Statement By Attorney General Eliot Spitzer Regarding The Comptroller Of Currency's (occ) Advisory Letter To National Banks

"I am pleased that the OCC has finally recognized its folly in directing national banks to ignore inquiries from state officials acting on behalf of consumers. The new guidelines issued today - which pulled back from its former position that member banks should ignore state inquiries and report any such contact to them - are clearly a step in the right direction.

However, this office remains concerned that the OCC continues to advise national bank officials that they are immune from the enforcement of state laws. As a matter of law, the OCC is wrong. As a matter of public interest, it is the states that have traditionally been the ‘local cops on the beat' protecting their residents from illegal, unscrupulous and sometimes, predatory practices. The states have the resources, the experience and the law on their side.

In fact, my office recently engaged in a effort to mediate a dispute between a New York resident and an affiliate of a nationally-chartered bank. Unfortunately, due to the OCC directive to its member banks, the financial institution refused to speak with my office. Due to the imminent threat of foreclosure on this consumer's home, my office was forced to resort to litigation in which we obtained a restraining order against the foreclosure. The case resulted in the consumer receiving a mortgage lien-release and a refund of the overcharges made by the lending institution.

Still, the OCC's regulations have resulted in nationally-chartered banks stonewalling investigations of consumer complaints, and could leave the door open for predatory lenders.

It is now critically important that the OCC recognize, either voluntarily, through action by Congress, or through judicial order, that its anti-consumer regulations must be overturned. If the OCC's rules are left to stand, it will mean that state legislatures and state officials are powerless to protect their citizens from even the most egregious conduct engaged in by a federally charted bank or its subsidiary. It would mean that states are powerless to protect their citizens from predatory lending engaged in by national banks or their subsidiaries, practices that cause substantial injury to some of the states' most vulnerable citizens - low income, elderly and minority homeowners. I am committed to ensuring that this does not happen.