On my Diary Why Eliot Spitzer was taken out - The true story? 03/23/08, I pose as a question that there may be another narrative on why he was possible targeted for other motives rather than the apparently accepted one of his stupidity and arrogance as the reason given on why he was found out/caught, with ample visible indications that he was the best ally his enemies would hope for in support of this view.
To lay down the first element on why this episode deserves a closer look, I offered the Op-Ed piece by Eliot Spitzer published 02/14/08 on the Washington Post headlined Predatory Lenders' Partner in Crime, where he accuses the Bush Administration of aligning itself with the banks that were victimizing consumers via the Office of the Comptroller of the Currency (OCC), by asserting:
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.Since the Op-Ed piece was published on Feb. 14, it can be safely assumed that he wrote it on/or before Feb. 13 in order to be published on the 14.
According to the Spitzer episode timeline compiled by the PostStar.com, it can be deduced that on Feb. 13, Spitzer... (Cough) 'performed' two 'activities' which are key in this saga, he wrote or just submitted for publication his Op-Ed piece (This event may have occurred earlier), and checked into Room 871 on the Mayflower Hotel in Washington, D.C.
Following the same timeline, two significant events occurred on Feb. 14, his Op-Ed was published and he (Spitzer) testified in front of a congressional subcommittee about regulations on the bond industry. These two events are cited as the catalysts which precipitated the execution of the judicial/legal aspect of the ongoing campaign to 'get him', this effort was spearheaded by a nefarious, and very good at what he did, old GOP operative/consultant with resources and connections named Roger J. Stone Jr.
This episode is reminiscent to many, of the events that led to the Wilson/Plame affair, where the Bush Administration and their allies, retaliated against them for a) dispelling the G. W. Bush SOTU 2003 address with his assertion in his infamous '16 words' claiming that Iraq was pursuing the purchase of nuclear materials (Yellow Cake) from Africa (Niger), in his now famous Op-Ed Published on Sunday, July 6, 2003 by the New York Times "What I Didn't Find in Africa", b) to stop Valerie Plame, a NOC CIA Operative, and her network of contacts, from continuing their research/investigations on the roles played on the funding of terrorism, production of nuclear weapons and WMD in general by Banks and Financial Institutions in the Middle East specifically, and c) send a warning that there are repercussions for causing trouble for the Bush's Administration's, that many believe are, criminal activities.
Eliot Spitzer set the stage, according to many, for him to become a target of the forces and their allies behind the predatory lending practice in the mortgage industry which, as is well known, precipitated a crisis on that market, by leveling more charges and disclosing how the Bush Administration used the OCC to act against consumers rather than helping them as was the intended reason for it's existence.
Predatory lending was widely understood to present a looming national crisis. This threat was so clear that as New York attorney general, I joined with colleagues in the other 49 states in attempting to fill the void left by the federal government. Individually, and together, state attorneys general of both parties brought litigation or entered into settlements with many subprime lenders that were engaged in predatory lending practices. Several state legislatures, including New York's, enacted laws aimed at curbing such practices.For the ones who think I'm wearing my tin foil hat, I understand because the case is still thin - but wait! The plot thickens.
What did the Bush administration do in response? Did it reverse course and decide to take action to halt this burgeoning scourge? As Americans are now painfully aware, with hundreds of thousands of homeowners facing foreclosure and our markets reeling, the answer is a resounding no.
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.
Let me explain: 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.
Subsequent to the posting or my previous Diary, I was privately alerted by a fellow Kosak to the existence of two Letters To The Editor published as a two page item on The Washington Post refuting Gov. Eliot Spitzer claim/charges, the first one dated March 6, 2008 - coincidentally the day before the date when Federal prosecutors inform Spitzer he is named in their investigation into a high-priced prostitution ring. He is referred to as "Client 9" in federal documents. - which was on FRIDAY, MARCH 7, the second letter is not dated but it was published the same day, March 6.
The significance of these letters with the headline "Misplaced Blame in the Loan Crisis" will become apparent when you learn who submitted them, the first one is signed under JOHN C. DUGAN, Comptroller of the Currency - Washington and the second one by JOHN D. HAWKE JR., Washington - The writer was comptroller of the currency from 1998 to 2004.
Here is another interesting item.
FOR IMMEDIATE RELEASE February 14, 2008 Comptroller Dugan Responds to Governor Spitzer
WASHINGTON — Comptroller of the Currency John C. Dugan issued the following statement today, responding to comments from New York Governor Eliot Spitzer:
Since there was a PRESS RELEASE with a response to Spitzer's Op-Ed on the same publication day from the Controller, it brings up two questions screaming for answers, 1. why were there two Letters to the Editor, by the current and former Comptrollers making essentially the same points than the Press Release published the day before Spitzer was informed that he was named in a Federal Investigation? 2. Who asked/suggested that the Comptrollers submit the Letters?
