Marquette Nat. Bank of Minneapolis V. First of Omaha Service Corp. - Aftermath

Aftermath

The decision attracted little notice at the time. Two years later, the possibilities it opened up became clearer when Citibank, squeezed by interest rate caps, decided to move its credit-card operations out of New York. The company persuaded Bill Janklow, then governor of South Dakota, whose agricultural economy was struggling at the time due to high fuel prices, to persuade that state's legislature to formally invite the bank there, as required by federal law before a national bank can do business from a state. He then successfully lobbied the legislators to pass a bill drafted by the bank that repealed the state's cap on interest rates, something a small group of legislators were already trying to do. Citibank quickly moved the 300 white-collar jobs in its credit-card division to Sioux Falls, where it has been ever since.

South Dakota lured a few more large credit operators, such as Wells Fargo, before corporation-friendly Delaware repealed its anti-usury laws as well. Several other states also repealed their interest-rate caps, more lenders entered the credit-card field and introduced newer products and by 1990 the amount of credit cards in use in the U.S. had more than doubled. Credit cards, once a loss leader for the banks that issued them, became a major profit center as banks aggressively marketed them to "revolvers", customers who carried large balances but rarely paid more than the monthly minimum, resulting in large interest payments to the bank

In the 1990s, Citibank's South Dakota operations would figure in a related Supreme Court case, Smiley v. Citibank (517 U.S. 735 (1996)). This time state regulations on the late fees charged by credit-card issuers were challenged, and again the court ruled unanimously that they were also pre-empted by the National Banking Act, as interpreted by the Comptroller of Currency.