndrewCuomo)attemptstoinvestigatecertain

nationalbanksforpotentialviolationsofanti‐discriminationlawsbasedonpurported

racialdisparitiesapparentindatathebanksmadepublicpursuanttothefederalHome

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