Accounting Error

Stephanie Mencimer's article on the Office of the Comptroller of the Currency (OCC) and OCC Chief Counsel Julie Williams was both dismaying and disappointing because of its serious errors of fact and judgment ("No Account," August 27).

In fact, the OCC has done a great deal for banking consumers, including our pioneering enforcement action against Providian National Bank in 2000 for unfair and deceptive marketing practices. While many banking lawyers and lobbyists argued at the time that no banking agency had the legal authority to take such an action, the OCC, based on legal arguments put forth by Williams, took the action that resulted in the bank returning

$300 million to customers. Other agencies have since followed the OCC's lead, but no one should forget how difficult or controversial that first case was.

It seems odd that Mencimer would so sharply criticize OCC legal positions, implying it is totally out of the mainstream. In fact, these positions have been vindicated by a nearly unbroken string of judicial decisions by the Supreme Court and federal courts from nearly every part of the country--and authored by a wide range of judges appointed by presidents from both the major political parties. The essence of all these decisions is that, ever since it enacted the National Bank Act in 1864, Congress intended for national banks to be subject to a uniform set of national laws established by Congress and implemented by the OCC and not to be subject to conflicting state laws. Not surprisingly, that federal principle is not popular with the states, but it is the law of the land. Mencimer may not like that principle either, but that is no reason for launching a diatribe against a career civil servant who has faithfully advocated the views of the agency she represents in legal positions that have been repeatedly ratified by the courts.

John C. Dugan

Comptroller of the Currency

Washington, D.C.

Stephanie Mencimer responds:

I'm always baffled as to why the OCC continues to herald the Providian settlement as evidence of its commitment to consumer protection. That case, now seven years old, was initiated by the tiny San Francisco district attorney's office, which had received hundreds of complaints from customers about credit card late fees. The OCC didn't lift a finger against Providian, a well-known poster child for credit card abuses, until the San Francisco investigation hit the newsstands. (Providian was so bad that it bar-coded its payment envelopes with the wrong zip code to guarantee that customer payments would be delivered late and thus incur a late fee.) When the OCC first contacted the D.A.'s office about Providian, it was to tell the San Francisco prosecutors to drop the case because they lacked jurisdiction. This was hardly a stellar moment for the nation's top banking regulator.

It's telling that the OCC can't actually point to a single public consumer protection enforcement action taken against a big national bank that the agency initiated on its own. Indeed, the OCC only goes to court over consumer protection issues when it's attempting to put the kibosh on an enforcement action by a state against one of the banks it regulates. There's also little evidence that the "guidance" the OCC is supposedly offering the national banks on credit cards or predatory lending has made much of an impact. In fact, abusive late fees, like those Providian specialized in, have ballooned 160 percent over the past decade, and some attorneys general believe that the OCC's legal actions have actually made banks more brazen in defrauding customers because they know they don't have to worry about state regulatory investigations.

Most criticism of the OCC concerns its priorities. Just because the OCC has the power to help trillion-dollar institutions further tromp on debt-ridden Americans doesn't mean that it should.

Unfair Criticism

His natural habitat threatened by the growing popularity of the FairTax, Bruce Bartlett rather sadly resorts to the most damning fiction he can create in order to malign this thoroughly researched proposal ("Dianetics, the Tax Plan," September 10). Misdirection is, of course, a valuable skill for pickpockets and stage magicians. But, in the case of public policy, it is a coarse path that reflects poorly on the performer and ill serves honest debate.

The FairTax was developed over the course of several years, independently of any other proposal, by noted economists after extensive market research was conducted into what the public desired in the way of a national tax system. It was originally developed, and has gained popular support, precisely because the current income tax system has so damaged the nation and so bedevils individual taxpayers. Its origins, therefore, can be found in the sincere desire of citizens, economists, and public-policy experts to see fairness, simplicity, and transparency replace the mind-numbing complexity of the tax system that so well serves self-styled experts like Bartlett. With the FairTax, foreign manufacturers would no longer see a price advantage over the "Made in America" label; taxpayers would be freed from the embarrassing and wasted

$265 billion dollars annually it costs merely to comply with the income tax system; and American earnings, investment, and productivity would no longer be subject to congressional power struggles, the profit motives of tax lobbyists, and yes, the intellect of individuals such as Bartlett.

Our FairTax campaign now verges on becoming a powerful national movement because the public desperately desires a better way to collect federal taxes for the common good and recognizes the current system as both inherently flawed and further corrupted by inside-the-Beltway machinations. Those who are joining our effort understand that overcoming the self-interest of the increasingly disdained Congress and the army of income tax system defenders is no small task. Distortions such as Bartlett's, however, just fuel the growing grassroots movement to drive public policy right over the broken income tax system and all its followers.

Leo Linbeck

Chairman and CEO

Americans for Fair Taxation

Houston, Texas

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