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THE DODD-FRANK ACT AND FEDERAL PREEMPTION OF STATE CONSUMER PROTECTION LAWS

mICHael HamburGer

The author of this article discusses how the Consumer Financial Protection Act of 2010 modifies the extent to which federal consumer financial laws preempt state consumer financial laws and the potential impact on banks.

n July 21st, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”).1 Perhaps the most contentious aspect of this far-reaching legislation, which addresses everything from lending practices to derivatives trading, is its creation of a new regulator of institutions that offer financial products and services to consumers. The Bureau of Consumer Financial Protection (the “Bureau”), which is established as an independent unit within the Fed- eral Reserve System by the Consumer Financial Protection Act of 2010 (the “CFP Act” or the “Act”),2 has varying degrees of supervisory and enforcement responsibility.3 In addition, the Bureau has rulemaking authority to adminis- ter, implement and enforce most federal consumer financial laws, except the Federal Trade Commission Act.4 O

Several provisions of the CFP Act modify the extent to which federal consumer financial laws preempt state consumer financial laws. First, state laws are generally preempted only if they are inconsistent with federal law. Second, state laws are preempted for national banks and federal savings as-

michael Hamburger is an associate in the litigation department of White & Case llP. The author may be contacted at michael.hamburger@whitecase.com.

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Published in the January 2011 issue of The Banking Law Journal. Copyright 2011 aleXeSoluTIoNS, INC. 1-800-572-2797.

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