WASHINGTON — The Supreme Court heard arguments on Tuesday in a case that could change the way big banks are regulated.
In the case, Cuomo v. the Clearing House Association, federal and state regulators have squared off over which part of the government should serve as the nation’s watchdog for national banks. The case began four years ago, when Eliot Spitzer, New York’s attorney general at the time, questioned why some national banks seemed to be making a disproportionate number of high-interest home mortgage loans to black and Hispanic borrowers.
The fight involves fundamental issues of federalism and consumer protection, and, should the court decide for Mr. Cuomo’s position, could open new powers of regulation to the states.
Mr. Spitzer was trying to enforce New York’s antidiscrimination laws, but he ran up against federal precedent that tended to leave regulation of national banks to the Treasury Department, and, specifically, the Office of the Comptroller of the Currency. A consortium of banks sued Mr. Spitzer, and so did the Office of the Comptroller of the Currency.
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I think this can be resolved by simply allowing State or Federal, which ever can offer maximum regulation to it's depositors, Serve as the Nation's Watchdog for National Banks.
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