Scalia breaks ranks, slams Bush officials on bank regulation

WASHINGTON — In a rebuke of the Bush administration, the Supreme Court ruled Monday that a federal bank regulator erred in quashing efforts by New York state to combat the kind of predatory mortgage lending that triggered the nation’s financial crisis.

The 5-4 ruling by the high court was unusual. Justice Antonin Scalia, arguably the most conservative jurist, wrote the majority’s opinion and was joined by the court’s four liberal judges.

The five justices held that contrary to what the Bush administration had argued, states can enforce their own laws on matters such as discrimination and predatory lending, even if that crosses into areas under federal regulation.

...“This Supreme Court decision is a victory for taxpayers, who have suffered enormously as a result of abusive business practices in all types of lending,” said the Center for Responsible Lending, a consumer advocacy organization based in Durham, N.C. “This decision will help to restore confidence in the financial services industry and the national economy.”

...At issue in Cuomo v. Clearing House Association is whether the Office of the Comptroller of the Currency, the chief regulator of national banks, erred in shutting down New York’s efforts to question banks about predatory lending practices.

The OCC convinced lower courts that then-New York Attorney General Eliot Spitzer had overstepped into federal territory when he sought non-public information about the lending practices of federally regulated banks. Forty-nine states joined New York in appealing the lower court ruling.

...The Bush administration argued that it had to the right to pre-empt any state effort to regulate. But after winning that argument, the OCC failed to address the issues of predatory lending that Spitzer, and later his successor Andrew Cuomo, sought to address.

Spitzer and Cuomo were concerned that white borrowers appeared routinely to be given lower interest rates than blacks and Hispanics. Their hunch was later proved correct, as poor underwriting standards and the explosion of adjustable-rate subprime mortgages — those given to borrowers with the weakest credit, most often minorities — combined to create record foreclosures.

Losses in mortgage finance morphed into a global credit crisis, bringing down venerable investment banks including Bear Stearns and Lehman Brothers and insurer American International Group. The rest is history.

This is an SAB Public Service Message:

The author of this post, blackwaterboob, is a self convicted and unrepentant racist and SAB troll.  His every utterance should be carefully evaluated in light of these established facts.

This concludes this SAB Public Service Message.  Real posts intended to promote conversation and debate will be discernible in that their author will not be blackwaterboob.