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34 States Join NY's Spitzer in Pressing Civil Rights Probe of Major Banks

August 8, 2005
Thirty-four states and a coalition of consumer advocates have joined New York Attorney General Eliot Spitzer in opposing a federal agency's effort to shield national banks from a state civil rights inquiry.

Spitzer and his allies filed briefs today in opposition to efforts by the federal Office of the Comptroller of Currency (OCC) and a private association of leading commercial banks to obtain a court order preventing Spitzer from investigating violations of state and federal anti-discrimination laws by four national banks.

"The OCC’s effort to shield national banks from vigorous enforcement of New York’s civil rights laws is shameful and indefensible," Spitzer said. "The OCC should be encouraging efforts to obtain compliance with civil rights laws, not blocking those efforts."

In the brief filed today in U.S. District Court in New York, the Attorney General made the following arguments:

• The National Bank Act does not prohibit state attorneys general from enforcing state laws against national banks. Indeed, for over 140 years, no one, including the OCC under dozens of Administrations, has questioned the fundamental right of the states to enforce non-preempted laws against national banks;

• Congress explicitly authorized state attorneys general to bring cases pursuant to the Fair Housing Act and created a multi-layered system of enforcement of fair housing laws at the state level;

• The OCC’s attempt to shield the banks would undermine the federal government’s longstanding recognition of the states’ authority to pass and enforce their own laws.

At issue is an investigation begun by Spitzer’s Civil Rights Bureau, which was prompted by data reported pursuant to the Home Mortgage Disclosure Act (HMDA). The data revealed that minority borrowers were significantly more likely to receive higher interest mortgage loans than white customers.

To determine the source of the disparity, Spitzer’s office sent letters to a number of banks including Citibank, Wells Fargo, HSBC, and JP Morgan Chase requesting information regarding the way that mortgage rates were set by the banks in order to determine the effect of race on the interest rates received by customers.

With the exception of Wells Fargo, all of the banks initially promised cooperation and provided some of the requested materials. The cooperation ended abruptly on June 16 with the filing of lawsuits by the Office of the Comptroller of Currency and an industry group known as the Clearing House Association.

The Clearing House filed a complaint asking that the Court preliminarily and permanently enjoin the Attorney General from taking any action to enforce anti-discrimination laws against Clearing House member banks. OCC filed a similar complaint requesting that the Attorney General be enjoined from instituting any enforcement activities against national banks.

In their complaints, the banks and the OCC argue that, even though the state anti-discrimination laws are not preempted by federal law and apply to national banks, only the OCC may enforce such laws, and the Attorney General may not.

On June 20, Judge Sidney Stein denied the Clearing House’s request for a temporary retraining order. Today’s brief was filed in opposition to the plaintiffs’ requests for injunctions to halt any further investigation by the Attorney General’s office.

A separate brief supporting Spitzer was filed by the attorneys general of the states of: Alaska; Arizona; Arkansas; California; Connecticut; Idaho; Illinois; Indiana; Iowa; Kentucky; Maine; Maryland; Massachusetts: Michigan: Minnesota; Mississippi; Montana, Nebraska; New Mexico; North Carolina; North Dakota; Ohio; Oklahoma; Oregon; South Carolina; South Dakota; Tennessee; Utah; Vermont; Washington; West Virginia; Wisconsin; the District of Columbia and the Commonwealth of Puerto Rico.

Numerous public interest groups also filed a brief supporting Spitzer, including: the National Community Reinvestment Coalition; Center for Responsible Lending; National Fair Housing Alliance; AARP; NAACP Legal Defense and Educational Fund, Inc.; National Association of Consumer Advocates; Fair Housing Justice Center of Help USA; Foreclosure Prevention Project of South Brooklyn Legal Services; Neighborhood Economic Development Advocacy Project; Long Island Housing Services; Empire Justice Center; Legal Services for the Elderly in Queens; Staten Island Center for Independent Living; Greater Rochester Community Reinvestment Coalition; Utica Citizens in Action; and Chautauqua Home Rehabilitation and Improvement Corporation.

The National Association of Realtors and the New York Association of Realtors also filed a brief in support of Spitzer, as did the Greenlining Institute of California.

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