Thursday, December 11, 2003

For years we've heard Republicans denounce "Washington, D.C." and say they believe in "returning power to the states." But have you noticed you don't hear much about returning power to the states anymore? That's because many states and municipalities want to do things the Gop's principal constituents -- lobbyists -- don't like: fighting corporate malfeasance, for instance, or buying prescription drugs from Canada. A couple of days ago, USA Today had a good story about this federal-state conflict.

And here's another example, as reported by Newsday:

New York State Attorney General Eliot Spitzer, who's already clashed with the Securities and Exchange Commision over the investigation of mutual funds, yesterday threatened to sue federal banking regulators if they attempt to curtail his enforcement power.

Flanked by politicians and consumer advocates during a news conference at his Manhattan office, Spitzer railed against the Office of the Comptroller of the Currency's recent proposal to allow federal banking law to supercede state consumer protection law. "The OCC is trying to pre-empt state and local laws ... This is bad law; it is simply wrong," said Spitzer, adding, "We know how to draft lawsuits," if the OCC continues to push its proposal....

Spitzer said he and other state attorney generals became concerned when the OCC sent a letter to national banks last year telling them they are not subject to state enforcement and to "consult with the OCC if state officials contact them concerning the potential application of state law."...

Spitzer, New York State Banking Department Superintendent Diana Taylor and consumer groups say that such a proposal would allow national banks to sidestep New York's strong anti-predatory lending laws.

Predatory lenders offer loans with exorbitant interest rates to disadvantaged consumers, which include immigrants, African Americans, Latinos and seniors. Spitzer and the New York State Banking Department have gone after several large financial institutions, such as Delta Funding and Household, for abusive lending. Spitzer said predatory lending costs American consumers more than $9.1 billion a year.

If national banks are allowed to sidestep these laws, it will encourage state-chartered banks to do the same by becoming national banks, he said....

Go, Eliot!

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