For an earlier letter from NFHA regarding preemption, see below:
ENSURE STRONG CONSUMER PROTECTION IN S. 3217: ENSURE THAT STATES CAN PROTECT THEIR CITIZENS FROM HARMFUL FINANCIAL PRACTICES
May 5, 2010
Dear Senator:
On behalf of the National Fair Housing Alliance, a coalition of over 200 private, non-profit fair housing organizations, state and local civil rights organizations, and individuals from 39 states and the District of Columbia, I write to convey support for meaningful financial reform legislation that will both change the dishonest ways in which Wall Street operates and also protect individual consumers and communities that have been the victims of the financial services industry’s predatory and discriminatory treatment and practices. As you consider S. 3217, the Restoring American Financial Stability Act of 2010, I urge you to strengthen Title X, which would establish a new Consumer Financial Protection Bureau (CFPB), and oppose all efforts to weaken it. In particular, we support a strong, independent agency that cooperates with states to protect consumers.
State Attorneys General must retain the authority to hold wrongdoers accountable by enforcing the CFPB’s rules. They must be a cop on the beat. S. 3217 allows state Attorneys General to bring cases to protect their own state’s residents. Any argument which seeks to prevent them from enforcing federal law is in essence an industry request for exemption from federal laws. It is unreasonable to think that even a strong federal agency will have the resources or capacity to address every violation of the law. After all, 8 million foreclosures are expected over the next five years. Attorneys General are best suited to identify financial abuses in their states, and have the resources necessary to protect consumers. It is imperative that federal laws and rules be rigorously and consistently enforced nationwide, and maintaining Attorney General enforcement is a necessary component for consistent enforcement. Let’s not take these cops off the beat.
Federal preemption of state lending laws enabled the subprime crisis; we must allow states to prevent new and emerging abuses not covered by federal law. Big national banks have enjoyed preemption from state laws in the past which has given them an unfair competitive advantage over smaller state and local banks. Wearing the protective cloak of preemption, national banks engaged in predatory and discriminatory practices that brought borrowers to their knees. The current language in S. 3217 regarding federal preemption of state laws provides the Office of the Comptroller of the Currency with authority to preempt state consumer protection laws on a case-by-case basis, thereby only providing states with a modest ability to enforce their own laws. The protection of state law should be strengthened, not weakened. States must have the ability to address emerging local problems as they arise – they should not have to wait for the federal government to act.
Your constituents need more cops on the beat, and states have an important role in both addressing emerging consumer and civil rights problems and enforcing existing federal consumer protections. Rather than preventing Attorneys General and states from preventing the next financial crisis, we should be empowering them to protect their residents.
Sincerely,
Shanna L. Smith
President & CEO