NY Governor On The Mortgage Meltdown: "The Bush Administration Will Not Be Judged Favorably"

Eliot Spitzer, the governor of New York and that state’s former Attorney General, has written an Op-Ed for the Washington Post in which he claims that the Bush Administration used the Office of the Comptroller of the Currency to prevent states from stopping the predatory lending practices that lead to the current financial crisis:

What did the Bush administration do in response? Did it reverse course and decide to take action to halt this burgeoning scourge? As Americans are now painfully aware, with hundreds of thousands of homeowners facing foreclosure and our markets reeling, the answer is a resounding no.

Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.

Let me explain: The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.

Spitzer claims that the OCC invoked “a clause from the 1863 National Bank Act” to preempt state predatory lending laws and prevent the states from protecting consumers against abusive loans.

But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.

Spitzer says the banking industry claimed at the time that consumer protection laws would have denied consumers access to credit.

Predatory Lenders’ Partner in Crime [Washington Post] (Thanks, AB!)

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