( Clearing House Association ), in which the Supreme Court, in a five-to-four decision announced on June 29, 2009, ruled that the National Bank Act (NBA) does not preempt states from bringing judicial actions against national banks to enforce non-preempted state anti-discrimination laws, and by implication state consumer protection laws, as long as the state authorities do not encroach on the visitorial powers of the national bank regulator, the Office of the Comptroller of the Currency (OCC). The Court ruled that administrative subpoenas or other forms of administrative oversight or examination are included in visitorial powers and, thus, are not available as state enforcement tools. In that case, the Court ruled that state licensing and regulation could not be applied to a real estate subsidiary of a national bank. The Court relied on the express language of the visitorial powers clause of the NBA, 12 U.S.C. The New York AG challenged OCC's regulatory interpretation of the visitorial powers clause of the NBA, which states:
(a) No national bank shall be subject to any visitorial powers except as authorized by Federal law, vested in the courts of justice or such as shall be, or have been exercised or directed by Congress or by either House thereof or by any committee of Congress or of either House duly authorized. The implementing regulation is 12 C.F.R. § 7.4000. In The Clearing House Association, L.L.C. v. Cuomo , the U.S. Circuit Court of Appeals for the Second Circuit, with one dissenting opinion, upheld the district court determining that the OCC regulation warranted deference under the standard announced in Chevron U.S.A., Inc. v. Natural Resources Defense Council . It concluded that neither the language of the regulation, nor OCC's interpretation of it, comported with the statute. The Dissenting Opinion

There is an opinion written by Justice Thomas and joined by Chief Justice Roberts, Justice Kennedy, and Justice Alito, which concurs in the Court's conclusion that the AG was without authority to issue an administrative subpoena for the national bank records, but registers a dissent with respect to the issue of the validity of OCC's preemption of state enforcement power. Legislation

		111th Congress

			Dodd Frank: Federal Preemption and State Enforcement of Consumer Protection Provisions

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), P.L. 111-203 , in Subtitle D of Title X, the Consumer Financial Protection Act of 2010, contains a provision designed to codify the ruling of the Supreme Court in Cuomo by making it clear in statute that the National Bank Act's visitorial powers clause does not preclude state enforcement actions against national banks for violation of non-preempted state law. There is also a provision authorizing state attorneys general and state regulators to bring actions against individual defendants, state institutions, and national banks and federal savings associations for violations of Title X and regulations promulgated under Title X. The legislation also defines a standard and procedural requirements for OCC to follow in preempting the applicability of state consumer protection laws to national banks or federal savings associations. Other Proposals During the 111th Congress

The provisions in Dodd-Frank follow other efforts in the 111 th Congress to deal with OCC preemption of state efforts to enforce consumer protection laws against national banks, including the following. The Consumer Financial Protection Agency Act of 2009, released on June 30, 2009, by the U.S. Treasury Department, contained provisions applying state consumer protection laws to national banks and a section specifying that no federal law is to be interpreted as precluding state enforcement of state consumer protection laws by bringing a judicial action against national banks involving potential violations of state or federal consumer protection laws. This proposal essentially proclaimed that state consumer protection laws, subject to certain standards, are applicable to national banks and federally chartered savings associations and their subsidiaries, and that state attorneys general may enforce those laws against those institutions.
On June 29, 2009, the U.S. Supreme Court ruled that the National Bank Act (NBA) does not preempt states from bringing judicial actions against national banks to enforce non-preempted state anti-discrimination laws, and by implication state consumer protection laws, as long as the state authorities do not encroach on the visitorial powers of the national bank regulator, the Office of Comptroller of the Currency (OCC). The Court ruled that administrative subpoenas or other forms of administrative oversight or examination are included in visitorial powers and, thus, are not available as state enforcement tools. The case, Cuomo v. The Clearing House Association, L.L.C.,___ U.S. ___, 129 S.Ct. 2710 (2009), involves a challenge by national banks and OCC to an attempt by the New York State Attorney General (AG) to investigate possible discrimination in real estate lending by certain national banks and their subsidiaries. In response to a request that these banks provide non-public information about their real estate policies and loans in New York, a banking association to which these banks belong, The Clearing House Association, L.L.C., and OCC obtained trial and appellate court orders enjoining the state investigation and enforcement efforts.
The Supreme Court decision invalidated an OCC regulation, 12 C.F.R. § 7.4000, to the extent that it preempted state officials from "prosecuting enforcement actions" against national banks. That regulation reflected OCC's interpretation of 12 U.S.C. § 484, a provision of the NBA which proclaims that "no national bank shall be subject to any visitorial powers except as authorized by Federal law, vested in the courts of justice, or such as shall be, or have been exercised or directed by Congress." The Court's opinion analyzed the OCC regulation on the basis of Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). It recognized that the term "visitorial powers" is ambiguous and that judicial deference should be accorded to a reasonable interpretation of the term by the agency charged with interpreting it, OCC. The Court, however, found that OCC's interpretation did not meet the reasonableness standard. The Court's opinion concluded that OCC had no reasonable basis for equating visitorial power delegated to OCC by the NBA and a state's sovereign power to enforce its own non-preempted state laws with respect to national banks. Dissenting on this point, Justice Thomas, joined by Chief Justice Roberts and Justices Kennedy and Alito, would have upheld the OCC regulation and the breadth of OCC's interpretation of visitorial power as a reasonable interpretation of an ambiguous statute and, therefore, falling within Chevron and worthy of judicial deference.
Subtitle D of Title X, the Consumer Financial Protection Act of 2010, of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), P.L. 111-203, contains a provision designed to codify the ruling of the Supreme Court in Cuomo that federal visitorial clause provisions do not prohibit state enforcement actions. There is also a provision authorizing state attorneys general and state regulators to bring actions against national banks and federal savings associations for violations of Title X and any implementing regulations. The legislation also defines a standard and some procedural requirements for OCC to follow in preempting the applicability of state consumer protection laws to national banks or federal savings associations. These provisions in Dodd-Frank follow other efforts in the 111th Congress to deal with the issue of federal preemption of state efforts to enforce financial consumer protection laws.
The 112th Congress may be presented with legislation to amend the Dodd-Frank provisions and/or opportunities to evaluate how the interaction between state and federal consumer protection laws and enforcement efforts is protecting consumers without unduly burdening nationwide banking concerns.