On January 26, 2004 New York City Mayor Michael Bloomberg and AFSA, as a co-plaintiff, won a summary judgment in the lawsuit against the New York City Council.

As Credit readers may recall, in November 2002, the New York City Council passed (over the Mayor's veto) a local law that prohibited any entity that engaged in "predatory lending" from doing business with the City. The City Council defined "predatory lending" to include practices that are legal under state and federal law, and defined "predatory lenders" to include entities far removed from any mortgage lending, such as purchasers of mortgage-backed securities (if the underlying mortgage was "predatory"). The resulting law would have forced many financial institutions to choose between offering subprime mortgages (directly or through affiliates) and providing financial services to New York City.

Mayor Bloomberg sued the Council, and AFSA intervened as a co-plaintiff. We succeeded in obtaining a stay of the law, and the law is now permanently enjoined. The Court largely adopted AFSA's argument that the local law is preempted by state and federal law, while relegating to a footnote some of the municipal power arguments advanced by the Mayor.

The City Council may appeal.