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"Spitzer stumbles as he loses two rounds"


New York State Attorney General Eliot Spitzer suffered a double defeat on Wednesday in what may be his biggest setback since turning his attention to Wall Street more than four years ago.

A U.S. District Court judge ruled that Spitzer had stepped outside his turf with a probe into home-lending practices at major banks, declaring that enforcing bank laws was a matter of federal, not state jurisdiction.

In a separate matter, Spitzer's office dropped four remaining criminal charges against former Bank of America Corp. broker Theodore Sihpol, whom he had accused of helping a hedge fund trade mutual funds illegally.

The WSJ has an editorial today (sub) on the lending dismissal:

This was an absolute victory for the Office of the Comptroller of the Currency -- the federal body charged with regulating national banks -- as well as the Clearing House Association, a commercial banking group. Both bodies had filed lawsuits arguing Mr. Spitzer was meddling in matters over which he had zero jurisdiction, and [U.S. District Judge Sidney] Stein wholeheartedly agreed....

Given how few organizations have been willing to resist Mr. Spitzer's bullying methods, the OCC deserves extra credit for stopping this power grab dead in its tracks.

Among the organizations that have been largely unwilling to resist Spitzer's methods are some in his back yard. Here's Reuters again:

Major business advocates have been reluctant to take the attorney general on on other issues though, at least partly out of concerns about appearing to support wrongdoing.

"We have worked closely and well with him since his first months in office," said Matthew Maguire, director of communications for the Business Council of New York State, a lobbying group with 3,500 corporate members. "Some of our members have reservations about some of his tactics, but institutionally, we have worked well with him and are optimistic about that continuing. That includes should he run for and become governor."

Tom Kirkendall has more.



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.