Chalk this up as another sad might-have-been from the days of Eliot Spitzer—but this is a case where Spitzer’s failure was caused not by his own flaws, but by the meddling of Bush administration officials whose relationships with the businesses they were supposed to be regulating mirrored the swinish behavior that ended Spitzer’s political career.

The U. S. Supreme Court ruled last week that the federal government was wrong to stop then-Attorney General Spitzer from seeking information about whether banks in New York, even those with federal charters, were engaging in questionable practices in the way they issued mortgage loans.

Had Spitzer been allowed to follow up his suspicions, there is some chance that the current economic recession, triggered by the collapse of the same kind of bad loans that he was investigating, might have been prevented. At least the previously somnambulant federal officials might have had some clue as to what was coming.

Spitzer’s case, since taken up by Attorney General Andrew M. Cuomo, was based on evidence that lenders in New York were directing black and Hispanic borrowers into high-rate mortgages at a disproportionate rate compared to white homebuyers.

The minority borrowers were the immediate victim of such schemes. But the fact that there were so many of them, and that their mortgages were bundled, resold and cross-insured in so many ways meant that, when the day of reckoning finally came, it would be more than a few unfortunate families that would feel the walls come tumbling down.

But Spitzer’s probe was blocked by the banks and by the U. S. Comptroller of the Currency. They got federal court rulings to the effect that the federally chartered banks—Citigroup, JPMorgan Chase and Wells Fargo—could be overseen only by the federal government. The fact, now well known, that the feds were not overseeing much of anything in those days wasn’t allowed to enter into it.

Last week, in a 5-4 ruling that surprised many because it was written by conservative Justice Antonin Scalia and approved by the court’s four liberal members, the Supreme Court said Spitzer was right.

Oh, the federal overseers have a power that no state can match, Scalia agreed. They have the power to walk into any federally chartered bank, at any time, for any reason, and pore over the books. A state official, on the other hand, has to file a lawsuit and then convince a judge that his subpoenas for non-public records are more than a stunt.

There is little doubt that Spitzer and/or Cuomo could have met that standard. Which is why the other 49 states all supported New York in its quest to enforce fair lending laws when the feds are silent.

It is a case of closing the barn door, for sure. But it demonstrates that, when it comes to making sure banks don’t cause the downfall of the whole economy, the more eyes on them, the better.