WASHINGTON—Banks and federal policy makers in Washington are seeking to limit the reach of laws in Florida and Tennessee that require lenders to provide “fair access” to customers, although they face a narrow path thanks to the Supreme Court, according to a new report.
“One of the perks for banks carrying federal charters is that they can be shielded from state laws, either through litigation or by regulation from the Office of the Comptroller of the Currency, which oversees national banks,” noted Bloomberg Law in its review. “But the high court’s May ruling in Cantero v. Bank of America NA added hurdles to the OCC’s process for declaring state laws preempted by the National Bank Act, the 1863 law that created the agency and federal banking charters.”
What’s Now Required
As Bloomberg Law explained, rather than simply declaring that broad categories of state laws are preempted, the Cantero decision now requires the OCC to determine whether legislation passed in each state “significantly interferes” in a national bank’s operations before declaring the law preempted.
“That analysis is going to make it harder for the federal regulator to preempt the red states’ fair access laws, which block banks from dropping customers based on religion or political affiliation. D.C. officials have raised concerns the laws will interfere with requirements for banks to flag when customers are potentially engaged in money laundering and other illicit financial moves,” Bloomberg Law said.
Additional Hurdles
Bloomberg Law added that the high court’s ruling also imposes hurdles for any efforts by banks and current or future administrations to preempt a law signed in Illinois targeting credit card swipe fees.
The banks sued Aug. 15 to block the new Illinois law, an action credit unions have joined.