New York attorney-general Eliot Spitzer has won the first round in a lawsuit filed against him by a coalition of banks after a federal judge refused to order a restraining order against the attorney-general.
US Federal District Court Judge Sydney Stein refused the banking groups’ requests to block Spitzer from seeking further data about their lending practices to low-income borrowers, but said that he would reconsider if Spitzer tried to subpoena information from the banks before he rules on the lawsuit.
The directive comes after the Clearing House Associ-ation, which represents a coalition of 11 banks, including HSBC Bank USA, JPMorgan Chase Bank and Wells Fargo Bank, filed a lawsuit earlier in the month asking the court to block Spitzer from probing into whether they charge minorities excessive mortgage rates.
Sullivan & Cromwell chairman Rodgin Cohen is leading the firm’s team advising the Clearing House Association. Judge Stein has ordered both sides to file written arguments by 11 July, stating that he wanted “to decide this rather expeditiously”.
He also sought assurances that the attorney-general’s office would not subpoena the banks prior to his decision. However, deputy attorney-general Dietrich Snell, who is representing Spitzer, stated that he was not “authorised to do that”.
Judge Stein’s directive comes as the Office of the Comptroller of the Currency, the federal banking regulator, filed a separate but related lawsuit claiming that Spitzer is exceeding his authority with his probe into the banks’ lending practices and interfering with its supervisory powers.