Via Raw Story, this very enlightening news that the Bush administration blocked efforts to enforce laws against predatory lending. We are so shocked:

Federal regulators in the Bush administration blocked attempts by state governments to prevent predatory lending practices that resulted in the financial crisis now stalking the American economy, a new study from the University of North Carolina says.

In 2004, the Office of the Currency Comptroller, an obscure regulatory agency tasked with ensuring the fiscal soundness of America's banks, invoked an 1863 law to give itself the power to override state laws against predatory lending. The OCC told states they could not enforce predatory-lending laws, and all banks would be subject only to less-strict federal laws.

Now, a research paper (PDF) from UNC-Chapel Hill's Center for Community Capital shows that those anti-predatory lending laws had actually worked. States that had stricter regulations on issuing mortgages were found to have fewer foreclosures.

"We believe that these findings are remarkable, since they suggest an important and yet unexplored link between [anti-predatory lending laws] and foreclosures," the study's authors state.

The study may be the first scientific evidence to back up claims made by many critics that the Bush administration and earlier administrations allowed last year's financial crisis to happen by not enforcing common-sense regulations on lenders.

Last year, seven months before the collapse of Lehman Brothers and the ensuing government banking bailout, then-New York Governor Eliot Spitzer wrote a Washington Post column in which he described how the Bush administration blocked states' efforts to prevent a crisis in the mortgage industry.

Spitzer wrote:

Predatory lending was widely understood to present a looming national crisis. This threat was so clear that as New York attorney general, I joined with colleagues in the other 49 states in attempting to fill the void left by the federal government. Individually, and together, state attorneys general of both parties brought litigation or entered into settlements with many subprime lenders that were engaged in predatory lending practices. Several state legislatures, including New York's, enacted laws aimed at curbing such practices.

What did the Bush administration do in response? Did it reverse course and decide to take action to halt this burgeoning scourge? As Americans are now painfully aware, with hundreds of thousands of homeowners facing foreclosure and our markets reeling, the answer is a resounding no.

Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.

Spitzer's Post column ran a month before the New York Times reported that federal authorities were investigating Spitzer as a patron of high-end hookers, ending his political career and long-running crusade against corporate malfeasance. Some observers, including investigative reporter Greg Palast, say this was not a coincidence.

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The Fox talkers were out trying to spin past the gruesome wreckage of Mark Sanford's political career yesterday, partly by claiming that Republicans always give the boot to such cases of gross immorality, while Democrats are so lascivious that they naturally tolerate such behavior within their own ranks.

First there was Faux Liberal Mort Kondracke on Brett Baier's afternoon show:

Kondracke: But look. You know, multiple affairs did not stop Bill Clinton from being elected president. But that's because the Democratic Party is a lot more tolerant of licentiousness than the Republican Party is. And that's the rub for poor old Mark Sanford here.

Then Ann Coulter attempted more or less the same claim later that day on Sean Hannity's show:

Coulter: But he's a Republican, so he will be gone. Unlike John Edwards, with all of his staff knowing that he --

Hannity: He may not be governor by the end of a couple of weeks.

Coulter: That's right. And even if he is, Republicans vote these guys out, generally.

Oddly enough, Coulter kept bringing up John Edwards, whose political career is pretty much toast -- so it's not a point that actually supported her claim. Moreover, she and Kondracke are glossing over the long history of other Democrats' careers being derailed by sexual hijinks: Gary Hart, Eliot Spitzer, Brock Adams, Jim McGreevy are just a few of the names that come to mind.

Meanwhile, it's not hard to come up with Republicans whose infidelities have been glossed over and "forgiven" (by the pundit class at least). Some of them are major figures in the party even today. To wit:

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In Eliot Spitzer's first interview since he resigned as New York's governor, he tells Fareed Zakaria that the problem with Wall St. isn't the individuals involved, but a culture that sought greater and greater returns without taking any of the risk. He also says he hopes Barney Frank will look more closely into the payments to Goldman Sachs via the AIG bailout funds:

FAREED ZAKARIA: So, do you think that the problems that AIG got into later on stem from some of the same practices that you were trying to get at?

