Biden’s agencies clash on state bank rules in court battle.

January 29, 2024
1 min read


  • The Biden administration is divided on the power of a federal banking regulator to exempt national banks from state laws.
  • A pending Supreme Court case will determine the applicability of a New York mortgage law to national banks.

A pending case in the U.S. Supreme Court is highlighting a rift within the Biden administration over whether a federal banking regulator has the power to exempt national banks from state laws. The case, Cantero v. Bank of America Corp., centers on whether national banks are required to comply with a New York law that mandates them to pay at least 2% interest on mortgage escrow accounts. The Supreme Court’s ruling in this case has the potential to limit the power of the Office of the Comptroller of the Currency (OCC) and raise questions about the agency’s role in the regulatory system for banking.

The OCC has long championed its authority to determine that certain categories of state laws, including escrow account interest mandates, do not apply to national banks. However, the agency has faced criticism for overriding state laws that have stricter borrower protections. The Biden administration’s split on this issue is evident in the briefs filed in support of Bank of America and the OCC, with some arguing for a case-by-case review of state laws and others advocating for the OCC’s broad power to exempt national banks from state laws.

While the outcome of this case remains uncertain, it has significant implications for the power of federal banking regulators and the relationship between federal and state banking laws. A ruling in favor of the Cantero petitioners could limit the OCC’s ability to make sweeping decisions about when state laws apply to national banks and potentially result in fewer preempted laws. The Supreme Court’s decision will shed light on the future of banking regulation and the balance between federal and state authority in the industry.

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