National Banks Now Have to Answer to the States

As if banks didn’t have enough on their plate with multiple regulators, the Supreme Court just gave them 50 more to deal with. The Supremes ruled that federally chartered banks were indeed subject to state laws and that an attorney general could take them to court to enforce those laws.

From the NYT:

The justices ruled that a state attorney general could not on his own issue a subpoena against a bank that has branches in that state and others. But the court said that national banks were subject to some state laws under the National Banking Act, and that an attorney general could go to court to enforce those laws.

”What this decision today says is that states have the ability to enforce their own laws as long as they follow state due process procedures, which generally mean issuance of a subpoena which can be challenged in court,” said John Cooney, a former assistant solicitor general and deputy general counsel at the Office of Management and Budget.

I’m going to resist the temptation to go on at lengths about this decision. Suffice it to say that I generally consider most attorneys general to be publicity seeking governors in waiting. They tend to grandstanding and seem quite adept at extorting significant sums of money out of business in order to bolster their state treasuries and their own self-image.

Defending banks is an unpopular sport these days, but I don’t think they need 50 sets of statutes around which to develop a business mode. The temptation of local politicians to shape laws that benefit parochial self-interest at the expense of national self-interest is great and given a juicy target like banks one that will be hard to resist. There’s a reason we have a commerce clause in the Constitution. It’s unfortunate that the Supreme Court has elected to ignore it.

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