U.S. Judge Deals a Setback to Spitzer

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The New York Sun

In a setback to New York State’s attorney general, Eliot Spitzer, a federal judge in Manhattan barred his office yesterday from subpoenaing documents and instituting enforcement actions against national banks as part of an investigation into lending practices.


In an order issued yesterday, U.S. District Judge Sidney Stein ruled that Mr. Spitzer’s office had infringed on the Office of the Comptroller of the Currency’s role in supervising national banks with his office’s investigation earlier this year of possible racially discriminatory practices in residential lending.


Judge Stein banned Mr. Spitzer’s office from issuing subpoenas or demanding inspection of the books and records of any national banks in connection with the probe.


The judge also ordered Mr. Spitzer not to institute any enforcement actions in order to compel compliance with his information requests or to institute court actions against national banks to enforce state fair lending laws.


A spokesman for Mr. Spitzer, Brad Maione, said the attorney general’s office would appeal the ruling.


“We believe today’s ruling is wrong and we will appeal,” Mr. Maione said. “The law authorizes this office to protect New Yorkers against discrimination by all lenders that do business here. 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?”


The OCC filed a lawsuit against Mr. Spitzer in June, saying his investigation infringed on its regulatory role. In the lawsuit, the OCC said Mr. Spitzer had sought public and nonpublic information about the mortgage lending business of four national banks that do business in New York.


Separately, Judge Stein said the Clearing House Association, a commercial banking group, is entitled to similar relief in a separate lawsuit it filed earlier this year.


In its lawsuit, also filed in June, the group asked for a preliminary injunction to prevent Mr. Spitzer from conducting inquiries into the lending activities of federally chartered nation al banks, saying it violates the National Bank Act.


The Clearing House Association said at the time that the banking units of HSBC Holding, JPMorgan Chase & Company, and Wells Fargo had turned over the federally required data to Mr. Spitzer’s office, but were threatened with a subpoena after declining to provide him with the nonpublic information.


Mr. Spitzer also sent a letter to Citigroup, seeking information about its mortgage lending operations, the OCC said in its lawsuit.


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