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Questions have been raised over City Attorney Mike Aguirre’s ability to sue Washington Mutual because the bank is federally chartered and Aguirre is a state official.
Aguirre, state Attorney General Jerry Brown and attorneys general from 11 states were able to sue Countrywide Financial Corp., even though it’s now owned by federally chartered Bank of America, because Countrywide was formally a state chartered bank, according to an interview Brown did last week with the KTVU television station in San Jose.
The report states:
The attorney general says he was able to sue Countrywide, unlike other mortgage lenders, because it is chartered under state law.
But Aguirre said he’s confident he’ll be able to argue against Washington Mutual if it claims he doesn’t have jurisdiction.
“The procedural hurdles of these cases — all the same arguments could’ve been made for Bank of America, and we got a settlement,” he said. “We expect that this will be a settled case as well because of the extraordinary circumstances.”
(Aguirre’s Countrywide case has not yet been settled; he was referring to Brown’s settlement with the bank. On Friday, Aguirre said he is “very close” to considering his Countrywide suit settled, but is still waiting for assurances from Countrywide that it has enough staff to deal with the influx of borrowers seeking workouts.)
Aguirre said his suit asks the courts to prohibit Washington Mutual from using a state-regulated procedure — foreclosure — to penalize borrowers who should have never been given their mortgages to begin with.
Aguirre’s challenger in the November election, Jan Goldsmith, raised the questions after Aguirre filed his suit Friday, alleging the suit was a campaign tactic.
Here’s another example of state officials meeting the federal jurisdiction roadblock, from a San Francisco Chronicle story on differences in interest rates charged for racial minorities:
And in 2003, Wells Fargo’s mortgage unit parried an attempt by the California Department of Corporations to limit interest charged on new loans.
The state, backed by state Attorney General Bill Lockyer, tried to shut down Wells’ mortgage-lending operations in California, alleging that the bank’s method of calculating interest rates broke state law. Wells argued that the state had no jurisdiction, and a federal judge agreed.