Supreme court allows NY state's bank lending probe

Legal News Center

The U.S. Supreme Court ruled on Monday that the New York attorney general's office can investigate whether national banks discriminated against minorities seeking mortgages.

The justices overturned part of a ruling by a U.S. appeals court that entirely blocked the state office from investigating or enforcing the fair lending laws against national banks because they are subject instead to federal regulation.

In the court's main split opinion, Justice Antonin Scalia concluded the state attorney general cannot issue subpoenas, but can bring judicial enforcement actions.

In 2005, Eliot Spitzer, then the state attorney general, began investigating possible racial discrimination in mortgage lending. He sent letters of inquiry to mortgage lenders, including banks such as Wells Fargo, HSBC, JPMorgan Chase and Citigroup.

The probe was prompted by data that Spitzer said appeared to show a significantly higher percentage of high-interest home mortgage loans issued to black and Hispanic borrowers than to white borrowers.

The Office of the Comptroller of the Currency, a federal agency that oversees nationally chartered banks, sued to enjoin the probe on the grounds it fell outside state jurisdiction. A consortium of national banks also sued.

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