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News Tips

Professor available to discuss Supreme Court's discriminatory lending decision

FOR IMMEDIATE RELEASE
June 29, 2009

The U.S. Supreme Court today (June 29) issued a 5-4 ruling on Cuomo v. the Clearing House Association confirming that states have the power to enforce state laws against national banks, including laws that prohibit discriminatory lending practices.

Sarah Jane Hughes, university scholar and fellow in commercial law at the Indiana University Maurer School of Law, is available to comment on the ruling.

"The U.S. Supreme Court today issued a long-awaited opinion in a case involving New York's attempt to enforce its fair-lending laws against national banks," she said. "In the narrow opinion, the court distinguished between the right to engage in 'visitation' or ongoing inspection of books and the separate right to enforce laws in a legal proceeding. It held that the New York attorney general's office was fully within its rights to take a national bank to court to enforce the state's fair-lending laws, but it cannot inspect the banks' books as a routine matter."

According to Hughes, the ruling is very good news for states and consumers, but a slight setback for the Office of the Comptroller of the Currency. "It's a win for states in some respects, but it's not everything they wanted. Historically, there has always been tension between the federal and state governments about what national banks and other federally chartered depositary institutions can do, who can inspect their books, and who can take them to court. This is the most recent chapter in a complicated issue that goes all the way back to the McCullough v. Maryland ruling in 1819," she explained. "The National Banking Act gives primary visitorial powers to the Comptroller, but it does not take away the state's right to enforce its laws."

"It will be incredibly interesting to see how this opinion shapes President Obama's new regulatory plan," she added.

Hughes is a nationally recognized expert on payment systems; public and private methods to deter, detect, and prosecute domestic and international money laundering; and consumer protection and financial privacy. She can be reached at sjhughes@indiana.edu.

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