States Battle Feds To Enforce Lending Laws

Attorneys General want more power to stop predatory lending

March 10, 2009

Predatory Lending • Some Payday Lenders Operate Outside U.S. Law • Payday Lenders Resist APR Comparisons • Massachusetts Settles Predatory Lending Charges For $10 Million • California Payday Lenders Target Blacks, Latinos • States Battle Feds To Enforce Lending Laws • Payday Loans Can Lead to Bankruptcy • Study Disputes Lenders' Excuses for Charging Blacks and Latinos Higher Rates • ACORN Names Money Mart "Loan Shark of the Year" • States Battle Feds Over Predatory Lending Laws • States Warn Bill in Congress Would Roll Back Predatory Lending Protections • Ney-Kanjorski Bill A Ruse, Consumer Groups Charge • Business Interests Target "Activist" Attorney Generals • Option One Agrees to Clean Up Its Lending Practices in Pennsylvania • Pennsylvania Tackles Predatory Lending • Predatory Lending Guidelines Too Vague, Consumers Group Charges • North Carolina Court Strikes Down CitiFinancial's Mandatory Arbitration • Congress Targets Predatory Lending • CitiGroup Settles Predatory Lending Charges for $215 Million • Household Settles for $484 Million • Consumers File Class Action Suit Against Household • FTC Charges Associates, Citigroup With Predatory Lending Practices

States should have the right to protect consumers from bad loans and federal regulators should not be allowed to stop states from doing so, Attorney General Roy Cooper said in a brief filed with the U.S. Supreme Court.

The amicus brief written by North Carolina and signed by 48 other states and the District of Columbia argues that the Supreme Court should not cede all consumer protection authority to federal banking agencies.

"Right now, we need all hands on deck to protect consumers from unfair loans," Cooper said. "Irresponsible lending helped get us into this economic mess, and these times call for more oversight and enforcement of tough consumer protection laws, not less."

This is the latest battle Cooper and other state attorneys general have waged against federal preemption of state consumer protection laws. Cooper says his battles with the U.S. Office of the Comptroller of the Currency go back at least six years. He maintains the agency has consistently taken enforcement power away from the states.

The brief, written in support of a case filed by New York seeking to enforce its state fair lending law against national banks, points out that states have a long track record of looking out for consumers' interests while the OCC has a minimal one.

Cooper says states have taken the lead in protecting the public from unfair loans, conductinginvestigations, pursuing cases and winning settlements for consumers. Federal regulators have done little to protect consumers, focusing instead on protecting national banks from tough state lending laws like the one Cooper helped author in North Carolina.

"It's better to have 50 cops on the beat instead of just one," Cooper said. "States must be able to enforce their laws to protect their consumers, but federal bank regulators have tried to block us at every turn."

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