Supreme Court gives states rights to protect consumers


The Supreme Court opened the door for states to enforce fair-lending laws and other consumer protection measures when it struck down a rule that limited such powers to federal banking regulators Monday.

The court decided that rules issued by federal banking regulators back in 1864 under the National Bank Act could not block or pre-empt efforts by the states to enforce their own laws.

This state's rights issue was probably won as Justices remembered the abusive banking policies that were ignored by the Fed and other regulators as the housing bubble inflated.

The case was started in 2005 by then New York Attorney General Eliot Spitzer when he began an inquiry of several national banks including Citigroup, JP Morgan Chase and Well Fargo. He told the banks that he saw "troubling" disparities in minority lending that made it appear as though black and Hispanic borrowers were being charged disproportionately higher interest rates on mortgages compared to those for whites.