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Dreher Tomkies LLP
Attorneys at Law
2750 Huntington Center
41 South High Street
Columbus, Ohio 43215
Telephone: 614-628-8000
Fax: 614-628-1600

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The United State District Court for the Southern District of West Virginia has enjoined the West Virginia Attorney General (AG) from enforcing subpoenas against a national bank based on the National Bank Act (NBA) and federal regulations that prohibit state officials from “visiting” national banks. Capital One Bank, N.A. v. McGraw, 2008 WL 2554962 (S.D. W. VA. June 26, 2008). The case arose from the AG’s attempt to investigate consumer complaints regarding the activities of Capital One Bank (USA), N.A., (Capital One) and Capital One Services, Inc. (COSI). As a result of these consumer complaints, the AG served subpoenas on Capital One and COSI on April 4, 2005. The subpoenas, which were virtually identical, were issued to assist the AG in the investigation of possible unfair or deceptive acts or practices relating to marketing, advertising, servicing, including debt collection, and issuing of credit cards and related services, in violation of the West Virginia Consumer Credit and Protection Act.

On March 1, 2008, Capital One converted from a Virginiachartered bank to a national banking association organized under the NBA. Capital One and COSI, a Delaware corporation, notified the AG of Capital One’s conversion to a national bank and requested that in light of this conversion, the AG withdraw its subpoenas. The AG refused and the suit followed.

In reaching its decision, the court explained that under the federal regulations, state officials, such as the AG, cannot inspect or require the production of books or records of a national bank. Moreover, the court noted that the NBA authorizes national banks to issue, market and service credit cards. The court reasoned that by issuing a subpoena to investigate possible deceptive marketing, servicing and issuance of credit cards, the AG attempted to supervise activities authorized by federal banking law, which is a “visitation” that state officials are prohibited from pursuing.

The court then considered the subpoenas issued against COSI. After reviewing federal law and case law, the court declined to extend the visitorial powers concept to a general corporation that is not a national bank or an operating subsidiary of a national bank.