Bank case to be reviewed
Supreme Court to hear Michigan appeal over mortgage-lending rules
GREG STOHR
Bloomberg News
The U.S. Supreme Court agreed to consider a bid by Michigan to regulate Wachovia Corp.'s mortgage-lending business in a case that may open banks to new oversight across the country.
The court Monday said it will hear Michigan's appeal to decide whether states can apply their lending rules to subsidiaries of Charlotte-based Wachovia and other national banks regulated by the U.S. Office of the Comptroller of the Currency.
The issue has arisen in cases across the country, including disputes involving units of National City Corp. in Maryland, Wells Fargo & Co. in California and Wachovia in Connecticut.
"National banks would have to choose between the benefits of maintaining an operating subsidiary and the benefits of avoiding burdensome state regulations," the Bush administration argued in papers urging the court not to consider the issue.
Forty-two states and the District of Columbia joined briefs that urged Supreme Court involvement, saying state regulations are needed to protect consumers from deceptive lending practices. Connecticut, California, Florida, Massachusetts, New Jersey and North Carolina have similar mortgage-lending rules.
"The states' ability to regulate mortgage lending and, in particular, to protect the public from predatory and abusive lending practices, is at stake," Connecticut Attorney General Richard Blumenthal argued in a court filing.
Connecticut was separately seeking high court review of its own effort to regulate Wachovia's mortgage-lending business. The justices didn't act on the Connecticut appeal, instead agreeing to hear the Michigan case.
Michigan's rules require lenders to register, pay a fee, submit an annual financial statement and make documents available for inspection. The Cincinnati-based 6th U.S. Circuit Court of Appeals sided with Wachovia.
Wachovia said the lower court was right to declare rules pre-empted by the U.S. National Bank Act and OCC regulations. Those regulations say national banks and their subsidiaries don't have to abide by state regulations on real estate loans
Supreme Court to hear Michigan appeal over mortgage-lending rules
GREG STOHR
Bloomberg News
The U.S. Supreme Court agreed to consider a bid by Michigan to regulate Wachovia Corp.'s mortgage-lending business in a case that may open banks to new oversight across the country.
The court Monday said it will hear Michigan's appeal to decide whether states can apply their lending rules to subsidiaries of Charlotte-based Wachovia and other national banks regulated by the U.S. Office of the Comptroller of the Currency.
The issue has arisen in cases across the country, including disputes involving units of National City Corp. in Maryland, Wells Fargo & Co. in California and Wachovia in Connecticut.
"National banks would have to choose between the benefits of maintaining an operating subsidiary and the benefits of avoiding burdensome state regulations," the Bush administration argued in papers urging the court not to consider the issue.
Forty-two states and the District of Columbia joined briefs that urged Supreme Court involvement, saying state regulations are needed to protect consumers from deceptive lending practices. Connecticut, California, Florida, Massachusetts, New Jersey and North Carolina have similar mortgage-lending rules.
"The states' ability to regulate mortgage lending and, in particular, to protect the public from predatory and abusive lending practices, is at stake," Connecticut Attorney General Richard Blumenthal argued in a court filing.
Connecticut was separately seeking high court review of its own effort to regulate Wachovia's mortgage-lending business. The justices didn't act on the Connecticut appeal, instead agreeing to hear the Michigan case.
Michigan's rules require lenders to register, pay a fee, submit an annual financial statement and make documents available for inspection. The Cincinnati-based 6th U.S. Circuit Court of Appeals sided with Wachovia.
Wachovia said the lower court was right to declare rules pre-empted by the U.S. National Bank Act and OCC regulations. Those regulations say national banks and their subsidiaries don't have to abide by state regulations on real estate loans
posted by Ralph Marcus (Mark) Maupin | 4:02 PM
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