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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About Tom Lindmark 401 Articles

I’m not sure that credentials mean much when it comes to writing about things but people seem to want to see them, so briefly here are mine. I have an undergraduate degree in economics from an undistinguished Midwestern university and masters in international business from an equally undistinguished Southwestern University. I spent a number of years working for large banks lending to lots of different industries. For the past few years, I’ve been engaged in real estate finance – primarily for commercial projects. Like a lot of other finance guys, I’m looking for a job at this point in time.

Given all of that, I suggest that you take what I write with the appropriate grain of salt. I try and figure out what’s behind the news but suspect that I’m often delusional. Nevertheless, I keep throwing things out there and occasionally it sticks. I do read the comments that readers leave and to the extent I can reply to them. I also reply to all emails so feel free to contact me if you want to discuss something at more length. Oh, I also have a very thick skin, so if you disagree feel free to say so.

Enjoy what I write and let me know when I’m off base – I probably won’t agree with you but don’t be shy.

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