On February 27, 2024, the U.S. Supreme Court will hear oral argument in Cantero v. Bank of America, N.A., a case involving the scope of preemption under the National Bank Act (NBA).  The question before the Court is whether the NBA preempts a New York statute requiring banks to pay interest on mortgage escrow accounts.  Reversing the district court, the Second Circuit ruled that the application of the New York statute to national banks is preempted by the NBA.

Since the OCC finalized its preemption regulations, most national banks have relied on them to not comply with many state consumer protection laws.  A ruling by the Supreme Court in Cantero that the NBA does not preempt the New York law will implicitly call into the question the validity of the OCC’s preemption regulations and mean that national banks will have to take a fresh look at whether they must now comply with certain state consumer protection laws and regulations which they have been ignoring.  An adverse ruling in Cantero could also trigger a new wave of state AG enforcement actions and private litigation against national banks based on violations of state consumer protection laws and regulations.