This vote was on an amendment by Tom Carper, D-Del., that would allow state attorneys general to enforce state banking laws, but only if there were no federal protections in place. The amendment was offered to a bill that aims to close gaps in financial regulations, strengthen oversight of consumer lending and more closely oversee complex financial investments.
Currently, state attorneys general are largely prohibited from enforcing state laws that are stricter than federal laws. The underlying bill contains a provision that would allow state attorneys general to enforce state banking laws in order to protect consumers, while also allowing federal law to overrule states when it’s necessary to preserve the integrity of the national banking system. This attempts to strike a balance between banks engaged in interstate commerce, who say they should not be subject to innumerable and sometimes inconsistent state enforcement of laws, and consumer advocates, who say states do the best job of protecting consumers from abusive practices in the financial sector.
Carper’s amendment would have weakened the underlying’s bills’ latitude for state attorneys general to pursue consumer protection lawsuits by allowing them to enforce state banking laws, but only when there are no related federal protections in place.
“I am convinced of this: What we are doing is good for consumers, and it is fair for the banks,” Carper said.
“The Carper amendment preserves the States’ attorneys general role in protecting their citizens from abusive practices. That is about as Main Street as you can get. As I said, the alternative is to have someone from Washington, I suppose, being able to show up to protect those interests. Why not preserve the right of an attorney general at the State level to protect those interests?” asked Chris Dodd, D-Conn., who supported the amendment. “But it also makes clear—the Carper amendment does—that the [federal government] can preempt a State consumer law, while preserving our national banking system. So it strikes that balance, which is so critical.”
Bob Corker, R-Tenn., offered a competing amendment that would have prevented state attorneys general from enforcing federal consumer regulations against national banks and their financial products, except in cases where state law doesn’t conflict with federal law.
“I hope others will join with me to ensure that we don’t allow this unfettered organization, this czar over consumer protection, to create rules that then put community banks and others at great risk and have the ability to break contracts after the fact based on very vague language that 50 AGs may interpret in very different ways on a case-by-case basis, in whatever mood they are in on that day,” Corker said.
By a vote of 80-18, Carper’s amendment was adopted. Of Democrats present, 38 voted for the amendment and 17 voted against it (including a majority of the most progressive members). Every Republican present voted for the amendment. The end result is that the bill went forward with language that would allow state attorneys general to enforce state banking laws, but only if there were no federal protections in place.