And he kept it up. He held press conferences with congressmen (1). He sued a nationally chartered bank, First Tennessee, that was threatening foreclosure on a New York man who had overpaid his mortgage by $9,000. The OCC intervened. The case was settled. But the fight was only heating up.

This was March 2004.

Spitzer’s fights were well covered, but then this was not an easy story to miss.

Typically, and understandably, the business press responded by framing the fight in one of two ways: as a turf war between ambitious, willful politicians, or, comically, as a good-faith dispute over regulatory “philosophies,” although strangely, in this case, the Bush administration and its amen-corner, The Wall Street Journal editorial page, abandoned their usual commitment to federalist principles and went with the centralized approach, which happened to be the more lax of the two and the one favored by the banking and securities industries.(2), (3), (4).

The stories are fine and give plenty of weight to Spitzer’s side.

The Journal wrote:

The OCC justified its January move by saying only a federal regulator can provide an efficient national banking market by assuring that the playing field is level from state to state for national banks, a category that includes big lenders such as Citigroup Inc. and Bank of America Corp. Failure to provide this level playing field, warns Comptroller John D. Hawke, would mean banks may no longer be able to offer loans to particularly less privileged borrowers.

Besides, Mr. Hawke says, the OCC’s power to pre-empt states in bank regulation are rooted in 140 years of legal precedent granting the OCC pre-emptive authority in national banking issues. “Federal pre-emption is a principle that is almost as old as our nation itself,” Mr. Hawke says.

But outraged state regulators and consumer advocates say the OCC has little experience in protecting consumers, and they accuse the OCC of being soft on banks at the expense of consumers. The OCC’s move, left unchallenged, would mean “the already vulnerable consumer has lost the only protection he had and national banks will now run roughshod over the rights of the individual consumer,” says Donna Heinrichs, Mr. Hall’s attorney.

And there is the usual back and forth:

“We’re prepared to take this to the U.S. Supreme Court,” Mr. Spitzer says.


Mr. Hawke, meanwhile, accuses Mr. Spitzer of “grandstanding.”


“We’re just happy that we were able to work things out with the customer to his satisfaction,” said a spokeswoman for First Tennessee. (5)

The New York Times wrote a good profile of Hawke, pointing out that his agency had allowed Riggs National Corporation to become a money-laundering center for corrupt foreign dictators, a fact embarrassingly uncovered by the Justice Department (6).

As the lenders turned frenzied in 2005 and set up boiler rooms to feed Wall Street’s escalating demand for product to turn into mortgage-backed securities and their lucrative derivatives, Spitzer continued to direct attention to the problem.

In the spring of 2005, he sent letters to nationally chartered banks demanding information about alleged discriminatory lending practices, suspecting what would turn out to be precisely the case—that subprime lenders were steering minority borrowers who qualified for prime loans into subprime products that were more onerous for them and more lucrative for lenders and Wall Street.

Again, the OCC, then led by the justly forgotten Julie Williams, stepped in on the side of big lenders and sued to stop Spitzer. The Wall Street Journal weighed in with a series of now-embarrassing editorials that took the lenders’ side in language approaching hysteria. From June 2005:

New York Attorney General Eliot Spitzer dislikes people who won’t bow to his command, so perhaps Julie Williams should invest in body armor.

That was out of bounds, even for that page. Spitzer kept at it even as he was about to leave office (7) and reminded everyone of the fact in this Washington Post opinion piece in February of this year, probably around the time federal investigators, tipped off by the financial services industry (Hmm. I wonder if…nah), found he was shuffling money around to pay for prostitution.

Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014).

Follow Dean on Twitter: @deanstarkman.