US supervisors at loggerheads

Daily news headlines

NEW YORK & WASHINGTON, DC – John Dugan, US Comptroller of the Currency, and Eliot Spitzer, the governor of New York, are at loggerheads over the investigation of New York banks’ lending practices.

The Office of the Comptroller of the Currency (OCC) released a statement yesterday (February 14) in response to allegations from the New York regulator that it has tied the hands of the state supervisor. “Almost everyone who has paid attention to the subprime lending crisis has concluded that OCC-regulated national banks were not the problem. Instead, the worst abuses came from loans originated by state-licensed mortgage brokers and lenders that are exclusively the responsibility of state regulators.”

“However, comments from today assert that the OCC and national bank pre-emption have prevented the states from taking action against predatory or abusive lenders. That’s just plain wrong.”

Spitzer spoke out against the OCC yesterday in the Washington Post, saying federal authorities had betrayed borrowers. “Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye,” he said.