lawrota.com

In the ongoing legal saga of Cantero v. Bank of America, the question of preemption under the National Bank Act takes center stage. The dispute revolves around mortgage escrow accounts, with lenders traditionally not paying interest on them. However, state laws in about a dozen states, including New York, mandate interest payments on these accounts, sparking conflict.

The Comptroller of the Currency, backed by regulations and a history of judicial support, views the National Bank Act as preempting state laws concerning escrow accounts. Cantero challenges this interpretation, citing Dodd-Frank’s provision requiring preemption only if state laws significantly interfere with national banks’ activities.

Bank of America argues that state laws like New York’s add conditions to national banks’ powers, thus falling within the ambit of preemption. They also point out practical difficulties and potential litigation burdens if Cantero’s interpretation were upheld.

The case gains intrigue with the unexpected support for Cantero from the solicitor general, contrary to past governmental stances. This raises eyebrows and promises heated discussions.

In essence, the case encapsulates the clash between state and federal banking regulations, highlighting the intricate dance between statutory interpretation, practical implications, and legal precedent in modern banking law.

#BankingLaw #LegalPreemption #DoddFrankAct #EscrowAccounts #SupremeCourt #BankingRegulations

Source: https://www.scotusblog.com/2024/02/homeowners-argue-for-interest-on-escrow-accounts-held-by-national-banks/