Inclusion of the provision in the federal Omnibus Appropriations Act of 2009 authorizing state attorneys general to enforce the federal Truth-In-Lending Act with private civil lawsuits will create a patchwork quilt of conflicting authorities and interpretations of federal laws dealing with home loans and other types of consumer finance transactions. 

Federally chartered banks and other financial institutions are currently regulated under TILA by several federal entities including the Federal Reserve Board. Adding state AGs to the regulatory mix will only prove harmful because of added uncertainty and confusion. 

The U.S. Chamber Institute for Legal Reform and other groups have sent a letter urging Senate leadership to drop this provision. In it, we underscore that this provision will likely lead to costly and unnecessary litigation at a time when businesses across the country are facing a very difficult economic environment.

Even more troubling is that this abdication of federal responsibility could allow state attorneys’ general to hire private outside plaintiffs’ lawyers on a contingency fee contract basis to enforce TILA.

This lawsuit provision in the Omnibus bill marks the second time this year that plaintiffs’ lawyers would be rewarded in federal legislation with the ability to expand lawsuits. Just weeks ago, the stimulus bill passed with a provision expanding state AG authority to enforce violations of the federal Health Information Privacy and Accountability Act (HIPAA).

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