States can apply own laws to national lenders

In yesterday’s ruling, the high court said state attorneys general cannot on their own issue a subpoena against a bank that has branches in that state and others. But the court also said that national banks are subject to some state laws under the National Banking Act, and attorneys general can go to court to enforce those laws.

“What this decision today says is that states have the ability to enforce their own laws [against national banks] as long as they follow state due-process procedures, which generally mean issuance of a subpoena, which can be challenged in court,’’ said lawyer John Cooney, a former assistant solicitor general and deputy general counsel at the Office of Management and Budget.

Officials say the 5-to-4 decision opens the door for states to do their own investigations of national banks, as long as they can convince a judge that investigations are needed.

New York’s attorney general, Andrew Cuomo, called the decision “a huge win for consumers across the nation.’’

“I am pleased that the court has turned back efforts by the nation’s largest banks to prevent the efforts of New York and other states to protect consumers from predatory financial practices,’’ Cuomo said. “With this decision, the court has recognized that fair lending and consumer protection - the cornerstones of a sound economy - require the cooperative efforts of both the states and the federal government.’’

Also yesterday, cable TV operators won a key legal battle against Hollywood studios and television networks as the court declined to block a new digital video recording system that could make it even easier for viewers to bypass commercials.

The justices declined to hear arguments on whether Cablevision Systems Corp.’s remote-storage DVR system would violate copyright laws. That allows the company based in Bethpage, N.Y., to start deploying the technology this summer.

With remote storage, TV shows are kept on the cable operator’s servers instead of the DVR inside the customer’s home, as systems offered by TiVo Inc. and cable operators currently do.

The distinction is important because a remote system essentially transforms every digital set-top box in the home into a DVR, allowing customers to sign up instantly, without the need to pick up a DVR from the cable office or wait for a technician to visit.

Movie studios, TV networks, and cable TV channels had argued that the service is more akin to video-on-demand, for which they negotiate licensing fees with cable providers. They said a remote-storage DVR service amounts to an unauthorized rebroadcast of their programs.

In the banking case, the state of New York had asked the Supreme Court to overturn a federal appeals court decision that blocks states from investigating the lending practices of national banks with branches within its borders. It was supported by the other 49 states.

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

“Here, the threatened action was not the bringing of a civil suit, or the obtaining of a judicial search warrant based on probable cause, but rather the attorney general’s issuance of subpoena on his own authority,’’ said Justice Antonin Scalia, who wrote the opinion for the court. “That is not the exercise of the power of law enforcement ‘vested in the courts of justice,’ ’’ which the National Banking Act allows.