The federal government is about to strip New York State agencies of the power to enforce state consumer-protection laws that prohibit many cases of abusive lending, according to Attorney General Eliot Spitzer.

Last year, the Washington-based Office of the Comptroller of the Currency (OCC), which oversees many of the nation’s largest banks, such as Citibank, drafted a proposed rule change that would supercede state laws. It would give the OCC primary responsibility for investigating and punishing national chartered banks—and their subsidiaries—if they engage in predatory lending.

“Our capacity to address the issue of predatory lending is being taken away from us,” Mr. Spitzer said at a press conference in December. “It’s a horrendous policy decision.”

The OCC could make the new rule final any day. Mr. Spitzer and the attorney generals of 45 other states recently called on the OCC to drop the change. [editor’s note: federal Comptroller of the Currency John D. Hawke Jr. approved the new regulations last week; New York attorney general filed suit on Jan. 15, 2004 challenging the federal regulations ]

“They’re giving a road map to the map guys on how to avoid prosecution and regulation,” Mr. Spitzer said. “They have come to the playing field late, and only to protect large banks.”

The agency dismissed the criticism. “The OCC has been doing supervision of the national banking system since it was chartered by the National Banking Act with the full support of Abraham Lincoln—that’s how far back we go,” said Kevin Mukri, an agency spokesperson. “This organization is very vocal, very public, and very aggressive in its pursuit of not tolerating predatory lending.”

“What we are seeing here is a transparent power grab by the national bank regulator,” said Sarah Ludwig of the Neighborhood Economic Development Advocacy Project. “All New Yorkers will be affected if the OCC carries out its plans.”