NH attorney general regains jurisdiction – to a point
CONCORD – Until the foreclosure settlement this week, the N.H. Attorney General’s Office had no authority to investigate bank fraud or other lending abuses thanks to a legal provision that exempted banks and other financial institutions from the state consumer protection law.
The $26 billion settlement, announced Thursday in Washington, D.C., restores the state office’s jurisdiction over Bank of America, Citigroup, GMAC, JPMorgan Chase and Wells Fargo – the five banks covered under the settlement agreement.
But even as it works to help the state’s suffering homeowners and foreclosure victims, the provision, which covers the banking, insurance and securities industries, among others, prohibits the Attorney General’s Office from investigating other banks not included in the settlement.
“In contrast to almost all of the attorneys general in this country, my hands are tied behind my back from pursuing these types of claims against financial institutions,” said Attorney General Michael Delaney, who said he hopes to join future settlements involving other banks and mortgage lenders.
“In light of the scope of the misconduct that this multistate investigation has uncovered … it just makes no sense to keep the attorney general on the sidelines.”
State lawmakers first enacted the exemptions in 2002, looking to clarify the Consumer Protection Act, which provided oversight responsibilities to the Attorney General’s Office, the Banking Department and other state authorities, said state Rep. John Hunt, R-Rindge, who helped to craft the exemption proposal.
“The issue was, ‘How do we fix this? How do we create a bright line to determine who’s in and who’s out?’ ” said Hunt, who was chairman of the House Finance Committee at the time. “This was our answer.”
In the years since, the exemption has left financial oversight to the state Banking Department, among others, which can issue fines and other penalties, but can’t file criminal or civil lawsuits against banks, said James Boffetti, a senior assistant attorney general.
“They don’t have the same options for recourse that we do,” said Boffetti, who said lawsuits can lead to heavier penalties for the banks. “This is something we should be involved in.”
With the mortgage crisis raging, several state lawmakers have looked to amend the consumer protection law in recent years to restore the attorney general’s jurisdiction.
One such proposal, sponsored by state Rep. Marshall Quandt, R-Exeter, among other lawmakers, was referred recently to a study committee for further review.
“Hopefully, we can make something come of it soon,” Quandt said.
A second proposal is being drafted by members of the state Senate, said Executive Councilor David Wheeler, of Milford, who recently reviewed the draft.
“I don’t know exactly what’s happening with it, but hopefully, it will come together quickly,” Wheeler said. “The people in this state need as many people fighting for them as possible.”
“We’re going to keep fighting,” added Boffetti, who said the state plans to join more settlements. “This (settlement) is just the beginning. We need to have all the arrows in our quiver.”
Jake Berry can be reached at 594-6402 or email@example.com.