The Lawyers’ Committee and Other National Civil Rights
Groups Seek Reversal of Decision Not Permitting States to Enforce
Their Own Fair Lending Laws Against National Banks
Groups File Supreme Court Amicus Brief in Cuomo v. The Clearing House Association
Washington, D.C., March 5, 2009 – Yesterday, three national civil rights organizations — the Lawyers’ Committee for Civil Rights Under Law, National Fair Housing Alliance and the NAACP Legal Defense and Educational Fund, Inc. — filed an amicus curiae, “friend of the court,” brief in the Supreme Court of the United States in the case of Cuomo v. The Clearing House Association, L.L.C. The brief supports the New York Attorney General’s continued efforts to enforce state fair lending laws against national banks and asks the Supreme Court to reverse the Second Circuit Court of Appeals’ ruling halting such enforcement.
“This case is vital in determining whether states will have the ability to enforce their own laws and to protect their citizens from discrimination,” said Barbara Arnwine, executive director, Lawyers’ Committee for Civil Rights Under Law. “It is crucial that they have this authority. The history of lending discrimination in this country is long and shameful. Minorities have historically been denied access to credit by the lending industry, and more recently, predatory lenders have discriminatorily targeted minority borrowers for high-cost, subprime loans. Minorities are disproportionately affected by this foreclosure morass and robust state and federal enforcement of fair lending laws is essential.”
This matter began in 2005, when after examining publicly available lending data; the New York Attorney General concluded that several national banks had issued a disproportionate number of high-interest home mortgage loans to minority borrowers. Because the data provided evidence of race discrimination, the Attorney General sent letters to several banks requesting additional information. The Office of the Comptroller of the Currency (OCC), the agency that Congress entrusted to oversee the national banks’ exercise of their powers, upon learning about the Attorney General’s letters, did not investigate the matter. Instead, it sued in federal court to stop New York’s investigative and enforcement efforts. A similar suit seeking the same relief was filed shortly after the OCC suit by the Clearing House Association, an organization of commercial banks whose members include the national banks investigated by New York and regulated by the OCC.
Since then, both the federal District Court for the Southern District of New York and the Second Circuit have issued rulings upholding a 2004 regulation issued by the OCC pursuant to the National Bank Act in which the OCC claims exclusive authority to enforce state fair lending laws even though the state laws themselves were not preempted. Based on this holding, the New York Attorney General has been enjoined from further investigating or otherwise enforcing state fair lending laws against national banks.
The brief emphasizes that Congress, when it passed federal fair housing and fair lending laws in 1968, 1974 and 1988, clearly intended to preserve a leading role for the states in a dual federal-state enforcement scheme. The brief carefully documents the longstanding history of lending discrimination which persists today and has been a major contributing factor to the current mortgage and foreclosure crisis. It also documents that federal enforcement of fair lending laws, including enforcement by the OCC, has been inconsistent and ineffective. It concludes that in light of the current national foreclosure crisis, now more than ever, requires critical state enforcement is needed and asserts that states are better-suited than the OCC to enforce their own lending laws, given OCC’s limited enforcement capacity.
The Lawyers’ Committee received valuable pro bono assistance in preparation of this brief from Amy Howe of Howe & Russell P.C. and the Stanford Law School Supreme Court Litigation Clinic.