Household HSBC Watch

How was the subprime crisis facilitated by lack of regulatory action? This report speaks to the situation quite loudly:

A federal appeals court on Tuesday upheld a lower court’s 2005 decision that barred the New York attorney general’s office from subpoenaing documents and instituting enforcement actions against national banks as part of an investigation into lending practices. In an order Tuesday, the 2nd Circuit Court of Appeals affirmed a decision that the New York attorney general’s office had infringed on the Office of the Comptroller of the Currency’s role in supervising national banks under the National Bank Act with a probe into possible racially discriminatory practices in residential lending.

The OCC filed a lawsuit against the attorney general’s office in June 2005, saying the investigation infringed on its regulatory role. In the lawsuit, the OCC said the attorney general’s office had sought public and nonpublic information about the mortgage lending business of four national banks that operate in New York.

The banks included units of HSBC Holding PLC, JPMorgan Chase & Co., Wells Fargo & Co. and Citigroup Inc. From 2005 until today the OCC took little regulatory action, if any. The OCC needs to take partial responsibility for letting the subprime crisis spiral out of control.