Scalia Throws A Curve

While there's no question the Supreme Court has tilted significantly to the right, in one case at the end of this session, they squeaked through a very damaging policy for the banking lobby. And believe it or not, it took Antonin Scalia to do it - I guess he's the new "swing vote":

In a rebuke of the Bush administration, the Supreme Court ruled Monday that a federal bank regulator erred in quashing efforts by New York state to combat the kind of predatory mortgage lending that triggered the nation's financial crisis.

The 5-4 ruling by the high court was unusual. Justice Antonin Scalia, arguably the most conservative jurist, wrote the majority's opinion and was joined by the court's four liberal judges.

The five justices held that contrary to what the Bush administration had argued, states can enforce their own laws on matters such as discrimination and predatory lending, even if that crosses into areas under federal regulation [...]

The ruling angered many in the financial sector, who fear it'll lead to a patchwork of state laws that'll make it harder for banks and other financial firms to take a national approach to the marketplace.

"We are worried about the effect that this ruling could have on the markets," said Rich Whiting, general counsel for the Financial Services Roundtable, a trade group representing the nation's 100 largest financial firms, in a statement. The decision "hinders the ability of financial services firms from conducting business in the United States. Even worse, it will cause confusion for consumers, especially those who move from state to state."

If there's one thing I love seeing in print, it's the words "the ruling angered many in the financial sector."

The near-term practical effect of this is that the states can resume looking into the lending practices of the banks in their regions, and potentially take them to court. Andrew Cuomo, the winner in this lawsuit, has been doing some of the best work in the country fighting the banks, and now he's empowered to continue.

These kinds of rules preventing pre-emption of the state laws when it comes to financial services are one key element of the creation of the new Consumer Financial Protection Agency, which the banks also can't stand, because it would consolidate consumer protection laws and enforce rigid standards for mortgages, credit cards, payday lending and consumer credit. Cue the whining:

"We have the view that the market, left to its own devices, isn't always going to lead to an optimal outcome for consumers," Michael Barr, the assistant treasury secretary for financial institutions, said in a news briefing.

Financial institutions said the move went beyond a step back to regulation.

"This is going in headfirst," said Scott Talbott, the senior vice president of government affairs for the Financial Services Roundtable, the lobby for the nation's biggest financial firms. "This could take us back to the 1950s."

While denying that the legislation is heavy-handed, Barr acknowledged that it would open a new era of financial regulation.

"I don't think it's a surprise that big banks and institutions that benefited from the status quo want to keep it that way. It's unacceptable to us," he said.

Now, if we actually can get this modern-day Pecora Commission off the ground, we'll at least have a multi-pronged approach to going after those who caused the financial crisis and continue to rip off their customers. I'm not all that optimistic, given the fact that the banksters own the place. But at least we have a chance.