You can see for yourself or read below and then go back to verify.
Letter on Page One:
Misplaced Blame in the Loan CrisisUndated Letter on Page Two:
Thursday, March 6, 2008; Page A20
In his Feb. 14 op-ed, "Predatory Lenders' Partner in Crime," New York Gov. Eliot Spitzer tried to blame the Office of the Comptroller of the Currency (OCC), which regulates national banks, for all the current problems caused by subprime loans. Nice try, governor. The facts tell a very different story.
The overwhelming majority of the subprime loans causing so many problems today, including the most predatory loans, were originated by state-regulated mortgage brokers and lenders. That's a fact, and here's another: The OCC doesn't regulate those brokers and lenders; that's the job of the states. The national-bank preemption that Mr. Spitzer complained about -- recently upheld by the U.S. Supreme Court -- did nothing to handcuff state efforts to prevent lenders from making loans that borrowers had no reasonable prospect of repaying.
More facts: The OCC extensively regulates national banks' activities, including mortgage lending. We established strong protections against predatory lending years ago, and we enforce them rigorously. And we have been a recognized national leader in addressing problems that can arise from such nontraditional products as "payment option" mortgages.
The results: Predatory mortgage lenders have avoided national banks like the plague. The abuses that consumers complain about most -- such as loan-flipping and equity-stripping -- are not tolerated in the national banking system; nor are the looser lending practices of the subprime market.
Effective regulation of subprime mortgage lending is a job for both federal and state agencies. But the most urgent need today is for the states to use the authority they already have to effectively regulate the institutions that caused most of the problems.
Comptroller of the Currency
Misplaced Blame in the Loan CrisisBeing the trusting and gullible person that I am, I did what comes natural to me, I investigated further.
Eliot Spitzer's tirade against the Office of the Comptroller of the Currency so profoundly muddles the law of federal preemption that one wonders whether he has read the many cases -- including those in which he was a losing litigant -- that have applied this rule for almost 200 years.
The rule derives from the Supremacy Clause of the U.S. Constitution and is quite simple: The states have no authority to interfere with the operations of nationally chartered banks. For Mr. Spitzer to characterize the OCC's enforcement of this rule as "an unprecedented assault on state legislatures" is nonsense.
The OCC has a good record on predatory lending. When the OCC put out the regulation that Mr. Spitzer attacked, we included strong provisions addressing such lending. The OCC was also the first federal banking agency to sanction banks for engaging in unfair and deceptive practices in violation of the Federal Trade Commission Act, and it maintains a world-class ombudsman and consumer assistance office that has helped myriad bank customers in their dealings with banks.
Mr. Spitzer was also off the mark in repeatedly characterizing the OCC's actions as those of "the Bush administration." I was appointed comptroller by President Bill Clinton for a term that carried into the next administration, and the OCC's actions during my tenure were those of the OCC alone.
At no time did we receive any direction from anyone in the Bush administration with respect to our enforcement of the long-standing rules on preemption.
The writer was comptroller of the currency from 1998 to 2004.
Based on the Public Interest Research Group (U.S. PIRG) reports on their "OCC WATCH" page, on the surface, the statements by both, the current and the former Comptroller of the Currency, appear disingenuous, or if you prefer, less that candid.
Gov. Spitzer complains that notwithstanding the right of the States to enact tougher laws against predatory lending, the OCC refers to the "Visitorial powers" and invokes the preemption rules to stop/block states from instituting tougher legislation to protect consumers in their individual states.
The comptroller of the currency agrees with the governor with the states rights, but denies any interference by the OCC
FROM THE WWW.PIRG.ORG/OCCWATCH RESOURCES
On this page, we maintain links to some significant documents (court decisions, legal briefs, journal articles, Congressional documents) about the OCC. Suggestions welcome.
Featured link: See the cover story in the Fall 2001 issue of the journal New Rules, "Rogue Agencies Gut Out State Banking Laws" by Stacy Mitchell. "The only reason you're not afraid of the Office of the Comptroller of Currency and the Office of Thrift Supervision is because you don't know what they do. Called indentured servants to the national banking industry, they are dismantling the state regulatory system piece by piece, with nothing more than a polite scolding from Congress."
Recent Congressional Oversight Hearings On The OCCThis is what Gov. Spitzer was referring to in his Op-Ed, the last factor to be included is the information you already possess, the Bush Administration is bailing out the Corporations and not helping the working people who bought homes and are losing them or lost them already.
