On December 15, 2023, the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) jointly filed an amicus brief with the US Supreme Court in the case of Cantero v. Bank of America. The case revolved around the question of whether or not certain state consumer financial laws are preempted under the National Bank Act. The Second Circuit Court of Appeals had ruled that a New York law requiring banks to pay interest on mortgage escrow accounts was preempted, exempting national banks from the law’s requirements. In issuing that ruling, the Second Circuit relied upon a very broad interpretation of the preemption standards – one that would preempt virtually every state consumer financial law.
The CSBS/AARMR brief argued that the interpretation disregarded the preemption standards codified in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which provide that a state law is preempted only if it “prevents or significantly interferes with” a national bank’s exercise of its powers, and that the court had not conducted the kind of nuanced analysis necessary to determine whether the law in question was preempted.
On May 30, 2024, in a unanimous decision, the Supreme Court overturned the Second Circuit’s ruling, agreeing with CSBS and AARMR that the lower court’s interpretation of the preemption standard was incorrect and remanding the case for reconsideration after an appropriate analysis in accordance with the Dodd-Frank standards. This decision represents a significant victory for consumers and for state consumer financial protection laws. AARMR is proud to have represented the interests of our members’ states in this case.
A statement from CSBS regarding the decision may be found here.