New York Attorney General Eliot Spitzer won a key ruling on preemption Thursday, when a federal judge in Albany sent back to state court a suit against a Delaware state bank and its New York partners.
The suit, which Mr. Spitzer filed in September, had accused County Bank of Rehoboth Beach of allowing payday lenders to rent its charter to illegally circumvent New York's usury laws.
County Bank and its co-defendants, which include the Pennsylvania payday lenders Cashnet Inc. of Elkins Park and TC Services Inc. of Bala Cynwyd, wanted the case moved to the U.S. District Court for the Northern District of New York to get the state's claims preempted through the Federal Deposit Insurance Act. The Federal Deposit Insurance Corp. is the most permissive federal regulator in terms of payday partnerships.
