Ninth Circuit Hands Out "Mixed Bag" on Federal Preemption

The Ninth Circuit just handed down an important decision on federal preemption. In Wells Fargo Bank, N.A. v. Boutris, No. 03-16194 (9th Cir., Aug. 12, 2005), it found preemption under the National Bank Act ("NBA") but not under the Depository Institutions Deregulation and Monetary Control Act ("DIDMCA").

This case arose from an attempt by the California Commissioner of Corporations to audit the residential mortgage operations of Wells Fargo Home Mortgage, Inc., a wholly-owned operating subsidiary of Wells Fargo Bank, N.A., a national bank. WFHMI held several state licenses, one under California’s Residential Mortgage Lender Act (Cal. Fin. Code § 50000 et seq.) ("RML") and another under California’s Finance Lenders Law (Cal. Fin. Code § 22000 et seq.) ("CFL"). The purpose of the audit was to determine WFHMI’s compliance with California’s "per diem interest" statutes, Cal. Fin. Code § 50204(o) and Cal. Civ. Code § 2948.5(a), both of which fall under the enforcement authority of