Several years ago, state attorneys general and others involved in
consumer protection began to notice a marked increase in a range of
predatory lending practices by mortgage lenders. Some were
misrepresenting the terms of loans, making loans without regard to
consumers' ability to repay, making loans with deceptive "teaser" rates
that later ballooned astronomically, packing loans with undisclosed
charges and fees, or even paying illegal kickbacks. These and other
practices, we noticed, were having a devastating effect on home buyers.
In addition, the widespread nature of these practices, if left
unchecked, threatened our financial markets.

Even though predatory lending was becoming a national problem, the
Bush administration looked the other way and did nothing to protect
American homeowners. In fact, the government chose instead to align
itself with the banks that were victimizing consumers.

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.

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.

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.

Throughout our battles with the OCC and the banks, the mantra of the
banks and their defenders was that efforts to curb predatory lending
would deny access to credit to the very consumers the states were
trying to protect. But the curbs we sought on predatory and unfair
lending would have in no way jeopardized access to the legitimate
credit market for appropriately priced loans. Instead, they would have
stopped the scourge of predatory lending practices that have resulted
in countless thousands of consumers losing their homes and put our
economy in a precarious position.

When history tells the story of the subprime lending crisis and
recounts its devastating effects on the lives of so many innocent
homeowners, the Bush administration will not be judged favorably. The
tale is still unfolding, but when the dust settles, it will be judged
as a willing accomplice to the lenders who went to any lengths in their
quest for profits. 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.

The writer was governor of New York.