The Office of The Comptroller of the Currency lost a battle to protect national banks at the expense of states and the consumer. This is a major win for consumer protection, and a loss for the banks.
In a surprising 5-4 vote, the Supreme Court ruled that national banks are still subject to the laws of the states they operate in. What made the ruling unusual is that Justice Scalia wrote the opinion and the other four conservative judges were in dissent (Roberts, Thomas, Alito and the normal swing vote Kennedy).
The ruling overturned an appeals court ruling that said that state attorney generals cannot investigate banks if they operate in more than one state.
The case in question involved the enforcement of fair lending laws in N.Y. State, specifically allegations that some banks were charging minorities higher interest rates. Instead, even though these are state laws, the appeals court had said that only the Office of the Comptroller of the Currency (OCC) had the power to investigate. In practice, this means that the laws were null and void, since the OCC is worthless on such issues.
With this Supreme Court ruling the states are free to investigate HSBC and all of HSBC’s holding companies.
Perhaps the OCC could have prevailed with their “protection” argument if the OCC actually regulated something prior to the subprime debacle and financial crisis. Such was not the case.
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