WASHINGTON, DC – Following oral argument at the U.S. Supreme Court this morning in Cantero v. Bank of America, a case in which the Court is considering whether a state law protecting New York homeowners is preempted by the federal National Banking Act, Constitutional Accountability Center (CAC) 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 Bank of America asked the Supreme Court to exempt it from that requirement, arguing that this state law is preempted by the National Banking Act.

As CAC’s amicus brief in this case made clear, this argument is at odds with history, as well as the Supreme Court’s own precedent. Significantly, 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 national values of competition, federalism, and freedom of choice. A ruling on behalf of Bank of America would run counter to this long history.

A ruling on behalf of Bank of America would also run counter to the statutory text at issue. That text instructs that state laws should only be preempted in their application to national banks when they “significantly interfere” with banks’ performance of public functions. While Bank of America’s counsel pushed back on that standard and sought a presumption that certain laws are preempted, that argument runs headlong into the text of the statute, as Justices Gorsuch and Jackson told the Bank’s lawyer today.

Bank of America’s argument, if accepted, would undermine state efforts to protect homeowners and consumers within their borders. Fortunately, neither law nor history is on Bank of America’s side.

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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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