WASHINGTON (Legal Newsline)- State attorneys general can investigate national banks but they cannot on their own subpoena financial institutions that have branches in other states, the U.S. Supreme Court ruled Monday.

The nation's highest court did say, however, that national banks are subject to some state laws under the National Banking Act. Because of that, the court said that attorneys general may seek a court's help to enforce those laws.

The case came to the Supreme Court after the state of New York asked the justices to overturn a federal appeals court decision that blocks states from investigating the lending practices of nationally chartered banks.

In 2005, then-New York Attorney General Eliot Spitzer wanted to investigate whether minorities were being forced to pay higher interest rates on home mortgage loans.

He asked financial institutions, including Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. to voluntarily produce internal documents about their mortgage-lending practices in New York.

At trial, a federal judge ruled that Spitzer could not enforce state fair-lending laws against national banks by bringing enforcement actions against them or issuing the banks subpoenas.

The 2nd U.S. Circuit Court of Appeals ruled that the Office of the Comptroller of the Currency, a part of the Treasury Department that oversees nationally chartered banks, and other federal agencies, have responsibility over such investigations.

In a win for the New York attorney general's office, the U.S. Supreme Court disagreed with the appeals court in its ruling.

"Here, the threatened action was not the bringing of a civil suit, or the obtaining of a judicial search warrant based on probable cause, but rather the attorney general's issuance of subpoena on his own authority," Associate Justice Antonin Scalia wrote for the court. "That is not the exercise of the power of law enforcement 'vested in the courts of justice.'"

The case is Cuomo v. The Clearing House Association, 08-453.

From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.