Truthout, February 2008
Title: “Predatory Lenders’ Partner in Crime”
Global Research, March 17, 2008
Title: “Why the Bush Administration ‘Watergated’ Eliot Spitzer”
Author: F. William Engdahl
Student Researchers: Rob Hunter, Elizabeth Rathbun, and Rebecca Newsome
Faculty Evaluator: Mickey S. Huff, MA
The exposure of New York State Governor Eliot Spitzer’s tryst with a luxury call girl had little to do with the Bush administration’s high moral standards for public servants. Author F. William Engdahl advises that, “in evaluating spectacular scandals around prominent public figures, it is important to ask what and who might want to eliminate that person.” Timing suggests that Spitzer was likely a target of a White House and Wall Street operation to silence one of its most dangerous and vocal critics of their handling of the current financial market crisis.
Spitzer had become increasingly public in blaming the Bush administration for the subprime crisis. He testified in mid-February before the US House of Representatives Financial Services subcommittee and later that day, in a national CNBC interview, laid blame squarely on the administration for creating an environment ripe for predatory lenders.
On February 14, the Washington Post published an editorial by Spitzer titled, “Predatory Lenders’ Partner in Crime: How the Bush Administration Stopped the States From Stepping In to Help Consumers,” which charged, “Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.”
In this editorial, Spitzer explained:
The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.
In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government’s actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.
But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.”
The editorial appeared the day after Spitzer’s ill-fated rendezvous with the prostitute at the Mayflower Hotel. With that article, some Washington insiders believe, Spitzer signed his own political death warrant.
On March 4, 2008, Spitzer furthermore proposed legislation that would have imposed penalties for mortgage fraud and predatory lending.1
Curiously, Spitzer, who had been elected governor in 2006, defeating a Republican by winning nearly 70 percent of the vote, has been not charged with any crime. His case went into the hands of Washington and not those of New York State authorities, underscoring the clear political nature of Spitzer’s “offense.” New York Assembly Republicans immediately announced plans to impeach Spitzer or put him on public trial if he were to refuse resignation. Although prostitution is illegal in most US states, clients of prostitutes are almost never charged, nor are their names typically released while a case is in process.
Spitzer’s editorial concluded, “When history tells the story of the sub-prime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners, the Bush administration will not be judged favorably . . . it will be judged as a willing accomplice to the lenders who went to any lengths in their quest for profits. The administration was so willing, in fact, that it used the power of the federal government in an unprecedented assault on state legislatures, as well as on state attorneys general and anyone else on the side of consumers.”
1. “Governor Spitzer Proposes Legislation to Address Sub-prime Mortgage Crisis,” New York State website, March 4, 2008.