OLYMPIA, Wash. (Legal Newsline)-The federal government should be careful not to fetter efforts by state attorneys general to go after consumer frauds in the banking industry, Washington Attorney General Rob McKenna said.
In an interview with Legal Newsline, McKenna said states ought to be able to pursue banking and financial services companies who break state laws.
"We need to be able to enforce our consumer protection laws without being preempted by the federal government," said McKenna, a Republican.
On Monday, the U.S. Supreme Court ruled that state attorneys general can investigate national banks but they cannot on their own subpoena financial institutions that have branches in other states.
The nation's highest court did say, however, that national banks are subject to some state laws under the National Banking Act. Given the federal law, the high court said that attorneys general may seek a court's help to enforce those state laws.
On whether state attorneys general should have more power over banks and the financial industry, McKenna said there is a balance that ought to be struck between state and federal oversight.
"It's important to have a national bank regulatory system," McKenna said. "I don't think that we should have 50 different state systems."
The attorney general added that there has been significant cooperation between the states and the federal government in addressing the subprime mortgage meltdown and the ensuing tide of home foreclosures.
McKenna, a member of the State Foreclosure Prevention Working Group, said the federal government is now "emulating" AGs' settlement with Bank of America's Countrywide Financial Corp.
The $8.4 billion multistate settlement ended some AGs' claims of predatory lending practices by Countrywide. The settlement, among other things, called for loan modifications.
"There is plenty of room for cooperation if the federal government wants to cooperate with the states," McKenna said. "Now we are seeing that interest in cooperation."
From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.
