Bank of America, N.A. v. Donald M. Lusnak

The National Bank Act created a system of federally-chartered national banks that derive their banking powers from federal law and are extensively regulated by the federal government. This Court has long held that a national bank’s federal banking powers are “not normally limited by, but rather ordinarily pre-empt[], contrary state law.” Barnett Bank of Marion County, N.A. v. Nelson, 517 U.S. 25, 32 (1996). The Office of the Comptroller of the Currency (“OCC”), the primary regulator of national banks, has promulgated regulations providing that national banks may exercise their real-estate lending powers without regard to certain state banking laws, including state laws regulating the terms of credit and mortgage loan escrow accounts. See 12 C.F.R. § 34.4(a)(4), (6). The Ninth Circuit nevertheless held that California can compel national banks to comply with a state law requiring payment of interest at a specified minimum rate on mortgage loan escrow accounts. The questions presented are:

1. Whether the National Bank Act preempts state laws regulating national bank loan terms, such as California’s law requiring payment of interest on mortgage loan escrow accounts.

2. Whether the Ninth Circuit erred in disregarding OCC regulations concerning the applicability of state real-estate lending laws to national banks.