Consumer Bureau Getting Cozy with State AGs

August 19, 2011
American Banker 
consumer financial protection bureau news

The new U.S. Consumer Financial Protection Bureau (CFPB) is working closely with state attorneys general to ensure the enforcement of consumer banking laws, as the Dodd-Frank Act opened the door for information sharing and consultation between state and federal regulators. The CFPB and state attorneys general released a joint statement about their coordinated efforts to protect consumers from abusive practices by banks and nonbanks, which was effectively underscored by the nomination of Former Ohio Attorney General Richard Cordray as the CFPB's first director. Many experts expect the agency to work more closely with state attorneys general in an effort to engage in a more nationwide impact on top priorities. White House Advisor Elizabeth Warren already laid the groundwork for the cooperative arrangement, noting, "While the value of shared law enforcement goals between federal and state officials is obvious to many of us in this room, we also know that federal banking regulators often have acted at cross-purposes with the attorneys general and state regulators in the past. Moving forward, consistent and effective enforcement of consumer financial laws will require our sustained collaboration." Cordray was considered one of he most aggressive state attorney generals in the recent past, with his efforts against large mortgage services for their foreclosure practices. "I think that on a number of levels," Cordray's nomination "sends a pretty important message . . . that it's going to be a meaningful partnership," says Kevin Petrasic, a partner with Paul Hastings Janofsky & Walker LLP. Meanwhile, questions of federal preemption must be decided through negotiations between the CFPB and the Office of the Comptroller of the Currency under Dodd-Frank. Moreover, the law enables state attorneys general to bring enforcement actions in the name of the state in federal district court to enforce consumer protections in Dodd-Frank and any of the CFPB's new regulations. The attorneys general and the CFPB plan to develop joint training programs and regularly consult with one another to identify mutual enforcement priorities and conduct joint or coordinated investigations and enforcement actions.
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