In remarks given on Tuesday to the National Association of State Attorneys General (NAAG), CFPB Director Chopra promoted an aggressive approach to enforcement by both the CFPB and state attorneys general (AGs).

In his most noteworthy remarks, Director Chopra:

  • Identified federal preemption as having played a major role in the 2007-2009 sub-prime mortgage crisis and suggested that the OCC had used preemption “to attack state consumer protection enforcement.”  While he referenced statistics showing significant subprime mortgage lending by national banks in advance of the crisis, the statistics he cited showed that national bank subprime lending nevertheless constituted the minority of such loans.
  • Advocated for the expansion of state AGs’ authority.  He encouraged state AGs to bring actions under the Consumer Financial Protection Act (CFPA) and indicated that the CFPB plans to “clarify[] the wide variety of claims that states can bring under the CFPB’s statute” and wants to “make clear that state AGs and regulators can enforce a range of federal prohibitions and allow you to join forces.”
  • Indicated that he has directed CFPB staff to “explore ways that states could be able to get more out of the remedies available under the [CFPA]” as a way of encouraging more state enforcement of federal consumer financial protection laws.  A possible way suggested by Director Chopra is for states to seek civil penalties under the CFPA, a suggestion that appears to fly in the face of the plain language of the CFPA, which limits civil monetary penalties to scenarios where “(A) the Bureau gives notice and an opportunity for a hearing to the person accused of the violation; or (B) the appropriate court has ordered such assessment and entered judgment in favor of the Bureau.”.
  • Warned, once again, that remedies need to be directed to “senior management and executive levels” in order “to address the underlying issues that drive repeat corporate offenses.”  (Director Chopra’s remarks follow his statements last week that bank executives could be at risk if banks engage in unlawful overdraft practices.)
  • Warned that when conducting investigations, the CFPB will alert state AGs and regulators when it finds non-compliance with their orders.