Photos: YouTube Screenshots
NEW YORK – New York Attorney General Letitia James this week led a coalition of 20 attorneys general in submitting letters to the federal Office of the Comptroller of the Currency (OCC) and Consumer Financial Protection Bureau (CFPB) urging both agencies to ensure that national banks cooperate with investigations being conducted by state attorneys general into violations of state laws. Though national banks are subject to state laws, as the Supreme Court recognized and as Congress codified in Dodd-Frank, they frequently decline to cooperate with investigations conducted by state attorneys general. This unacceptable behavior by the major banks can lead to companies and senior officials evading accountability for illegal conduct, which is why Attorney General James and the coalition are calling on federal banking regulators to correct the situation.
“No one is above the law, no matter how rich or powerful they are, and that includes major banks,” said Attorney General James. “Big banks should not be able to simply ignore investigations by state officials or think they can violate state laws with impunity. I thank my fellow attorneys general for joining with me to call on the OCC and CFPB to address this problem and ensure banks know they are answerable to state officials and laws.”
The federal OCC adopted regulations in 2004 exempting national banks from state laws and actions brought by state attorneys general. This action enabled national banks to claim immunity from state law enforcement, and preceded the explosion in subprime and predatory lending that resulted in the most destructive financial crisis in the United States since the Great Depression. Both the U.S. Congress and the U.S. Supreme Court rejected the OCC’s view of national bank immunity from state laws, while Congress also created the CFPB as a consumer-protection-focused supervisor of big banks.
Big banks refusing to submit to state-level authorities, and being sheltered by the federal OCC in doing so, puts consumers, the economy, and national banks themselves at risk. State attorneys general are the primary source of consumer protections on issues including lending, debt collection, and prohibitions against unfair or deceptive business practices. When big banks refuse to cooperate with attorney general investigations, consumers suffer and problems can fester into major crises. Big banks, meanwhile, put themselves at risk when a culture of unaccountability tolerates improper business practices. Attorneys general should not have to resort to filing lawsuits against national banks to stop deceptive and illegal banking practices, and big banks should be equally accountable under state law as any other business operating within their jurisdictions.
Attorney General James and the coalition call on the OCC to issue supervisory guidance to national banks, instructing them that failures to cooperate with legitimate state law enforcement investigations pose safety and soundness risks to banking institutions. The attorneys general also urge the CFPB to take appropriate actions to ensure that big banks are accountable for violations of state consumer protection laws.
Joining Attorney General James in signing on to the letters are the attorneys general of Arizona, California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, the District of Columbia, the Northern Mariana Islands, and the Virgin Islands, as well as the Executive Director of the Hawaii Office of Consumer Protection.
