New York – A federal judge Wednesday blocked New York state Attorney General Eliot Spitzer from investigating national banks’ lending practices, saying the probe is prohibited by federal law.
U.S. District Judge Sydney Stein ruled in favor of the Clearing House Association and the Office of the Comptroller of the Currency, an arm of the Treasury Department that oversees the banking system.
Spitzer had said his probe to see whether minorities are being charged higher interest rates on home mortgage loans had already shown a “significant racial disparity that could violate state civil-rights laws.”
The judge said Spitzer cannot enforce the state’s fair-lending laws against national banks or their operating subsidiaries by issuing subpoenas and bringing enforcement actions against them.
Both the Clearing House Association and the Office of the Comptroller of the Currency sued Spitzer earlier this year, arguing that the attorney general was interfering with their supervisory powers. The Clearing House Association is an organization representing federally chartered commercial banks.
They contended that the federal Fair Housing Act did not authorize Spitzer to bring civil actions to enforce its fair-lending provisions against national banks.
The Fair Housing Act prohibits discrimination in lending but is broadly written to eliminate discrimination in housing.
Stein noted that the act directs the various federal banking regulators, including the Office of the Comptroller of the Currency, to cooperate with the secretary of Housing and Urban Development and the U.S. attorney general to enforce its provisions.
He added: “None of the various enforcement provisions expressly grants state attorneys general the power to enforce the law.”
Spitzer said he would appeal.
