Saturday, June 18, 2005

Spitzer in turf war over probe

New York Daily News
Spitzer in turf war over probe
Friday, June 17th, 2005

State Attorney General Eliot Spitzer said he has evidence banks broke state civil rights laws and called a suit by a U.S. regulator seeking to "join" efforts by a lender's group to block his mortgage probe, "shameful."

The U.S. Office of the Comptroller of the Currency and a group of banks the agency oversees filed separate suits against Spitzer, asking a federal judge to stop him from investigating whether lenders charged blacks and other minorities excessive mortgage rates.

"It's unconscionable that the OCC would help the banks it regulates draft litigation to shield them from reasoned enforcement of consumer protection," Spitzer said in a statement.

The Comptroller and the Clearing House Association, which represents commercial banks, contend that Spitzer lacks legal authority to investigate mortgage lending. They say only a federal banking regulator may conduct such an inquiry.

The banks say state oversight will add to their regulatory burden. Spitzer in April launched an investigation into the mortgage lending practices of at least three banks - JPMorgan Chase, HSBC and Wells Fargo.

It's his first foray into consumer banking after probes of the securities, mutual fund and insurance industries over practices he claimed were abusive.

Spitzer said that evidence already disclosed by the banks "appears to show a significant racial disparity that could violate" New York's civil rights laws.

'The OCC agrees with the banks' stance. Last month Julie Williams, acting head of the agency, said she told Spitzer that his interference may "disrupt and impede" her agency's probe of discriminatory lending.

In January, the OCC issued a ruling asserting that it is the primary regulator of national banks.

At a brief hearing in Manhattan federal court, a lawyer from Spitzer's office said the attorney general had agreed to hold off, at least until Monday, before issuing subpoenas.