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NEW YORK � Attorney General Eliot Spitzer has been blocked from pursuing national banks for allegedly discriminatory lending practices. Southern District Judge Sidney Stein yesterday issued an injunction sought by the federal Office of the Comptroller of the Currency, ruling that Spitzer does not have the authority to enforce anti-discrimination laws against the banks. Judge Stein found that Spitzer’s assertion of authority to enforce the laws is preempted by the National Bank Act and a regulation under the act adopted by the Office of the Comptroller of the Currency, the agency responsible for supervising the nation’s banking system. The OCC’s authority to visit and supervise the national banks, the judge found, was exclusive. OCC sued in June seeking to block a wide-ranging investigation by Spitzer into the lending practices of the banks. In Office of the Comptroller of the Currency v. Spitzer, 05 Civ. 5636, the agency asserted that the National Bank Act, 12 U.S.C. � 484(a) and its implementing regulation, 12 C.F.R. �7.4000, gives it exclusive authority to investigate and prosecute enforcement actions to compel the bank’s compliance with state and federal laws. Spitzer countered by claiming that the comptroller’s office was misinterpreting �484 and, even if that interpretation was found valid, he would still be allowed to enforce fair lending laws against the banks under the federal Fair Housing Act, 42 U.S.C. �3601 et seq. Judge Stein agreed with the OCC, finding that the regulation “reflects a permissible construction of �484″ of the act. And because the comptroller’s office had proven that it made “a permissible construction” of the section, the judge said, the agency’s judgment is entitled to deference under U.S. Supreme Court case law and its construction must be given “controlling weight.” Judge Stein also found that the New York attorney general’s “assertion of visitorial authority impermissibly interferes with the OCC’s supervisory role.” Therefore, the judge permanently enjoined Spitzer from “issuing subpoenas or demanding inspection of the books and records of any national banks in connection with his investigation into residential lending practices; from instituting any enforcement actions to compel compliance with the attorney general’s already existing informational demands; and from instituting actions in the courts of justice against national banks to enforce state fair lending laws.” Spitzer’s investigation focused on alleged glaring racial disparities in subprime mortgage pricing. He contended that federal preemption of his investigation would interfere with his obligation to enforce New York’s civil rights laws. Spitzer had sent letters to several major banks in April saying data indicated that the price of a home loan may have been based on the race of the borrower. Saying that the racial disparities in the loan rates might violate federal and state laws barring discrimination in lending, he requested additional, non-public information from the banks. FEDERAL ‘POWER GRAB’ Spitzer reacted strongly in June when the OCC filed suit, calling it a “shameful . . . effort to shield banks from the scrutiny of state regulators.” In court papers, he also called the regulation a jurisdictional “power grab” by the comptroller’s office, one to which Judge Stein owed no deference. The Associated Press quoted Spitzer as saying Wednesday that he would appeal the ruling. “The law authorizes this office to protect New Yorkers against discrimination by all lenders that do business here,” he said in a statement. “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?” In filing the suit, officials of the comptroller’s office said they were not contesting the importance of enforcing federal and state anti-discrimination laws and provisions, but merely trying to ensure a uniform, consistent system of national regulation of banks. The agency’s suit came on the heels of a suit filed by an association of commercial banks also challenging Spitzer’s authority. Judge Stein yesterday issued a companion ruling in the banks’ case, The Clearing House Association v. Spitzer, 05 Civ. 5629. In that case, Judge Stein addressed Spitzer’s argument that he was entitled to pursue the banks under the civil enforcement provision of the Fair Housing Act, 42 U.S.C. �3612(a), which authorizes the attorney general to sue national banks in the state’s parens patriae capacity for alleged violations of the act’s fair lending provisions. “Because an action in the state’s parens patriae capacity to enforce the FHA’s fair lending provisions against the Clearing House national bank members constitutes a form of visitorial authority prohibited by � 484(a) of the National Bank Act, and is not expressly authorized by the FHA, the Clearing House is entitled to the injunction it seeks,” he said. Mark Hamblett is a reporter with the New York Law Journal, a Recorder affiliate.

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