Tags: US | Geithner | Financial | Overhaul

Geithner: States 'Crucial' to Enforcing New Rules

Friday, 02 Apr 2010 07:26 AM

Treasury Secretary Timothy Geithner told state attorneys general they would play a "crucial role" under the Obama administration's proposed overhaul of financial regulations.

Speaking on a conference call Thursday, Geithner told 14 states' top law enforcement officials that they will take the lead in enforcing new rules designed to protect consumers from financial abuse, the Treasury Department said.

The rules would be written by a new consumer financial protection agency. The proposed agency is one of the most controversial parts of the administration's plan. Business groups and financial companies have spent tens of millions of dollars campaigning against it.

Geithner thanked the state officials for their "pioneering and important work" protecting consumers from predatory lenders, Treasury said in a statement. He asked them to report trends in fraud and illegal practices so that Treasury can help coordinate a national response.

The proposed consumer agency would set minimum standards for most companies offering consumer financial products. For the first time, states would be able to override federal rules with stricter standards of their own.

Critics in the financial industry say that would be onerous for national companies trying to follow 51 different sets of rules.

The Treasury Department detailed its overhaul proposal last June. The House passed a version of the bill with a weakened consumer agency, but the agency became a sticking point in negotiations between Senate Democrats and Republicans.

The Senate Banking Committee last month approved a bill with a consumer protection department that would be part of the Federal Reserve. It was approved without the support of any Republicans.

The full Senate will take up the measure this spring.

The financial overhaul is a top priority for the Obama administration now that the health care overhaul has been signed into law.

Geithner's call included attorneys general from: Connecticut, Hawaii, Iowa, Illinois, Maine, Mississippi, Missouri, Montana, North Carolina, Ohio, Oregon, Tennessee, Vermont and West Virginia.

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