Brother, Can You Spare a Basis Point?
High Cost Lending and Federal Preemption of State Regulation

Observers of the state and national housing market are increasingly concerned about the number of mortgage foreclosures and the spate of high interest rate loans to struggling buyers that may be exacerbating the foreclosure problem. States taking steps to address this situation, including Connecticut, however, have encountered a recent roadblock in court decisions finding that state laws have been preempted by federal regulations. This conference will use one such case now pending before the U.S. Supreme Court, Wachovia Bank, N.A. v. Linda A. Watters, Commissioner of the Michigan Office of Insurance and Financial Services, 431 F.3d 556 (6th Cir. 2005), cert. granted, 2006 U.S. LEXIS 4690 (U.S. June 19, 2006), as a springboard to explore broad questions of whether lenders should be regulated at the state or federal level as well as the narrower question of whether state safeguards against abusive subprime lending have been preempted by administrative regulations issued pursuant to the National Banking Act.

The discussion will begin with the two issues that the Supreme Court has agreed to consider:

1. Whether agency rulings preempting state law merit traditional Chevron deference; and
2. Whether the Sixth Circuit's holding in favor of preemption violated the Tenth Amendment.

Our panelists and keynote speaker also plan a wide-ranging inquiry into questions of federalism and administrative law and a preliminary assessment of the potential implications of the forthcoming Watters ruling on individual borrowers and the practices of the residential mortgage industry.

Schedule