[FLT-bird]

Supreme Court Announces Standard For Determining Whether Federal Law Preempts State Laws Regulating National Banks

Cantero v. Bank of America, N.A., No. 22-529 – Decided May 30, 2024

Today, the Supreme Court held 9-0 that there is no categorical rule for determining whether federal law preempts state banking laws when applied to national banks, and instead adopted a test focused on whether the law interferes with a national bank’s exercise of its powers.

What It Means:

The Supreme Court expressly rejected the competing categorical approaches advanced by the parties. The Court declined to adopt the bank’s proposed rule, which would “preempt virtually all state laws that regulate national banks.” It also rejected the plaintiffs’ proposed preemption standard, which would “preempt virtually no non-discriminatory state laws.”

[Wallace T.]

The Supreme Court unanimously decided to punt on this issue, liberals, centrists, and conservatives alike. The Trump administration will likely insist that the OCC and FDIC be headed by people committed to promoting and soundness as opposed to items like the Community Reinvestment Act or anything related to DEI or ESG. As for the Federal Reserve, if they go against the lead of the other two Federal regulators, their member banks will defect to national or state nonmember status. With Trump publicly chastising the chairman of Wells Fargo for debanking conservatives at the World Economic Forum, it will be difficult for state level leaders like Newsom in California, Pritzker in Illinois, or Hochul in New York to push leftist initiatives even on state chartered banks.