Consumer Law

Economic Crisis? Let State Attorney's General Do Their Work!

By Joe Consumer

We?ve blogged before about how years of corporate immunity in the financial world has led to disastrous results.  In 2007, in a case called Waters v. Wachovia, the Supreme Court ruled that bank-owned mortgage lenders were no longer subject to more rigorous state licensing and consumer protections laws.  This led directly to the subprime mortgage crisis.  In his dissent, Justice John Paul Stevens lamented that it was ?especially troubling that the court so blithely preempt[ed] Michigan laws designed to protect consumers.?

Well, now the Court has agreed to stick its nose into bank regulatory practices again.  This time, we hope the Court does the right thing.  The case was brought by New York Attorney General Andrew Cuomo, who is investigating ?whether minorities were being charged higher interest rates on home mortgage loans, a practice that is prohibited under various state and federal laws.?  Lower courts said Cuomo couldn?t do this.  Everything single state in the country is supporting Cuomo.  We hope the Court takes notice of this, for a change!

Meanwhile, some important securities class actions have begun (including one recently settled by the Ohio Attorney General representing the State Teachers Retirement System against Merrill Lynch), but as the Washington Post points out, the weakening of these laws in recent years, by both Congress and the Supreme Court, have taken their toll on the rights of defrauded shareholders and investors.  So we'll see!

Full post as published by ThePopTort on January 19, 2009 (boomark / email).