WASHINGTON – West Virginia Attorney General Darrell McGraw is one of 22 state attorneys general who are urging Congress to pass a plan crafted by President Barack Obama's administration for a consumer protection agency that will team with them.
Obama is hoping to create a federal Consumer Financial Protection Agency that will regulate and supervise the financial industry, and 22 state attorneys general wrote four members of Congress Tuesday in support of it.
Of the 22 state attorneys general, only one – Hawaii's Mark Bennett – is a Republican. They wrote Sens. Chris Dodd, D-Conn., and Richard Shelby, R-Ala., of the Committee on Banking, Housing and Urban Affairs, and Reps. Barney Frank, D-Mass., and Spencer Bachus, R-Ala., of the Financial Services Committee.
"The current financial crisis, caused in part by irresponsible subprime lending and inadequate oversight, has demonstrated the need for comprehensive and effective consumer protection and enforcement at the federal level," the letter says.
"We believe an independent federal agency combined with joint enforcement by state officials is the best option for meaningful consumer protection in this area."
Frank introduced the legislation, H.R. 3126, in July.
"Any state attorney general may bring a civil action in the name of such state, as parens patriae on behalf of natural persons residing in such state, in any district court of the United States or state court having jurisdiction of the defendant, to secure monetary or equitable relief for violation of any provisions…" it says.
The attorneys general who signed their names to the letter are: Arizona's Terry Goddard, California's Jerry Brown, Connecticut's Richard Blumenthal, Bennett, Illinois' Lisa Madigan, Iowa's Tom Miller, Louisiana's Buddy Caldwell, Maine's Janet Mills, Massachusetts' Martha Coakley, Minnesota's Lori Swanson, Minnesota's Jim Hood, Missouri's Chris Koster, Montana's Steve Bullock, Nevada's Catherine Cortez Masto, New Jersey's Anne Milgram, New Mexico's Gary King, North Carolina's Roy Cooper, Ohio's Richard Cordray, Oklahoma's Drew Edmondson, Oregon's John Kroger, Tennessee's Robert Cooper, Vermont's William Sorrell and McGraw.
Guam Attorney General Alicia Limtiaco also joined in the letter.
Part of the Obama administration's plan for financial regulation reform calls for the creation of a Financial Consumer Coordinating Council that will "establish mechanisms for state attorneys general, consumer advocates and others to make recommendations to the Council on issues to be considered or gaps to be filled."
Obama's proposal noted that state attorneys general are currently left to "fill the gap" where mortgage companies not owned by banks fall.
Recently, the U.S. Supreme Court ruled that state attorneys general did have the authority to sue national banks, and Bank of America's Countrywide Financial Corp. agreed to pay $8.4 billion in a multi-state settlement of predatory lending allegations.
In June, Washington Attorney General Rob McKenna said the federal government is "emulating" that Countrywide settlement.
Eight state attorneys general wrote Obama in June to advise him not to undercut their authority to litigate against the financial industry, adding that consumers will be harmed.
"We look forward to forging an alliance with a federal regulator that has the protection of consumers and the promotion of sound credit practices as its central agenda," the letter says.
"We appreciate the fact that this legislation recognizes the key role that state attorneys general serve in spotting new frauds and abuses, responding to citizen concerns and enforcing state laws."
Ben Bernanke, the chairman of the Federal Reserve, testified before the Senate Committee on Banking, Housing and Urban Affairs in June that Obama's plan is not needed because the Fed can handle the issues.
"The Federal Reserve's combination of expertise in financial markets, payment systems and supervision positions us well to protect the interests of consumers in their financial transactions," he wrote.