[JURIST] A judge for the United States District Court for the Southern District of New York [official website] ruled [opinion, PDF] on Friday that New York City’s regulation of the banking industry through the Responsible Banking Act [text, PDF] is unconstitutional. The Act was passed by New York’s City Council in 2012 over a veto of then-mayor Bloomberg and required lenders to disclose confidential loan and foreclosure data in order to curb discriminatory practices. The act also provided for a city-appointed eight-person panel that could deny public funding to banks that refused to adhere to the Act’s requirements, which is why the act to was declared unconstitutional. District Court Judge Katherine Polk Failla [official website] noted that the panel was appropriating powers that are constitutionally federal :

A review of the extensive record in this case confirms that while the animating concerns of the City Council are valid, the means by which it sought to harness banks to redress those concerns intrudes on the province of the federal and state governments

The suit was brought by the New York Bankers Association (NYBA) [official website], which had been attempting to challenge the law for some time. Previous efforts were unsuccessful due to then-Mayor Bloomberg’s refusal to enforce the law. However, current Mayor Bill de Blasio’s implementation of the Act gave the NYBA standing to challenge the law.

New York has a history financial corruption scandals, the latest of which is the Madoff Ponzi scheme of 2008. On Thursday, the last of the defendants in that action was sentenced to six months in prison for his involvement in Bernard Madoff’s [JURIST news archive] multi-billion-dollar Ponzi scheme. In June 2014 a former accountant for Madoff plead guilty [JURIST report] to charges connected to the Ponzi scheme. In March 2014 a federal jury in the US District Court for the Southern District of New York returned a guilty verdict [JURIST report] for five former associates of Madoff on charges they aided and profited from the Ponzi scheme. In January 2014 a federal judge approved a settlement [JURIST report] between the US Attorney’s Office for the Southern District of New York and JPMorgan Chase over the bank’s failure to report internal suspicions regarding Madoff’s Ponzi scheme. In September 2013 a judge for the US Bankruptcy Court for the Southern District of New York ruled [JURIST report] that victims can only recover the principal amount invested without accounting for inflation over the past five years and excluding interest. In April 2013 a judge for the US Court of Appeals for the Second Circuit rejected a suit [JURIST report] by victims against the US Securities and Exchange Commission.