Cantero II: Circuit Split and OCC Preemption Determination Set Up Likely Supreme Court Review

Subscribe and Listen

National bank preemption is headed toward another Supreme Court showdown. The Second Circuit has held that New York’s mortgage escrow-interest requirement is preempted, directly conflicting with the First Circuit’s decision upholding a comparable Rhode Island requirement and the Ninth Circuit’s decision allowing a similar California law to remain in effect. The OCC has sided with the Second Circuit, issuing final preemption regulations concluding that state laws requiring national banks to pay interest on mortgage escrow accounts are preempted.

In the latest episode of the Consumer Finance Monitor podcast released today, Alan Kaplinsky (founder and former chair for 25 years, and now Senior Counsel of our Consumer Financial Services Group) is joined by Professor Emeritus Arthur Wilmarth of George Washington University Law School to discuss the Second Circuit’s post-remand decision in Cantero v. Bank of America, the Supreme Court’s 2024 decision in the case, the conflicting decisions in Conti v. Citizens Bank in the First Circuit and Kivett v. Flagstar Bank in the Ninth Circuit and the OCC’s

The immediate dispute is whether national banks must pay interest on residential mortgage escrow accounts under state law. The broader question is whether state consumer financial laws (other than state usury laws) may regulate national banks and, if so, when those laws are preempted by the National Bank Act. With certiorari petitions pending in Cantero and Kivett, further proceedings in Conti potentially bringing that case back before the Supreme Court, and the OCC’s regulations now under challenge by ten state attorneys general, the circuit split and the OCC’s intervention make another Supreme Court review increasingly likely.

Our podcast with Professor Wilmarth explores these issues in depth and provides an important perspective on what could become one of the most significant national bank preemption disputes in years.

Consumer Finance Monitor is hosted by Alan Kaplinsky, Senior Counsel at Ballard Spahr, and the founder and former chair of the firm's Consumer Financial Services Group. We encourage listeners to subscribe to the podcast on their preferred platform for weekly insights into developments in the consumer finance industry.

View a transcript of the recording here.

Copyright © 2026 by Ballard Spahr LLP.
www.ballardspahr.com
(No claim to original U.S. government material.)

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher.

This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.