Cook County Record

Monday, November 18, 2019

Attorney: States will enforce Consumer Financial Protection Bureau standards if feds don't

By Justin Stoltzfus | Apr 25, 2018

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WASHINGTON — With the Trump administration pulling back on some traditional consumer protection activities by the Consumer Financial Protection Bureau, some states, including Illinois, are stepping in to try to continue the work of the bureau, which had been created under former President Obama, ostensiblyas part of the federal response to the Great Recession.

The attorneys general of Illinois, California, Connecticut, Hawaii, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Mexico, North Carolina, Oregon, Vermont, Virginia and Washington have expressed the desire to implement consumer protections if the federal agency doesn't work proactively enought, in the attorneys' general opinions, to protect their states' residents. Some states, like New Jersey, have announced efforts to create a state agency to mirror the CFPB's original stated goals to protect consumers from various types of predatory lending and fraudulent commercial activity.

“If the protections of the federal government are weakened, states will step in to enforce,” Tonya Esposito, an attorney at Seyfarth Shaw in Washington, D.C., told the Cook County Record. “A number of states have said similar things.”

Tonya Esposito | Seyfarth Shaw

Esposito cited a collective letter by a number of attorneys general she said reflects their dedication to pursuing state action on some of the protections built into the CFPB's previous work.

“I would expect that we'll see more of the same,” she said.

Esposito said there could be additional state regulations on student loan activity or rules on certain kinds of auto loans.

“All of these are prime for inquiry and enforcement action,” she said.

Esposito said that credit cards are another potential target, adding that state agencies could look at “tricky language” in credit card contracts and other similar issues in order to protect citizens.

“We have no way of knowing how it's all going to shake out in the end,” Esposito said.

However, she added that it's clear that some states are going to be following the CFPB closely and how its actions could affect what the attorneys general perceive as financial threats to their states' residents.

Critics of the CFPB have argued its work and perhaps its very existence are unconstitutional, as the legislation creating it also limited the power of U.S. presidents to remove and appoint the bureau's director. However, in January, a 10-judge federal appeals panel ruled 7-3 that provision of the law was constitutional.  

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Consumer Financial Protection BureauSeyfarth Shaw, LLP

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Tonya M Esposito