Rob McKenna (R-Wash.)
Tom Miller (D-Iowa)
WASHINGTON (Legal Newsline)-A bipartisan group of 40 state attorneys general is urging Congress not to erode their offices' role in consumer protection amid the proposed creation of a new federal Consumer Financial Protection Agency.
In a letter to congressional leaders, the attorneys general said Washington should not preempt state laws aimed at protecting consumers from frauds and abuses, particularly in the enforcement of state banking and mortgage foreclosure laws, if lawmakers create the new agency.
"Rather than limiting the states' role in consumer financial protection, as some have advocated," the letter said, "we believe Congress should encourage an active and effective partnership between the states and federal financial regulatory agencies to the ultimate benefit of all consumers."
The states' legal officers say they should be able to enforce the proposed federal agency's regulations, allowing for a joint approach to protecting consumers. They also said they want to be able to enforce consumer protection laws for state- and federally-chartered financial institutions.
"Weakened consumer protections and limited enforcement authority already have damaged many consumers and the economy in general," the letter said. "Early state action can prevent a local problem from becoming a national one."
Earlier this year, the U.S. Supreme Court ruled that state attorneys general have the authority to sue national banks.
Legislation calling for the creation of a national consumer protection agency was introduced by U.S. Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, in July. The bill is H.R. 3126.
The AGs' letter was organized by Attorneys General Rob McKenna of Washington, a Republican, and Tom Miller of Iowa, a Democrat.
"Attorneys general are living and breathing the fight against the abusive financial practices impacting people of their states," McKenna said. "The two Washingtons each have an important role in protecting consumers and businesses. But when it comes to understanding and rapidly responding to the economic issues affecting our communities, the states' abilities are unmatched."
From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.