Remember how, after the September 11 attacks, Congress moved swiftly to eliminate law enforcement "turf wars" over sharing information and cooperating to catch evildoers? In light of recent events in the financial world, it's time for bank regulators to work together for the common good and stop the current practice of pissing contests and flat out refusal to hold bad lenders accountable. There's a great article on the issue from The Seattle Post-Intelligencer.

Here's what's been going on to date: literally dozens of state Attorneys General have attempted to take large, nationally chartered lenders like Washington Mutual and National City Bank to task for predatory lending practices and violations of state consumer protection laws. Their efforts always end up hitting a brick wall.

The culprits: the federal Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS), the two agencies that oversee federally chartered banks. Actually, under the Bush Administration, these agencies have consistently refused to oversee lenders.

Often, the OTS and OCC would come to the aid of the banks, ordering state investigators to back off because the federal agencies claim exclusive regulatory authority.The agencies have gone so far as to obtain court orders barring state regulators from even visiting the offices of the banks in question.

Normally, this would not be a problem, except that neither the OTS nor the OCC has any authority to enforce state laws.

So the banks got a free pass. In effect, these banks are currently above the law, because states are nearly barred from going after them, and the federal agencies who are supposed to be regulating them have done a laughable job in making them play by the rules.

It is precisely this sort of perversion of a regulatory system that's supposed to protect the public that cries out for reform. The OTS and OCC have abdicated their responsibilities to the American people, and have caused grave harm to countless American homeowners by shielding bad lenders from having to answer for their actions.

There is a very easy solution to this miscarriage of justice. We need a financial equivalent to the Patriot Act, at least as to the law enforcement cooperation and information sharing aspects. Congress could very easily require the OTS and OCC to step aside in matters of state enforcement of state consumer protection laws, or require that banks under federal charters abide by all general consumer protection laws in the states where they do business, and empower state agencies to enforce those laws.

At any rate, Congress should do something right now, because allowing federal agencies to thwart legitimate state investigations simply rewards bad behavior and encourages lenders to get federal charters for the sole purpose of being shielded from often tougher state consumer protections.