Attorney General Bonta Urges Federal Banking Regulators to Hold Big Banks Accountable for Violating State Laws

Thursday, December 7, 2023
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OAKLAND — California Attorney General Rob Bonta today joined 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 banking regulators to ensure that national banks cooperate with investigations being conducted by state attorneys general into violations of state laws. The U.S. Supreme Court has recognized — and Congress codified in the Dodd-Frank Act — that national banks are subject to state consumer protections law. However, these banks often decline to cooperate with investigations conducted by state attorneys general. In the letters sent today, the state attorneys general call on the OCC and CFPB to correct the situation. State attorneys general are the primary enforcers of state consumer protections on issues including lending, debt collection, and prohibitions against unfair or deceptive business practices.    

"Big banks should not be able to evade investigations by state attorneys general. Unfortunately, we've seen that happen time and again. Today, my fellow attorneys general and I are emphatically saying: No more," said Attorney General Bonta. "The OCC and CFPB can and should move expeditiously to fix this situation."

The attorneys general are urging 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 are also urging the CFPB to take appropriate actions to ensure that big banks are accountable for violations of state consumer protection laws.   

The OCC adopted regulations in 2004, prior to the passage of the Dodd-Frank Act, that sought to shield national banks from complying with state law, as well as from investigations and enforcement actions 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 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.    

Joining Attorney General Bonta in signing on to the letters are the attorneys general of Arizona, Colorado, Connecticut, Hawaii, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, 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.   

A copy of the letters can be found here and here.

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