- The Washington Times - Wednesday, October 12, 2005

BLOOMBERG NEWS

A federal judge stopped New York Attorney General Eliot Spitzer from investigating whether residential-lending practices are discriminatory at national banks.

U.S. District Judge Sidney H. Stein yesterday issued an order that blocks Mr. Spitzer from demanding information from the banks and from suing them to enforce state fair-lending laws. The decision comes in a suit filed by the Office of the Comptroller of the Currency, which says it has exclusive authority to regulate nationally chartered banks.

“This is a big legal victory for Citigroup, Wells Fargo, HSBC and JPMorgan Chase,” Jaret Seiberg, an analyst at Stanford Washington Research Group, wrote in a note to clients yesterday. “These four banks no longer must worry that Spitzer will try to force them into fair-lending settlements.”

The decision stops Mr. Spitzer’s investigation, which began earlier this year, and may discourage other attorneys general from trying to enforce their states’ laws against national banks.

“The law authorizes this office to protect New Yorkers against discrimination by all lenders that do business here,” Mr. Spitzer’s office said. “We urge the banks not to hide behind today’s rulings but instead to stand up and voluntarily give this office the information necessary to answer the critical question: Is there ongoing discrimination?”

Mr. Spitzer will appeal the ruling, according to the statement from his office.

“It’s important to remember that these cases did not question the applicability of a state’s consumer protection laws to national banks; they simply answered the question of who can and should enforce the laws,” said Edward L. Yingling, president of the American Bankers Association.

The ABA, joined by two other industry groups, filed a brief supporting the comptroller office’s position in the case. Mr. Spitzer was backed by 30 state attorneys general, two Realtors associations, and consumer and civil rights groups.

Dean DeBuck, a spokesman for the comptroller’s office, said the agency was “very pleased” with the decision.

“The New York State attorney general may not exercise visitorial powers over national banks in connection with an investigation into the banks’ residential lending practices,” Judge Stein wrote. “This opinion says nothing about whether it is better public policy to vest visitorial powers over national banks in state attorneys general as well as in the OCC. That is a matter for the legislative and executive branches of government to determine.”

Judge Stein also ruled yesterday in a related suit filed by the Clearing House Association, which represents commercial banks, that the federal Fair Housing Act does not give Mr. Spitzer the authority to enforce its fair-lending provisions.

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