The Consumer Financial Protection Bureau has issued an interpretive rule outlining the role of state-level authorities in enforcing federal consumer financial protection laws. The rule reaffirms provisions of the Dodd-Frank Act which acknowledge the importance of state-level financial consumer protection efforts.
In a press release announcing the rule, the CFPB blamed federal banking regulators for weakening state-level protections in the lead-up to the Great Recession. They “took numerous steps to undermine state regulators and enforcers, deteriorating protections for mortgage borrowers and setting the stage for the subprime crisis,” the bureau said. It cited a 2010 Senate report on the recession’s causes as an example: “Unfortunately, rather than supporting [states’] anti-predatory lending laws, federal regulators preempted them.”
State authorities, including regulators and attorneys general, were empowered to enforce the Consumer Financial Protection Act’s consumer protection provisions under Dodd-Frank’s Section 1042. States have used this authority in 33 public enforcement actions to protect consumers since 2010, the agency said.
“In the years leading up to the financial crisis, federal regulators undermined states seeking to protect families and businesses from abuses in the mortgage market,” said CFPB Director Rohit Chopra. “Our action today demonstrates our commitment to promoting state enforcement, not suffocating it.”
The CFPB has memoranda of understanding to promote and enable collaborations with more than 20 state attorney general offices, as well as regulators in all fifty states, the District of Columbia, and Puerto Rico.