WASHINGTON, DC – Following today’s decision at the Supreme Court in Cantero v. Bank of America, a case in which the Court was considering whether a state law protecting New York homeowners is preempted by the federal National Banking Act, Constitutional Accountability Center Appellate Counsel Smita Ghosh issued the following reaction:

For nearly five decades, New York state law has protected homeowning New Yorkers by requiring mortgage lenders to share the profits earned by interest-generating mortgage escrow accounts. Today, the Supreme Court unanimously rejected a Second Circuit decision that sanctioned Bank of America’s effort to circumvent this law, reiterating the long-established rule that state laws should only be preempted if they significantly interfere with the operations of a national bank.

The Court clearly reached the right result today. As CAC’s amicus brief in this case made clear, states have regulated the banks within their borders—including national banks—since the passage of the National Banking Act during the Civil War. Indeed, the so-called dual banking system, in which states and the federal government each participate in bank chartering and regulating, has been seen as promoting, in the words of former Comptroller of the Currency John Hawke, “competition, federalism, and freedom of choice.”

Today’s decision is a victory for America’s consumers, and it is also a victory for honest textualism. As Justice Kavanaugh’s opinion recognized, Congress specifically mandated that state laws should only be preempted in their application to national banks when they “significantly interfere” with banks’ performance of public functions. Bank of America attempted to get around that text, proposing a rule that would have made it much harder for states to regulate national banks. The Court was right to reject it.

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Resources:

Case page in Cantero v. Bank of America: https://www.theusconstitution.org/litigation/cantero-v-bank-of-america/

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Constitutional Accountability Center is a nonpartisan think tank and public interest law firm dedicated to fulfilling the progressive promise of the Constitution’s text, history, and values. Visit CAC’s website at www.theusconstitution.org.

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