WASHINGTON (Legal Newsline) - Giving state attorneys general the power to sue national banks will help lift the country out of its home foreclosure crisis, the former attorney general of the District of Columbia says.
Linda Singer authored an amicus brief for six members of Congress interested in a case currently before the U.S. Supreme Court. New York Attorney General Andrew Cuomo is seeking a ruling that would allow him to investigate and sue national banks over their lending practices.
It has been ruled the responsibility of the federal Office of Controller of Currency in the lower courts. Singer says that needs to change.
"One of the things that is troubling is the OCC preempted states from acting but didn't act themselves," Singer said. "The stage was empty.
"There's a general consensus there was a failure to regulate and enforce that contributed to a lot of the practices."
A victory for Cuomo would mean states would have the ability to enforce in their two traditional areas -- consumer protection and civil rights -- Singer said. Licensing, fees and other related areas would still be the OCC's responsibility, she said.
"There isn't much mortgage lending happening but in some point it will come back," Singer said. "Part of it is people having faith in the financial system, and people knowing that the banks are operating between the lines.
"It gives people confidence and keeps banks from committing the excesses that got us into this mess."
Singer's opponents say giving the authority to states would put national banks at the mercy of 50 separate sets of regulations.
"State investigations and enforcement actions regarding the exercise of national banks' lending powers could result in burdensome oversight of national banks' day-to-day lending practices," wrote former Solicotor General Ted Olson, who authored an amicus brief on behalf of the banking industry.
"Indeed, the New York Attorney General recently settled a fairlending investigation into the activities of a lending institution through an agreement that mandated extensive and continuous state supervision of the institution's lending practices.
"If the (National Bank Act) were construed to permit similar state examination and regulation of national banks' lending practices, state attorneys general could undertake equally intrusive oversight of national banks' day-to-day lending activities and 'impose limitations and restrictions as various and as numerous as the states."
Singer, who now works at Zuckerman Spaeder, authored the brief on behalf of U.S. Reps. Barney Frank (D-Mass.), John Conyers (D-Mich.), Carolyn Maloney (D-N.Y.), Melvin Watt (D-N.C.), Luis Gutierrez (D-Ill.) and William Lacy Clay (D-Mo.).
They say the authority for a federal agency to preempt state action must come from Congress.
"The power to decide the preemptive meaning of a statute is different from the power to decide its substantive meaning," Singer wrote.
The Court recently heard oral arguments in the case.
From Legal Newsline: Reach John O'Brien by e-mail at email@example.com.