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States seek more power over banks

Associated Press / April 29, 2009
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WASHINGTON - New York officials yesterday asked the US Supreme Court to let states enforce their antidiscrimination laws against national banks, despite arguments from the federal government that it is the only entity that can regulate those institutions.

Several justices questioned whether it made sense to allow states to make laws that could be used to investigate illegal actions at banks that operate within their borders, but then only let the federal government enforce them against national banks.

New York, with backing from the other 49 states, wants the Supreme Court to overturn a federal appeals court decision that blocks states from investigating national banks' lending practices. New York argued the federal government doesn't have the manpower or expertise.

Eliot Spitzer, then New York's attorney general, wanted to investigate whether minorities were being charged higher interest rates on mortgage loans, which is prohibited under state and federal laws. But a federal judge said Spitzer could not enforce state fair-lending laws against national banks or their operating subsidiaries by issuing subpoenas and bringing enforcement actions against them.