... Calling the Office of the Comptroller of the Currency a “regulator” is almost laughable. The Environmental Protection Agency is a regulator. The O.C.C. is a coddler, a protector, an outright enabler of the institutions it oversees.
Back during the subprime bubble, for instance, it was so eager to please its “clients” — yes, that’s how O.C.C. executives used to describe the banks — that it steamrolled anyone who tried to stop lending abuses. States and cities around the country would pass laws requiring consumer-friendly measures such as mandatory counseling for subprime borrowers, or the listing of the fees the banks were going to charge for the loan. The O.C.C. would then use its power to either block or roll back the legislation.
Joe Nocera used to report on and analyze financial news for the business section of Times. He's move up to the editorial board and can be counted on to pull no punches in his views of Wall Street. Nocera has come to believe nothing much has changed.
One of the changes many of us counted on was to come from the states. A number of states' attorneys general have been relentless in their pursuit of financial institutions that stepped over the line. Now the O.C.C. is back in the "federal preemption" mood -- using the federal government to override state laws. A state law allowing segregation or voting fraud should indeed be overridden. A state law preventing banks from conning their customers should not. But that's just what the federal Office of the Comptroller of the Currency is doing.
Last week the O.C.C. went back to its old ways.
Like the banks, it views the new Consumer Financial Protection Bureau as the enemy. And, as we learned last week, it is doing its darndest to make sure the banks escape the foreclosure crisis — a crisis they created with their sloppy, callous and often illegal practices — with no serious consequences.
Now the O.C.C. finds that the states' attorneys general aren't just investigating banks, they may join together in punishing the banks for conning customers.
That's going too far for the O.C.C. They plan to put a stop to the A.G.'s plans. If the banks decide not to observe the states' new rules, tough. The O.C.C. doesn't intend to enforce them. The O.C.C. has, instead, created its own mild settlement proposal.
By jumping out in front of the attorneys general, the O.C.C. has made the likelihood of a 50-state master settlement much less likely. Any such settlement needs bipartisan support; now, thanks to the O.C.C., there’s a good chance that Republican attorneys general will walk away. The banks will be able to say that they’ve already settled with the federal government, so why should they have to settle a second time? If they wind up being sued by the states, the federal settlement will help them
in court.
“It’s a vintage O.C.C. move,” said Prentiss Cox, a law professor at the University of Minnesota who was formerly an assistant attorney general. “It is clearly an attempt to undercut the A.G.’s.”Old habits die hard in Washington. The O.C.C.’s historical reliance on pre-emption should have died after the financial crisis. Instead, it’s merely been disguised to look like a settlement.
