Jerry Brown (D)
SAN FRANCISCO (Legal Newsline)--Federal preemption has allowed Wall Street scofflaws to evade punishment, California Attorney General Jerry Brown said Monday.
Speaking at the annual meeting of Public Justice, the Democratic attorney general assailed federal preemption, saying it prevents state attorneys general from pursuing lawsuits against members of the financial industry who defrauded Americans.
Brown, who is widely considered to be gearing up for a run for California governor, told members of the trial lawyers' group that there has been a "rampant dereliction of duty" on the part of some Wall Street figures, particularly nefarious lenders in the subprime mortgage market.
"Nobody is guilty. That cannot be," Brown said. "You cannot have such a massive fraud with no one wrong."
He noted that because many financial firms are regulated by the federal government states cannot take action against them for violating state securities and consumer protection laws.
"I hope that some of the people in this room can figure out how to frame a cause of action" against the bad actors, Brown said, half jokingly.
He also noted that federal preemption was during the Bush-era White House a barrier to his state's efforts to enforce its own tailpipe emissions standards.
In denying the waiver late last year, EPA Administrator Stephen Johnson said there ought to be a national approach to cutting tailpipe emissions, so it would not be well to allow individual states to set emissions standards.
However, the U.S. Environmental Protection Agency, under the Obama administration, has since granted California's request for a waiver to enforce its legislatively-approved emissions standards, aimed at achieving a 30 percent reduction in tailpipe emissions by 2016.
Still, he said the state has a long way to go to achieve the goal given the range of sources of climate-altering greenhouse gasses, including from planes, ships and off-road vehicles.
"It's going to take a lot of rule-making, legislative fighting and litigation before we're finished," Brown said.