Cuomo v. Clearing House Association: SupremeCourt Holds Invalid the OCC’s Prohibition of State Enforcement of Applicable State Laws; States May Bring Judicial Enforcement Actions Against National Bank

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In a ruling that surprised many, on June 29, 2009, the U.S. Supreme Court reversed the

Court of Appeals for the Second Circuit and held that the Office of the Comptroller of

the Currency’s (“OCC”) regulation preempting state law enforcement of applicable state

laws against national banks to be invalid as far as a state’s prosecution of enforcement

actions against national banks. Cuomo v. Clearing House Association, L.L.C., Et. Al., 557

U.S. ____ , Slip. Op. No. 08-453 (2009). In doing so, the Court made a distinction between

a sovereign’s “visitorial powers” and its power to enforce the law, and ruled that the

National Bank Act’s (“NBA”) prohibition on “visitorial powers” does not prohibit

“ordinary enforcement of state law.” However, such enforcement is limited to

enforcement pursuant to filing suit in a court of law, and does not extend to the state’s

investigation of national banks other than pursuant to a lawsuit, such as issuing

subpoenas for information to national banks without court approval. Penny Somer-Greif of Ober|Kaler discusses.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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