We’re destroying our economy to feed the political aspirations of states attorney general. Is this wise?

Andrew Cuomo files anti-trust suit against Intel.

States are gearing up to sue banks, lenders.

The states’ new power to sue banks arose from an effort in 2005 by Eliot Spitzer, then the New York attorney general, to discover whether several banks had violated the state’s fair-lending laws.

The banks balked at surrendering any information. The Clearing House Association, a consortium of national banks, and the federal Office of the Comptroller of the Currency filed suit, asserting the states had no authority over national lenders.

Mr. Spitzer’s successor, Andrew M. Cuomo, took up the battle. Lower courts agreed with the banks, but the Supreme Court, narrowly, did not.

Already, the states’ victory in Cuomo v. Clearing House is beginning to affect the legal landscape. “The handcuffs are off,” said Ann Graham, a professor of banking law at Texas Tech University. “The states can pursue justice now.”

In July, the Illinois attorney general, Lisa Madigan, filed a civil rights case accusing Wells Fargo of predatory lending. While the case was in the works for 18 months, Ms. Madigan said “it would have been much more difficult to bring” without the favorable Clearing House ruling.

The impact goes beyond housing issues. In West Virginia, a case brought by the state against Capital One, charging deceptive marketing of credit cards, was blocked by a judge in June 2008. The judge said the state did not have authority to pursue the case. After the Clearing House decision, West Virginia filed a request to reinstate the case.

Other states say they are just beginning to explore their new powers.

“We’re back on the field,” said Iowa’s attorney general, Tom Miller. “That’s really important. Certainly there will be some litigation.”

Banks, drug companies, insurance companies – businesses of all types, in fact, are unpopular and it’s great politics to go after them, but hitting them from fifty different states, plus attacks from Washington, will drag us down along with “them”. Bad business, bad economics, bad policy.

Dick Blumenthal was unavailable for comment.

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One response to “We’re destroying our economy to feed the political aspirations of states attorney general. Is this wise?

  1. Anonymous

    Someone should sue Andrew Cuomo for aiding and abetting the sub-prime mortgage meltdown. When he was the HUD Chair during Clinton administration, he forced banks to reduce lending requirements in order to provide loans for those who would not ordinarily qualify. He threatened the banks with million dollar penalties if they didn’t follow his orders.