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Cooperation, Competition or ConfusionFederal and State Regulators Seek to Enforce the DoddFrank Act and State Consumer Banking Laws in Close Alliance

An important development of the new enforcement scheme established by the DoddFrank Wall Street Reform and Consumer Protection Act (DoddFrank Act) is state and federal enforcement of consumer banking regulations. State enforcement is a radical change from the traditional enforcement scheme, which has been almost exclusively federal. However, state enforcement of federal regulations creates numerous challenges. For example, while the DoddFrank Act establishes a framework for a certain level of statefederal cooperation, ambiguities in the enforcement scheme may actually restrict collaboration. Further limiting the consumer protection and enforcement scheme envisioned by its drafters is the controversy surrounding the agency created to enforce it, the Consumer Financial Protection Bureau (CFPB). Among the most significant issues that the CFPB must overcome are its leadership and the scope and limits of its powers. Finally, because the DoddFrank Act reduces the impact of federal preemption on some state banking laws, the CFPB, in adopting its own consumer protection rules, may be at the forefront of a regulatory pileon with states following suit to pass and enforce their laws even more broadly, rather than cooperating with federal regulators to enforce the CFPBs rules under the DoddFrank Act.

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