CRL Argues All Banks Must Follow State Repossession Laws

Published: March 5, 2010

United States Court of Appeals for the Ninth Circuit , No. 09-56679 Issue: Auto Financing
Amicus Brief, filed 05 Mar 2010

Download the full brief (PDF)

In this legal brief CRL, joined by multiple allies, explains why National Banks regulated by the federal Office of Comptroller of the Currency must provide California borrowers with the notices mandated by California law when the borrower defaults on a car loan and the bank repossesses the car.

California's Rees-Levering Act entitles car loan borrowers to receive information on the amount they must pay to recover their car when it is repossessed.  This represents an important, and easy to satisfy, legal protection for car loan borrowers who otherwise may find it hard to determine the amount of payments and fees the lender claims are owed.  U.S. Bank successfully argued to a California federal district court that it did not have to follow this law because of its status as a National Bank.

CRL, joined by AARP, National Consumer Law Center, National Association of Consumer Advocates, Consumers for Auto Reliability and Safety, Asian Pacific American Legal Center of Southern California, California Reinvestment Coalition, Law Foundation of Silicon Valley, and Housing and Economic Rights Advocates, explains the flaws in the bank's argument in this legal brief filed with the United States Court of Appeals for the Ninth Circuit.  The brief explains that no federal law instructs banks how to conduct repossessions or other debt collection activities, so state laws like the Rees-Levering Act must continue to apply to National Banks.  Otherwise, these banks will be subject to no law and able to treat customers in any way they see fit without any accountability.  Although National Banks do not have to follow state laws when they are preempted by federal laws, this principle does not apply when no federal law replaces state law.  The brief explains that accepting U.S. Bank's argument concerning the Rees-Levering Act will enable National Banks to claim that they do not have to follow numerous state laws necessary to the existence of commercial transactions, even though the Office of the Comptroller of the Currency has said that the banks it regulates are bound by state laws creating the legal "infrastructure" that makes banking possible.