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AG Cooper calls on Congress to protect fair loans for consumers

Release date: 4/7/2004

WASHINGTON: Attorney General Roy Cooper testified before a US Senate committee on Wednesday about his opposition to new federal rules that would make it harder for states to protect consumers from abusive loans.

“Across the country, attorneys general and their staffs are helping consumers with their problems, mediating disputes and securing refunds for people who’ve been wronged,” said Cooper, chair of the Consumer Protection Committee and co-chair of the Predatory Lending Working Group for the National Association of Attorneys General. “Simply put, these new rules put consumers at risk by taking 50 cops off the beat.”

Speaking at a hearing of the US Senate Committee on Banking, Housing, and Urban Affairs, Cooper outlined his opposition to sweeping new rules by the Office of the Comptroller of the Currency under which national banks and their subsidiaries no longer have to abide by state laws or be subject to state enforcement. Cooper told the committee that the proposed OCC rules weaken important protections for consumers, undermine state efforts to fight predatory lending, and interfere with states’ rights to enforce their laws against banks doing business within the state.

Cooper criticized the rules for shielding national banks and their subsidiaries from state predatory lending laws and for replacing those tough laws with minimal protections. North Carolina’s predatory lending law, which Cooper authored as a state senator, limits prepayment penalties and bans predatory practices such as loan flipping, deceptive points and fees and the packing of single premium credit insurance into loans, practices the OCC rules fail to address.

Cooper also refuted OCC arguments that state laws and state enforcement hinder banks, noting that North Carolina’s banking industry played a critical role in developing the state’s predatory lending law and that the law has proven effective without restricting consumers’ access to loans. Recent studies show that the worst predatory lending practices have been stopped under the state law while subprime mortgage credit remains freely available to North Carolina consumers. The studies were conducted by the Kenan-Flagler Business School of the University of North Carolina at Chapel Hill (see http://www.kenan-flagler.unc.edu/KI/commCapitalism/publications.cfm) and the Center for Responsible Lending (see http://www.responsiblelending.org/predlend_nc/index.cfm ).

All 50 state attorneys general have expressed opposition to the proposed rules, Cooper noted. He pointed to the wealth of experience that state attorneys general have protecting consumers and combating abusive lending practices. Cooper cited his recent actions against predatory lenders including a 2001 settlement with The Associates which resulted in $20 million in refunds to North Carolinians and a 2002 multistate settlement with Household that provided $484 million to consumers across the nation and $11 million for North Carolina residents.

“As Attorneys General, we will not stand by and let these rules take effect without a judicial fight,” said Cooper. “But the best place to deal with this problem is right here in Congress.”