In May, the Consumer Financial Protection Bureau (CFPB) issued an interpretive rule that describes states’ authority to pursue lawbreaking companies and individuals that violate the provisions of federal consumer financial protection law. Because of the crucial role states play in protecting consumers, the Consumer Financial Protection Act grants their consumer protection enforcers the authority to protect their citizens and otherwise pursue lawbreakers, CFPB said.
“In the years leading up to the financial crisis, federal regulators undermined states seeking to
protect families and businesses from abuses in the mortgage market,” said CFPB Director
Rohit Chopra. “Our action today demonstrates our commitment to promoting state enforcement,
not suffocating it.”
When Congress passed the Consumer Financial Protection Act in 2010, it recognized the
important role of states in protecting consumers from financial fraud, scams, and other wrongdoing, CFPB noted. In the run-up to the Great Recession, federal banking regulators took numerous steps to undermine state regulators and enforcers, deteriorating protections for mortgage borrowers and setting the stage for the subprime crisis. Through the Consumer Financial Protection Act, Congress significantly restricted the ability of federal banking regulators to broadly preempt state consumer financial protections.