Cuomo Can Investigate Banks for Discriminatory Lending
July 10th, 2009

New York prosecutors have gotten permission from the US Supreme Court to investigate whether national banks discriminate against people of color when lending. Last week’s ruling does not allow state prosecutors to subpoena the banks, but can take them to court if they think they’re breaking state fair-lending laws.

The case, which spanned two presidential administrations, was brought by New York Attorney General Andrew Cuomo, who sought to pick up an investigation started by his predecessor Eliot Spitzer in 2005.

In an interview with Reuters, Spitzer said that regulators lost an opportunity to investigate lending practices that eventually brought the economy to its knees. “We didn’t quite know how much or in what form, but there was much there that was troubling,” Spitzer said. “Obviously, it’s a little late to forestall the cataclysm that emerged when the subprime debt fuse finally exploded.”

“Had Spitzer been able to investigate the banks,” Stephanie Mencimer of Mother Jones chimes in, “he might have put the brakes on some of these practices fully two years before the entire subprime industry collapsed and brought the rest of the economy down with it.”

But the Wall Street Journal editorial board thinks investigations such as this cause more problems than they will solve. “Eliot Spitzer has departed the national stage in ignominy,” they wrote the day after the ruling, “but the damage he did as an unrestrained state Attorney General lives on, notably in a dubious 5-4 victory yesterday before the Supreme Court.”

Still, Errol Louis of the Daily News points out that there was plenty of reason to investigate the banks. “Spitzer was more than justified in making inquiries in 2005, when his office discovered that more than 80 percent of all high-cost subprime loans in the New York metro area went to black and Latino borrowers. The comparable number for white borrowers was 9.4 percent.”

By on July 10, 2009, 4:45 pm
In category: Civil Rights,Economy,Housing,Law | Comments Off on Cuomo Can Investigate Banks for Discriminatory Lending

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