Sunday, July 05, 2009

Late but worth noting in passing

This is from last week and there is a particular reason I expect most you know already know about it, but I have a reason for mentioning it.

A week ago, the Supreme Court ruled in a 5-4 decision that
[s]tate governments can challenge the practices of national banks in court ... in a decision that bolsters the power of states relative to federal bank regulators.

The decision gives state attorneys general the ability to pursue in court banks that are alleged to have violated state laws such as those protecting consumers. Banking groups and their national regulator, the Office of the Comptroller of the Currency, argued that that power is restricted to the federal regulator.
More particularly, the OCC argued that it alone could demand from so called "national banks" any information that might be relevant to an investigation - for example, in the case at hand, Cuomo v. Clearing House Association, information about the a bank's lending patterns related to an investigation of minorities being steered into bad mortgages.

Happily, the Supreme Court disagreed with the agency. The OCC's rule, the decision read, "says that the State may not enforce its valid ... laws against national banks. The bark remains, but the bite does not." It essence, it undermined state-level consumer protection laws about major financial institutions by leaving enforcement of those laws up to a federal agency.

Now, the reason you probably heard about this is that the decision was written, to most people's surprise, by Antonin Scalia, who joined with the usual liberals (Breyer, Ginsburg, Souter, and Stevens) to form the majority.

But the reason I wanted to mention it before it got too far away is that, as I noted in May, in arguments before the Court, the Obama administration went against the briefs filed by all 50 state attorney generals and a wide variety of consumer groups and sided with the banks. It was another case of the Obama team - either due to sloppiness, laziness, or preference, none of which is an acceptable reason - sliding along and endorsing a position held over from the Bush regime.

This time, the Court did the right thing. But we know we can't count on that continuing. When are we going to get fed up with the "we haven't had time to re-think it" excuse from the White House?

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