Spitzer: Federal Preemption Policy Drove Rise in Predatory Lending

In a scathing op-ed published Thursday at the Washington Post, current New York governor and former New York AG Eliot Spitzer accuses the Bush administration of being a ‘partner in crime’ to the current subprime mortgage debacle. Spitzer focuses on the Office of the Comptroller of the Currency, which he said was an instrument for “an unprecedented assault on state legislatures, as well as on state attorneys general and anyone else on the side of consumers.”

Recalling the fight that helped him make his name, Spitzer writes:

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government’s actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

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.