Supreme Ct Kills Range of State Banking Laws in Gift to Predatory Lenders
In a blow to consumers, the Supreme Court ruled yesterday that mortgage lending subsidiaries of national banks are exempt from state regulation. Every state attorney general and bank regulator had urged the High Court to protect these state laws, especially in light of federal inaction in the face of abuse by predatory lenders.
But the Court in its Watters v. Wachovia decision, upheld the power of the Bush Office of the Comptroller (OCC) to pass regulations shutting down such state laws. Those federal decisions, as Progressive States discussed a few weeks ago, directly fed the predatory lending mortgage bubble and helped encourage the abuses that may lead to 2.2 million subprime borrowers facing foreclosure on their home loans.
Justice Stevens, in his dissent to the decision, blasted his fellow Court members for endorsing those executive decisions, since no new Congressional action had given the OCC guidance to undermine these state laws:
"Never before have we endorsed administrative action whose sole purpose was to pre-empt state law rather than to implement a statutory command."
Stevens point was that while the federal government might have the power to preempt state laws, it should only do so when Congress has clearly authorized such preemption or where the exercise of existing federal laws leave "no room for additional state regulation." Clearly, given federal inaction, there was plenty of room for state regulation in this situation, so the Court's decision is a radical expansion of executive power to undermine state power at the whim of a federal regulator.
Congressman Barney Frank, who chairs the House Banking Commitee, expressed similar outrage at the court decision: "We have to act on this...The controller has eliminated a whole bunch of state consumer laws with nothing to put in their place." Hopefully, instead of just passing a few additional federal consumer protections, Congress will also restore state power to add its own protections as well.
Comments (14)
It should be noted
that the Majority Opinion was written by Ruth Bader Ginsburg one of the liberal (?) justices on the Court, and Justices Roberts and Scalia joined Stevens in the dissent.
Politics does, indeed, make strange bedfellows. Of course the Democratic Party has close ties to the banking industry, like the "Senator from MBNA" Joe Biden. And Ginsburg was appointed by the chief triangulator, Bill Clinton. I wonder if either Candidate Biden or Candidate Rodham Clinton will comment on this decision, or whether any of the mainstream media will ask them for a comment about it?
My breath is not being held
aMike
April 19, 2007 7:34 AM | Reply | Permalink
And Bank of America's profits are up again.
CSPAN junkies visit http://spannerbackup.ipbhost.com
April 19, 2007 7:42 AM | Reply | Permalink
IMO, the time has come for the solution to an elitist Supreme Court FDR intended but due to sudden vacancies did not have to implement. When the Democrats next take the White House they should double, plus one, the membership of the Court. There is no Constitutional limit I am aware of to the number of judges on the Court. This court crossed the line when it meddled in the 2000 Presidential election and is deserving of no kid glove handling or respect from the citizenry or their representatives. The Court played partisan politics and is elitist and classist, it has fully earned a politically partisan reprimand.
Whenever two people meet, there are really six people present. There is each man as he sees himself, each man as the other person sees him, and each man as he really is.
William James
April 19, 2007 7:44 AM | Reply | Permalink
It's not enough to pay usurious interest rates when carrying a balance. As of next month, they are charging a *minimum finance charge* of $1.50 per month. Period.
Well may be not, if we send in our notes "not accepting the new policy", to a particular address, with particular language, etc. etc. etc.
As have many folks in our society, I have worked my entire adult life honestly and productively. It's only now that I am working double the hours for half the pay that people like Bank of America are jacking the costs of participation.
Here's an interesting study in inflation: Look around the economy, measuring inflation in sectors that are not outsourceable (sp?) versus changes in worker pay in sectors that could be outsourced.
Could be an interesting study.
April 19, 2007 8:10 AM | Reply | Permalink
No "strange bedfellows" here. The Court ruled correctly. It is a States-Rights issue. Bush's appointees clearly have the power by law to overrule the state laws in this case. They were foolish to do so, but that is not the point.
April 19, 2007 11:14 AM | Reply | Permalink
Easier to impeach Scalia. The case has already been made. Scalia has sat on cases where he had visible conflicts of interest. Just wait until AFTER November 2008.
April 19, 2007 11:14 AM | Reply | Permalink
Republicans:
"We for state's rights....unless we aren't.......
We want to get government out of people's lives.....unless we don't."
April 19, 2007 2:39 PM | Reply | Permalink
Fuedalism is not dead.
Maybe the GOP will bring back indentured servitude and tennant farming while they're at it.
April 19, 2007 2:50 PM | Reply | Permalink
Geeze, more of Bush's "Shitz Blitz" to sabotage as much as possible before the clock runs out. This better be stopped.
Have to give them credit in a weird way though, for the utter zealousness of it all.
I mean, they sabotage government so fast the lethargic and negligent press hardly covers it all. Then they lose in 2006 and 2008. All the harm starts coming to light and the long term effects are felt when Dems are in office, who will no doubt be attacked by Republicans.
Will it work again? It could. Reagan still gets credit for the collapse of the soviet Union.
April 19, 2007 2:54 PM | Reply | Permalink
Don't forget The mantra, many of America's problems are due to to activist Judges.
April 19, 2007 3:51 PM | Reply | Permalink
The Washington Monthly had an article by Benjamin Wallace-Wells on the housing bubble back in 4/2004 titled "There Goes the Neighborhood" which is still an excellent read.
The link:
http://www.washingtonmonthly.com/features/2004/0404.wallace-wells.html
April 19, 2007 9:01 PM | Reply | Permalink
We could see if Congress would remove the legislative authority for the weak regulation, or move the other direction and force strong regulations.
April 19, 2007 9:33 PM | Reply | Permalink
It appears to me that Bush's appointees were split. Did I miss something?
April 20, 2007 6:18 AM | Reply | Permalink
BVZ,
Interesting comments and I concur. I also advocate that changes be made in the length and type of service USSC judges. This crap of "serving for life" needs to be rescinded pronto.
I would go along with the current process to a certain point. However, I believe there should be a "probationary" period of 5 years (as an example). Each USSC justice serves a district of states.
After that initial probationary period is up, that Judge should have to be voted upon by the people in the district they represent.
It could a "vote of confidence" type of vote. If the USSC doesn't receive a certain percentage of "yea" or "nay" votes, they MUST be replaced.
It is simply ridiculous that they should have "life-time" appointments.
April 20, 2007 12:27 PM | Reply | Permalink