SPITZER: They stemmed from an effort from the very top to gin up returns whenever, wherever possible, and to push the boundaries in a way that would garner returns almost regardless of risk. And so, to the extent that there is a discussion, did this begin before or after the tenure of Hank Greenberg, it's unambiguous -- unambiguous that the structures and the flaws and the policies began while he was there. That is why the board that he had controlled with an iron fist asked him to leave. It was their decision -- not my decision, their decision -- to ask him to step down, something that was then and is now very unusual.

He has invoked the Fifth Amendment, which, of course, is his right to do. But he was asked to leave by his own board, because they saw the flaws and the problems that have since multiplied and created this monster that can bring down the financial system.

Back then I said to people, AIG is at the center of the web. The financial tentacles of this company stretched to every major investment bank. The web between AIG and Goldman Sachs is something that should be pursued.

And as I have written...

ZAKARIA: Meaning what? Meaning that a lot of the money that we the taxpayers gave AIG has ended up being paid to Goldman Sachs...

SPITZER: Precisely. And...

ZAKARIA: ... and other companies.

SPITZER: The so-called counterparties to these very sophisticated financial transactions.

When AIG initially received $80 billion -- a decision that was the consequence of a very brief meeting of the president of the New York Fed, the secretary of the Treasury, perhaps Chairman Bernanke and arguably, some reports say, the chairman of Goldman Sachs -- $80 billion, virtually all of it flowed out to counterparties, $12.9 billion to Goldman Sachs.

Why did that happen? What questions were asked? Why did we need to pay 100 cents on the dollar on those transactions, if we had to pay anything? What would have happened to the financial system, had it not been paid?

These are the questions that should be pursued. Look, bonus is a real issue. It touches us viscerally. The real money and the real structural issue is the dynamic between AIG and the counterparties.

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From Fareed Zakaria GPS, Eliot Spitzer weighed in on the regulatory system that is in place overseeing Wall Street, the bonuses that have everyone outraged and what he thinks of the job President Obama is doing so far.

ZAKARIA: Was the regulation -- was the regulatory regime in place strong enough? And I'm thinking particularly of the New York Fed, which was headed by Tim Geithner, of the SEC?

Where do you see the flaw having been over the last few years?

SPITZER: Here's my answer to that. The regulatory system was structurally flawed, but that's not why this happened.

After the last round of scandals -- Enron, et al. -- we passed Sarbanes-Oxley. And we said, aha, we've solved the problem. Now we have another set of scandals.

There are enough laws, enough regulations on the books for smart, aggressive regulators and prosecutors to make all the cases. What was missing was judgment. And you can't legislate judgment. You can't regulate judgment. Either the people who are the regulators will walk into a bank and say "Your leverage is too great. We are going to take actions to pull it back," or "This type of investment is flawed," or they won't. You can't pass a law that says, you must use sound judgment.

Bubbles have been there through history, through over-regulation and under-regulation. This is a question of judgment and of failure of judgment.

When I was attorney general, people said, "Oh, you're using this crazy little statute," the Martin Act in New York, "to bring all these cases." The Martin Act had a simple anti-fraud provision. That's all we used.

The federal government has exponentially more regulatory power than we did. What was lacking was the judgment, the tenacity, the desire to rein in a financial system that was spiraling out of control.

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That's the question the House Financial Services Committee will begin to start investigating.

New York Times:

Eight months after a federal investigation into a prostitution ring brought about the downfall of Gov. Eliot Spitzer, the question still persists in some circles: Was the federal government out to get Mr. Spitzer?

No evidence has surfaced to support such an assertion, and the prosecutor in the case has said that politics played no role in the pursuit of Mr. Spitzer, a Democrat. But that has not put to rest suspicions, expressed on left wing blogs, that Mr. Spitzer, a zealous pursuer of Wall Street wrongdoing who some thought could one day be president, had been singled out.

Now, a congressional committee is pursuing what would be the first public examination of the events that prompted the initial inquiry into his bank transactions, which showed he was sending money to a front company for Emperor’s Club V.I.P.

The House Financial Services Committee intends to take up the matter early next year and tentatively plans to hold hearings that could include testimony from the United States Treasury’s law enforcement unit, along with Mr. Spitzer’s bank, North Fork, and HSBC, a bank used by a company connected to the prostitution service.

This should be interesting. After the whole USA scandal, I don't think any reasonable person will dispute the notion that justice has become politicized under George Bush. Whether or not it's the case here will remain to be seen.

Project Censored included this possibility in the yearly Top 25 Censored Stories for 2009. Check it out here.