States have always played an important role in protecting their citizens - including enforcing consumer protections. The Wall Street reform bill protects that role, preserving states' enforcement powers while asking them to play an essential role in new efforts to protect American consumers.
The consumer protection agency created in the Wall Street reform bill puts forth the strongest federal consumer protections ever. But these protections are not meant to replace the states' efforts, they are intended to work with them.
That's why efforts in the Senate to take away states' ability to supplement federal consumer protections are shortsighted.
States are a first line of defense responding quickly to new consumer abuses developing in local communities, for example, in acting against predatory subprime mortgage practices as seen in the recent crisis. State initiatives can also be an important signal to Congress and federal regulators of a need for action at the federal level - a welcome canary in the coal mine for the new consumer protection agency, America's families and responsible providers of consumer financial products and services.
When it comes to protecting American families, states and the federal government are partners. The Senate bill works to strengthen that partnership, implementing coordination among state and federal agencies to help ensure that there will be consistent interpretations of federal laws and consistent enforcement everywhere against everyone.
And the Wall Street reform bill protects the states' powers by ensuring that national banks may be held accountable to state Attorneys General through court actions to enforce applicable laws, including rules issues by the new consumer protection agency. The Supreme Court has specifically recognized that federal law prohibiting state officials from examining national banks does not prevent them from exercising their longstanding authority to file court actions enforcing federal predatory lending, consumer protection and other banking laws.
With more than 115,000 financial service providers nationwide and hundreds of thousands of consumer complaints against financial firms every year. This is no time to be taking cops off the beat.
Richard Blumenthal is Attorney General in the State of Connecticut and Diana Farrell is Deputy Director of the White House National Economic Council