Released: June 30, 2009

Ruling adds teeth to state oversight of banks

Source: Neil Irwin, Washington Post (Free Registration)

For years, state governments have had little power to enforce consumer-protection and lending rules at the country’s biggest banks. No more.

Yesterday, in a decision that marked a major victory for consumer advocates, the Supreme Court held that states can challenge the practices of national banks in court.

Major banks have long argued that only federal bank regulators can compel them to comply with rules meant to protect consumers from potentially unfair lending practices or pursue cases of potential discrimination against minorities.

The Supreme Court, in a 5-4 decision, disagreed, concluding that state attorneys general can go after national banks on such matters.

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