States Battle for Stronger Consumer Protection Role

Washington Post
March 15, 2010
Dennis, Brady
P. A13

Debate over the consumer financial protection agency has renewed a dispute between states and federal regulators over whether national banks should be exempt from state consumer protection laws or if state officials should be able to exceed go beyond federal standards. Several attorneys general and the Obama administration are vying for the latter, suggesting, in the words of the Obama administration, that "states should have the ability to adopt and enforce stricter laws for institutions of all types." Sen. Christopher Dodd (D-Conn.) seemed to indicate that he would leave in place the preemptive powers of U.S. regulators over state consumer protection laws for national banks. Attorneys general Tom Miller of Iowa, Lisa Madigan of Illinois, and Roy Cooper of North Carolina have been outspoken in their criticism of this decision and have proven powerful allies of the administration's proposal for an independent CFPA. Madigan criticizes federal regulators for past inactivity despite warnings from the state level, and Cooper stresses the tendency of states to recognize abuses more quickly than regulators at the federal level. Together, the three attorneys general argue that allowing states to enact tougher laws would mean better protection from predatory practices that can lead to a crisis, such as subprime mortgages and payday lending. The banking industry continues to advocate a single set of standards, saying it will be less confusing than 50 separate state regimes.
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