NEW YORK’S ‘PATERNALISTIC’ STANCE
New York is a “paternalistic” state, which means its attorney general is “of the view that a consumer needs to be protected from financial institutions,” Enyart said. As such, the state attorney general operates the Department of Financial Services to examine lenders for fair lending violations.
N.Y. Attorney General Letitia James is known for being very active regarding consumer protection. Last month, James led a coalition of 21 state attorneys general who called on the CFPB to drop the “regulatory sandbox” that would allow companies to experiment with fintech products and services without penalty. The AGs claimed the sandbox “would erode critical consumer protections under the guise of fostering innovation in the consumer financial marketplace,” they wrote in the Feb. 11 letter.
“The CFPB was created to protect consumers and ensure the financial stability of this country. These proposed rule changes would have the complete opposite effect — putting blind faith in the very industries and services they are supposed to regulate and correct. At a time when so many Americans are struggling to make ends meet, the CFPB should be focused on protecting consumers, not advancing regulations that could hurt them,” James wrote in the letter.
Also, the N.Y. attorney general is likely to follow California’s Consumer Privacy Act, Covington said. “The states talk to each other and meet multiple times a year to exchange ideas and exchange priorities — it’s a trend,” she said. “California has the CPA, and now there are, I think, nine other states that have bills in play — New York is one of those. I don’t think the CPA is going to be an anomaly.”