An unexpected trend has emerged following the passage of the Dodd-Frank Act: state attorneys general are taking on a new role as bank regulators.
The Dodd-Frank Act of 2010 authorizes state attorneys general to enforce rules issued by the Consumer Financial Protection Bureau. Last April, the National Association of Attorneys General announced a Joint Statement of Principles with the CFPB, a partnership that seeks to ensure consumer protection, according to AmericanBanker.com.
The Obama administration's fraud task force also carves out an essential role for the state AGs as investigators and regulators in the finance industry. Many AGs throughout the nation have come to demand good behavior from financial institutions.
Iowa Attorney General Tom Miller is leading a “robo-signing” investigation, a multistate initiative aimed at correcting errors in the foreclosure process and redefining mortgage practices. The initiative also seeks $25 billion in relief funds for jeopardized homeowners. Many AGs from large states, however, are unwilling to sign on to the initiative.
Settlement agreements and investigations are just a few methods employed by the AGs to ensure compliance and to establish expectations.
State attorneys general have played a crucial role in investigations and regulation of the tobacco industry, securing multi-billion dollar settlements for constituents and their families, AmericanBanker.com reports.
With the involvement of AGs, however, banks will eventually have to come to terms with the added enforcement and comply with not only federal statutes but further demands made by state attorneys general.