The United States District Court for the Second Circuit affirmed the decision in Office of the Comptroller of the Currency v. Spitzer, 396 F. Supp. 2d 383 (S.D. N.Y. 2005), enjoining the New York Attorney General’s office from enforcing the state’s fair lending law against national banks and their operating subsidiaries. Clearing House Association, LLC v. Cuoma, 2007 WL 4233358 (2nd Cir. Dec. 4, 2007). The Second Circuit concluded that the district court did not err in deferring to the OCC’s interpretation of Section 484(a), regarding visitorial powers, as set forth in 12 C.F.R. § 7.4000. The OCC had sought declaratory and injunctive relief to stop the New York Attorney General from investigating national banks and their operating subsidiaries in an attempt to enforce New York’s fair lending laws that are designed to prevent racial discrimination. The OCC argued that the state was infringing on the OCC’s exclusive visitorial authority by its actions. The OCC did not challenge the applicability of state anti-discrimination laws to national banks, but rather focused on the Attorney General’s attempt to enforce the law against national banks including requests books and records.

The Second Circuit found that the OCC’s regulation on visitorial powers (12 C.F.R § 7.4000) reflected a reasonable interpretation of Section 484 of the National Bank Act and is therefore entitled to deference under Chevron U.S.A., Inc. v. Natural Resources Defense Council,467 U.S 837 (1984).

The Second Circuit affirmed in part the lower court decision in the Clearing House Association, LLC v. Spitzer, 394 Supp. 2nd 620 (S.D. N.Y. 2005), to the extent that the Clearing House judgment granted Clearing House the injunctive relief provided in OCC v. Spitzer. The court vacated that part of the Clearing House judgment granting permanent injunctive relief against the Attorney General’s enforcement of the federal Fair Housing Act (FHA). The lower court had enjoined the Attorney General from instituting any judicial actions based on the state’s parens patriae authority to enforce the FHA. The Second Circuit found the claim unripe because the Attorney General never mentioned the FHA until after Clearing House filed the suit. Thus, the court found that the lower court lacked jurisdiction and indicated that the claim should be dismissed.

  • Elizabeth Anstaett and Mike Tomkies