All Things FinReg


On October 7, attorneys general (all Democrats) from New York, Connecticut, the District of Columbia, Maryland, Massachusetts, New Hampshire, Pennsylvania, and Vermont filed a comment letter (Comment Letter) with the Consumer Financial Protection Bureau (CFPB) supporting proposed rules concerning Payday, Vehicle Title, and Certain High-Cost Installment Loans (Proposed Rule), to be codified at 12 C.F.R. §1041.

The Comment Letter focuses primarily on the importance of state attorneys general’s independent authority as separate sovereigns to enforce state laws that may be more stringent than federal law. The Comment Letter points to the preamble of the Proposed Rule as evidence of the CFPB’s intent to treat its proposal as a floor, not a ceiling:

The protections imposed by this proposal would operate as a floor across the country, while leaving State and local jurisdictions to adopt additional regulatory requirements (whether a usury limit or another form of protection) above that floor as they judge appropriate to protect consumers in their respective jurisdictions.

Proposed Rule to be codified at 12 C.F.R. §1041.3(b)(2))(i) at p. 177.

The Comment Letter is significant for several reasons. First, the state attorneys general have a clear and active jurisdictional interest in the Proposed Rule. Under Dodd-Frank, the attorneys general (along with the CFPB) have the authority to prosecute allegations of unfair, deceptive, or abusive acts or practices (UDAAP) in Federal court. In addition, in some instances, violations of the Proposed Rule may constitute violations of state consumer fraud laws, and we would expect state attorneys general to be active in leveraging the federal requirements into state causes of action.

Notably, the Comment Letter is further evidence of the continuing close working relationship between many attorneys general and the CFPB, coming as it does at the end of a week when consumer protection prosecutors from 48 states and territories met with representatives of the CFPB in Phoenix, Arizona.