Federal credit unions could be subject to additional subpoenas for information from state attorneys general as a result of a U.S. Supreme Court decision issued last week.
The high court ruled that federal law-specifically the National Bank Act-can't be used to block or pre-empt state enforcement of state laws, even if that means additional regulatory burdens for federally chartered financial institutions.
In his majority opinion, Justice Antonin Scalia wrote that the action being challenged-a request by then-New York Attorney General Eliot Spitzer for information about the lending practices of several national banks-didn't interfere with the rights given to the federal government under the National Bank Act.
Scalia wrote that Spitzer wasn't exercising supervisory authority (which is reserved for the federal government) but was acting as a law enforcer.
CUNA General Counsel Eric Richard said, “To the extent that state attorneys general feel they need to get information from federal credit unions, this gives federal credit unions less leeway.”
“Fortunately, credit unions generally don't engage in the type of practices attorneys general usually get concerned about,” he said. “The portions of the National Bank Act that were referenced in the opinion are broader than similar portions of the Federal Credit Union Act.”
NAFCU Associate Director of Regulatory Affairs Dillon Shea said in a statement that the court's 5-4 decision is “interesting given its importance on the issue of pre-emption.” He added that his association is reviewing the ruling to see what impact it has on the laws and regulations governing federal credit unions.
Justice Clarence Thomas wrote the minority opinion, which concurred in part and dissented in part.
He wrote that the federal government's “visitorial powers,” which include the right to examine banks, are subject to several meanings. But he concluded the interpretation of the law by the Office of the Comptroller of the Currency (which regulates national banks) was appropriate in this case.
The lawsuit was filed by The Clearing House Association, a bank trade association, and the Office of the Comptroller of the Currency.
–[email protected]
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