Cantero v. Bank of America
Issues
Does requiring a national bank to pay interest on escrow accounts attached to its mortgages under New York’s minimum interest-on-escrow law unconstitutionally infringe on the bank’s exercise of its federal power under the National Bank Act?
This case asks the Supreme Court to consider to what extent nationally-chartered banks should be shielded from state banking regulations on mortgage escrow accounts. Alex Cantero argues that the Second Circuit’s standard for preemption based on control is improper, and that the Court must evaluate the actual impact the interest-on-escrow law has on bank operations. Bank of America maintains that the state law is preempted because it both impermissibly exerts control over bank operations and also significantly hinders national banks’ exercise of their federally-granted powers. This case has significant implications not only for mortgage escrow accounts but also for states’ capacity to regulate other practices and products of federally-chartered banks.
Questions as Framed for the Court by the Parties
Whether the National Bank Act preempts the application of state escrow-interest laws to national banks.
The core banking powers of federally chartered banks such as the power to lend come from the National Bank Act (“NBA”). Brief for Respondent, Bank of America at 1. Under the NBA, chartering, regulation, and supervision of national banks are overseen by the Office of Comptroller of the Currency (“OCC”).
Additional Resources
- Andrew Doersam, U.S. Supreme Court Agrees to Examine National Bank Act Preemption, American Bankers’ Association.
- Susan M. Seaman & Leslie A. Sowers, Supreme Court to Hear National Bank Act Preemption Case, Husch Blackwell (Oct. 25, 2023).
- Reid F. Herlihy, Supreme Court Grants Cert for Interest-on-Escrow Preemption Case, Ballard Spahr, LLP (Oct. 24, 2023).