An association of leading commercial banks and a federal agency sued Attorney General Eliot Spitzer yesterday, saying his probe into the...
NEW YORK — An association of leading commercial banks and a federal agency sued Attorney General Eliot Spitzer yesterday, saying his probe into the lending practices of national banks violates laws ensuring banks are not subject to supervision by state authorities.
The lawsuit in U.S. District Court in Manhattan asked the court to block Spitzer from demanding information to enforce federal and state discrimination-in-lending laws against banks belonging to the Clearing House Association.
The Manhattan-based association said it was taking the legal action as part of its role of protecting the rights of its 11 members, eight of which are federally chartered national banks already subjected to federal regulation.
The Office of the Comptroller of the Currency, the Treasury Department agency that oversees national banks, filed a related suit against Spitzer seeking to block what it called his interference in the agency’s fair-lending supervision.
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The agency “is absolutely committed to assuring that the national banking system is free of lending discrimination of any sort,” acting Comptroller Julie Williams said in a statement. “This issue is vital and it is complex, and it must not be politicized. The (Comptroller’s office) will take whatever steps are needed to assure that the lending practices in the national banking system are reviewed thoroughly, carefully and fairly.”
The bank association said at least three of its members — HSBC Bank USA, JPMorgan Chase Bank and Wells Fargo Bank — have been subjected to the probe.
Spitzer has been questioning some of the nation’s biggest banks in a probe of potential discriminatory practices in setting mortgage rates and fees.
Washington Mutual, one of the nation’s largest issuers of home mortgages, was queried by Spitzer about its loan practices. But the thrift is not part of the commercial bank association and isn’t participating in the lawsuit, said spokeswoman Libby Hutchinson.
The lawsuit said the banks were told in letters dated April 19 and April 20 from Spitzer’s office that it had begun a preliminary inquiry into lending practices to find potential violations of federal and state anti-discrimination laws.
The lawsuit said the banks already are subject to monitoring by the Comptroller’s office and that Spitzer is threatening to increase the compliance burden they face in a manner prohibited by federal law.
Spitzer spokeswoman Juanita Scarlett said she could not comment on the lawsuit. But she said Spitzer’s office has “a long history of protecting consumers through our civil rights and consumer fraud enforcement.”
She added, “We will aggressively pursue this case. We are simply trying to determine if the lending patterns by major financial institutions are equitable across the board.”
Community groups have said blacks and Hispanics are more likely than whites to get higher-cost mortgage loans. Seattle Times staff contributed
to this report.