CHARLESTON – State Attorney General Darrell McGraw is upset that Capitol One Bank changed its registration to put a stop to his investigation.
While appealing the enforcement of a McGraw subpoena, Capital One Bank changed from a Virginia-based bank to a national one. That meant the bank could only be regulated by the Office of the Comptroller of Currency.
U.S. District Judge Joseph Goodwin said Thursday that McGraw's investigation was "hijacked" but ruled he could still probe Capital One Services. After receiving hundreds of complaints, McGraw was looking into several different business practices by Capital One.
It will be up to the OOC to continue the investigation of Capital One Bank.
"West Virginia consumer law has strong protections for consumers. The maximum late fee that can be charged on a credit card is 5% of the unpaid balance, but not more than $15; the maximum over-limit fee is 2% of the credit limit or $10, whichever is less," McGraw said.
"However, the OCC and the courts have deemed most state consumer protection laws unenforceable against national banks. Many national banks now have late fees and over-limit fees of $30 or more. Until Congress decides to take action, states are powerless to protect consumers who are charged such unlawful fees."
Goodwin wrote that he felt bad for McGraw's wasted efforts.
"While I find that federal law requires this result, I am sympathetic to the [Attorney General], whose lawful investigation was hijacked by Capital One's conversion to a national bank…" he wrote.
"Moreover, it is questionable whether the OCC will be as motivated or as effective in protecting the consumers of West Virginia as is the West Virginia Attorney General."
McGraw received 264 complaints, leading to the issuance of subpoenas in April 2005.
Eventually, Capital One appealed a Circuit Court decision to the state Supreme Court. In March, it converted to a national bank.