(July 14, 2009) On June 29, 2009, the U.S. Supreme Court ruled that state governments are not preempted by the National Bank Act (NBA) from enforcing state law against national banks in judicial proceedings.
The NBA, enacted in 1864, provides that national banks will not “be subject to any visitorial powers except as authorized by Federal law.” Under this authority, the federal Office of the Comptroller of the Currency (OCC) issued regulations that barred states from enforcing state laws against national banks. The New York Attorney General issued letters “in lieu of subpoena” to certain national banks requesting information about their lending practices. The OCC and a banking trade group brought suit to enjoin the request for information, arguing that under the NBA and OCC regulations, only the federal government could pursue this type of inquiry. The federal district court agreed and issued an injunction. The U.S. Court of Appeals for the Second Circuit affirmed the injunction.
The Supreme Court ruled that the NBA provision preempting states from exercising “visitorial powers” over national banks was ambiguous, and thus any reasonable interpretation of this statute by the OCC would be entitled to deference. However, the Court ruled that the OCC's regulation under the NBA, by preempting all state enforcement powers over national banks, was not reasonable. It said that the NBA's reference to “visitorial powers” entails the power to examine a bank's corporate records at any time for any reason, but does not cover states' power to enforce their laws by filing lawsuits. The Court held that the New York Attorney General's letters sent in lieu of a subpoena were properly enjoined, because these information requests were issued outside the context of a judicial enforcement action, but the Court said that New York could bring a lawsuit against the banks and seek information through discovery and civil procedure rules. (Cuomo v. Clearing House Association, L.L.C., No. 08-453 (June 29, 2009), available at http://www.supremecourtus.gov/opinions/08pdf/08-453.pdf.)