General Powers of State Officials (including the recent OCC preemption rules)
31 January 03 OCC (link to press release) seeks to broaden preemption authority by amending so-called Visitorial Powers in rule change proposal out for comment for 60 days: "The proposal also provides clarification of the OCC's current regulation concerning the scope of the agency's "visitorial powers" over national banks. "Visitorial powers" refers to the authority to examine, supervise, regulate, require information from and take enforcement action against a bank. Addressing questions that have arisen concerning the scope of this exclusive authority, the rule provides that the OCC's visitorial powers over national banks are exclusive with respect to activities that are expressly authorized or recognized as permissible for national banks under Federal law, including the OCC's regulations and interpretations. The proposed rule also provides that, while courts can exercise visitorial powers by issuing orders or writs compelling the production of information or witnesses, this exception cannot be used by the states as a means of inspecting, regulating or supervising national bank activities."
See November 02 advisory from OCC to national banks advising them of sweeping nature of OCC authority and urging them to contact the OCC before responding to any inquiries or requests from state officials. In at least one news story, OCC Chief Counsel Julie Williams referred to the sweeping letter, which broadly asserts OCC authority and attempts to minimize states' rights, as nothing more than a "gentle reminder" to the state officials who seek to enforce their stronger laws. Most observers believe that the letter was a direct response to an information request that California State Senator Jackie Speier, Chair of the Senate's Insurance Committee and a leading consumer privacy champion, had sent this fall to a number of national banks, seeking information about their privacy practices. The banks have also been carping to the OCC about aggressive enforcement actions by state Attorney Generals when national banks or their affiliates or operating subsidiaries have been found in violation of state or federal predatory lending, deceptive practices or other laws. See, for example, 27 state settlement with Citibank over privacy violations.
4 April 03 USPIRG, CFA, National Consumer Law Center and National Association of Consumer Advocates join AARP brief to Supreme Court urging court to uphold 11th Circuit ruling that state law claims against payday lenders and other predatory lenders are not preempted by National Bank Act. OCC, of course, on other side. On 2 June 03, the Court ruled that claims against these predatory lenders could be removed to federal court.
8 April 03 EPIC and USPIRG file comments opposing OCC's proposed visitorial rule change preempting all state enforcement of consumer protection and privacy laws against national banks and their subsidiaries.
January, 2004 the OCC issued two related and sweeping rules, one preempting nearly all state and local consumer laws (the "preemption rule") [69 Fed. Reg. 1904 (2004)] and the other restricting nearly all enforcement powers of state regulators and attorneys general (the "visitorial powers rule.") [69 Fed. Reg. 1895 (2004)] over national banks, and incredibly, their state-licensed operating subsidiaries, which are not banks. Link to House Financial Services Committee Oversight Subcommittee hearing. Link to Senate Banking Committee Oversight Hearing.
28 July 04 Federal judge rules that case against Bank of America for failing to inform employers of liability regarding check-cashing fees can be heard in state court. Bank of America had claimed all lawsuits against national banks were completely preempted. Press release from attorney for class action plaintiffs here.
11 Aug 04 OCC and sister agencies file brief supporting bank appeal of district court ruling upholding landmark California financial privacy law, SB1. Not surprisingly, the OCC doesn't think states can protect their citizens from unfair affiliate sharing, but in a disappointing move, the usually pro-privacy, usually pro-state authority Federal trade Commission signed on, too. The district court opinion by U.S. Judge Morrison England is here. It fully agrees with the position long set forth by the state and consumer groups that the Fair Credit Reporting Act exempts affiliate sharing from its regulatory scheme. FCRA preemption means states cannot change that and regulate affiliate sharing under the FCRA. But the Gramm Leach Bliley Financial Modernization Act is a comprehensive, albeit weak, financial privacy law, and it clearly gives states the right to enact stronger laws, such as SB1, championed by State Senator Jackie Speier, to regulate affiliate sharing (as well as third-party sharing, not a subject of the litigation).
I don't think they'd like to hear more Governors or District Attorneys in different states following Governor Eliot Spitzer's example.
A good article to read Eliot's Mess - The $200 billion bail-out for predator banks and Spitzer charges are intimately linked By Greg Palast
Reporting for Air America Radio’s Clout
March 14th, 2008
Want another wrinkle on the fabric? Do this pre-set Google searches with the following keywords:
- Eliot Spitzer Mossad CIA
- Eliot Spitzer Emperors Club Mossad CIA
- McCain Spitzer Mossad Emperors Club CIA
I report my findings, you make your conclusions.
(I'll leave for another Diary, a more comprehensive narrative , yes, I know that there have been prior Diaries posted on this issue here, here, here and here, plus others which touch parts of it or other angles, but I assure you, that if I decide to post it here, mine will not be a duplicate because there is a lot more to this story, albeit it may contain some unavoidable repetitive information for the narrative's even flow and continuity)