OCC Wins Another Federal Preemption Case
The Second Circuit recently upheld a ruling stating that the OCC is the exclusive enforcer of banking laws for national banks in Clearing House Association, LLC v. Cuomo, 2007 WL 4233358. In 2005, the Attorney General of New York sought non-public mortgage lending information of several national banks to investigate possible violations of anti-discrimination laws. The OCC opposed the AG's investigation on the basis that it has sole visitorial powers over national banks. The lower court ruled in favor of the OCC and was affirmed by the Second Circuit. The court stated that Congress has expressly limited the role of states in regulating national banks "especially when such conduct involves the exercise of powers granted to the banks by federal statute and regulation . . . ."
The Second Circuit did overturn one aspect of the decision. In the lower court the AG unsuccessfully argued that it had the right to access national bank records to enforce the Fair Housing Act. On appeal, the court determined that this issue was not ripe and remanded the decision with instructions to dismiss. It is unclear whether this issue will be revisited.
Post Watters v. Wachovia cases have consistently held in favor of broad federal preemption. This case does not seem to advance federal preemption any further, it is just another affirmation of preemption's reach. All in all its just another brick in the post-Watters v. Wachovia wall. Expect state attorney generals to continue to try to the climb the wall.
