Connecticut Attorney General's Office

Press Release

Attorney General Asks Obama Administration To Restore State Authority To Regulate National Bank Lending, Credit Cards And Banking Rules

Date, 2009

Attorney General Richard Blumenthal has asked the Obama administration to overturn a federal rule barring states from reining in predatory lending, banking and credit card practices by national banks, saying that the regulation helped cause the ongoing economic catastrophe.

Blumenthal and all 49 other state attorneys general signed a letter to the president seeking the rule's repeal, as well as support for their arguments against the regulation in a case pending before the U.S. Supreme Court.

In 2004, the Office of Controller of Currency (OCC) reversed decades of practice when it issued new rules barring states from enforcing their consumer protection and fair lending statutes regarding loans, credit cards and other banking activities by national banks.

The rule hamstrung the states' ability to intervene against predatory lending and banking practices by large national banks. It also seriously hindered their authority to fight abusive credit card rules.

"In protecting consumers, federal authorities should lead, follow or get out of the way," Blumenthal said. "The Bush administration flagrantly favored national banks over consumers, exempting them from state regulation and helping set the stage for the ongoing economic meltdown.This rule was a key element in the perfect storm that devastated the mortgage market, turning the American Dream of home ownership into a nightmare and wrecking our economy. Without this rule, states could have stopped abusive practices, slowing or even preventing the current crisis.

"I urge the Obama administration to overturn this anti-consumer rule, restoring and assuring common sense regulation of the lending, banking and credit card industries. Repealing this regulation will once again allow states to intervene vigorously on the side of consumers when their lender, bank or credit card provider treats them unfairly.

"Ending this rule is a vital step in restoring sanity to our lending and banking system. It will level the playing field tilted so drastically by the Bush administration, providing consumers a powerful protection against abusive lending and banking practices," Blumenthal said.