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Attorneys General Fight OCC on Overreach

*_Correction: MReport attributed a statement about the OCC to Bill Himpler. It has been changed to reflect a statement about the CFPB, and a statement from the American Financial Services Association has been added._*

On Tuesday attorneys general from 48 states and territories aired their concerns about federal overreach in a letter to the ""Office of the Comptroller of the Currency"":http://www.occ.treas.gov/ (OCC), charging that the regulatory agency will sidestep state consumer financial laws and misinterpret the intent of the Dodd-Frank Act if it moves forward with a controversial preemption rule.


Addressing acting comptroller John Walsh, the ""National Association of Attorneys General"":http://www.naag.org/ (NAAG) began the letter by calling ""protection of consumers├â┬ó├óÔÇÜ┬¼├é┬ª a traditional state duty and power"" and defending the role played by state-level reforms in mortgage lending failures and settlements nationwide.

The ""NAAG"":http://www.naag.org/ criticized the agency for considering certain preemption regulations, citing several Supreme Court cases and rules brought into force in 2004 that run counter to the intent of the Dodd-Frank Act and take power out of the states' hands.

""The ""OCC's"":http://www.occ.treas.gov/ insistence on maintaining its posture in favor of broad preemption of state law is disappointing and ignores a clear Congressional mandate to the contrary,"" the letter went on to say, concluding with a call for ""state and federal regulators [to] work together and share their respective authority to protect consumers and to ensure a fair financial marketplace.""


""NAAG"":http://www.naag.org/ director of communications Marjorie Tharp declined to comment on the letter. She cited the respective roles played by Illinois and Indiana attorneys general Lisa Madigan and Greg Zoeller in drafting the letter.

├â┬ó├óÔÇÜ┬¼├àÔÇ£The rules proposed by the ""OCC"":http://www.occ.treas.gov/ run contrary to the directive of Congress to preserve state powers to protect consumers,"" Zoeller, who also serves as co-chair of ""NAAG's"":http://www.naag.org/ consumer protection committee, said in a statement. ""Through these rules, the ""OCC"":http://www.occ.treas.gov/ would exceed its authority by unilaterally preempting state laws.""

An ""OCC"":http://www.occ.treas.gov/ spokesperson provided _The MReport_ with a brief statement, saying only that ""[t]he comment process is a very important part of every rulemaking, and we will be carefully reviewing all comments we've received as we move toward a final rule.""

According to ""Reuters"":http://www.reuters.com/article/2011/06/28/us-financial-regulation-occ-idUSTRE75R6WA20110628, the ""OCC"":http://www.occ.treas.gov/ claimed that it needs preemption authority to protect national mortgage lenders and servicers from a quilt of varying and contradictory state laws.

Lending credibility to the ""NAAG's"":http://www.naag.org/ assertions, ""_The Financial Times_"":http://www.ft.com/intl/cms/s/0/c457a002-a1e0-11e0-b485-00144feabdc0.html reported that the ""Treasury Department"":http://www.treasury.gov/Pages/default.aspx weighed in on the matter by expressing concerns over ""excesses"" that might result if the ""OCC"":http://www.occ.treas.gov/ adopts the preemption rules.

In an e-mail provided to _MReport_, ""American Financial Services Association"":http://www.afsaonline.org/ spokesperson Karen Klugh said that the association ""believes that the OCC should retain its preemption authority as a safeguard against state laws that overreach or are contradictory to one another.""

Referencing fellow regulatory agency ""Consumer Financial Protection Bureau"":http://www.consumerfinance.gov/, Bill Himpler, EVP at the ""AFSA"":http://www.afsaonline.org/, elaborated on the sometimes uncertain relationship between federal and state agencies.

He said that consumer credit administrators in states already ""check├â┬ó├óÔÇÜ┬¼├é┬ª compliance with federal and state consumer protections├â┬ó├óÔÇÜ┬¼├é┬ª under the jurisdiction of the state attorneys general.""

""You've got a healthy experience there, so rather than reinvent the wheel with folks who haven't had experience with├â┬ó├óÔÇÜ┬¼├é┬ª consumer credit"" and mortgage lending, federal regulatory authorities should respect and work in tandem with state consumer financial laws, Himpler added.

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.

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