National banking regulator sues N.Y. Attorney General

June 20, 2005

Seeks to block state from interfering with fair lending exam


Inman News

The Office of the Comptroller of the Currency has filed a lawsuit against the New York Attorney General, seeking a declaratory judgment and preliminary injunction to prevent him from interfering in the OCC's fair lending examination and supervision processes at national banks.

The OCC's action Thursday follows the filing of a suit by The Clearing House Association, New York, seeking similar remedies against the New York Attorney General.

New York Attorney General Eliot Spitzer has been investigating the lending practices of national banks for possible discrimination in lending practices. The OCC says Spitzer's probe violates laws that ensure national banks are not subject to supervision by state authorities.

Juanita Scarlett, a spokeswoman for Spitzer's office, told the Associated Press she could not comment on the lawsuit, but said the office will "aggressively pursue this case. We are simply trying to determine if the lending patterns by major financial institutions are equitable across the board."

Acting Comptroller of the Currency Julie L. Williams in a statement Thursday said, "The OCC is absolutely committed to assuring that the national banking system is free of lending discrimination of any sort. This issue is vital and it is complex and it must not be politicized."

She said the federal agency would take necessary steps to assure that the lending practices in the national banking system are reviewed thoroughly, carefully and fairly.

Williams said she reached out to the Attorney General's office last month to discuss how the two offices could work together to ensure laws against lending discrimination are upheld. "The Attorney General's office has indicated that it is not interested in pursuing such a collaborative approach," she said.

The New York Attorney General's office has authority for a number of lending institutions operating in the state, Williams noted, but federal law provides that lending activities of national banks and their subsidiaries are under the jurisdiction of the OCC.

"These are not new legal standards," she added. "The laws here were enacted in 1864."

The OCC is in the process of assessing new data collected under the Home Mortgage Disclosure Act as part of its fair lending evaluations. "The efforts of the New York Attorney General to examine and direct the actions of national banks and their operating subsidiaries creates confusion and uncertainty concerning the OCC's authority and its supervisory expectations for national banks that undermines our ability to carry out our supervisory responsibilities," Williams said.

In its suit, the OCC noted that the New York Attorney General's office has sought both public and non-public information about the mortgage lending business of four national banks that do business in New York.

However, Section 484 of the National Bank Act, enacted in 1864, generally forbids any assertion of visitorial authority by state officers to supervise or examine national banks and prohibits state authorities from inspecting the records of national banks or bringing enforcement actions against national banks, except as specifically authorized by federal law. Under federal law and OCC regulation, the operating subsidiaries of national banks are treated the same as the bank itself.

The defendant's "assertion of visitorial authority over national banks and their operating subsidiaries represents an interference with the OCC's plenary authority to ensure the efficiency and integrity of the federal national bank supervisory regime," the OCC complaint states.

In addition to seeking a preliminary injunction, the OCC is asking the federal court to:

  • Declare that the state Attorney General may not demand, examine, or inspect the books and records of national banks or their operating subsidiaries, except as specifically authorized under federal law.
  • Declare that the New York agency has no authority to enforce the Equal Credit Opportunity Act, New York Executive Law section 296-a or other laws, rules or regulations concerning the banking activities of national banks or their operating subsidiaries except as specifically authorized under federal law.
  • Permanently enjoin the New York Attorney General from demanding, examining or inspecting the books and records of any national banks or their operating subsidiaries, except as specifically authorized by federal law.
  • Permanently enjoin the New York Attorney General from instituting any enforcement activities against national banks or their operating subsidiaries, except as specifically authorized by federal law and from any further usurpation of the OCC's exclusive authority to supervise and examine national banks or their operating subsidiaries, except as specifically authorized by federal law.
The Office of the Comptroller of the Currency was created by Congress to charter national banks, and to oversee a nationwide system of banking institutions.

Copyright 2005 Inman News


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