SCOTUS Adopts Favorable Standard for States’ Ability to Enforce Consumer Protection Laws Regulating National Banks

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  • The U.S. Supreme Court issued an opinion in Cantero v. Bank of America, N.A., No. 22-529, allowing states to enforce state consumer financial protection laws against both state and national banks.
  • The Court was reviewing the Second Circuit’s decision holding that the National Bank Act preempted the application of a New York escrow-interest law to national banks, under a “categorical test” which would preempt virtually all state laws that regulate national banks. The Supreme Court rejected the categorical test and held that the correct rule to be applied under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 is that states may enforce state consumer financial protection laws against both state and national banks as long as the state law does not prevent or significantly interfere with the exercise of power by national banks. The case is vacated and remanded to the Second Circuit for reconsideration under this standard.
  • A bipartisan coalition of 34 AGs submitted an amicus brief to the U.S. Supreme Court, asking the Court to overturn the Second Circuit’s decision, arguing that the ruling conflicts with Supreme Court precedent establishing states’ ability to enforce consumer protection laws regulating national banks.
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