Today’s New York Times reports that several State Attorneys General are contemplating consumer fraud cases against the banks and brokers who marketed predatory mortgages in Ohio and other states. A recent United States Supreme Court ruling determined that state regulators were not preempted by federal regulation of banks from enforcing state civil rights laws against federally chartered banks. Cuomo v. Clearinghouse opens up the door for state enforcement of Consumer protection laws against those who defrauded consumers with mortgages that could not be repaid.
The broad preemption claimed by the Office of the Controller of the Currency and the Banks never made sense. State regulators can and should fill the void left by the failure of regulation in Washington.
The next question to ponder is whether or not this decision also opens the door for individual and class action consumer claims by the private bar enforcing state consumer protection laws.
Justice may be on the way.