July 19, 2012
California Disclosure Laws Preempted By Justice Goodwin Liu
Posted by David Zaring

Rick Hills observes that the decision by the California Supreme Court on disclosure requirements for credit card checks pretty broadly preempts state banking regulation, even at it permit traditional common law actions against banks (for breach of contract, say) to go ahead.  It's not exactly a state power decision.  As Rick explains:

Park distinguishes all such state common-law rules on the ground that such state laws "were laws of general applicability." But wait -- the disclosure requirements of California law did not single out nationally chartered banks! They, too, were "generally applicable" to that extent.Park concedes as much but contends that "state laws that restrict federally authorized banking powers may be preempted even if they are nondiscriminatory."

The case also permits federal banks to make the case that a state reg is preempted on the basis of pleadings, not discovery.  And also gestures at Dodd-Frank.  He's right in thinking that federal regulators, and the institutions that prefer to be overseen by them, will be very heartened by the decision - now we'll have to see its take-up rate.

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