General Assembly leaders are backing an effort to provide $1 million to bolster state enforcement of consumer protections against financial fraud in case the Trump administration scales back those efforts.
State Senate President Thomas V. Mike Miller, House Speaker Michael E. Busch and other lawmakers held a news conference Friday to express their support for legislation that would carry out the recommendations of a commission set up to study the implications for Maryland of President Donald J. Trump’s drive to deregulate financial services.
The legislators were joined by Gary Gensler, a former federal regulator who headed the Maryland Financial Consumer Protection Commission. After a six-month study, that panel produced a report urging the state to fill in gaps left by the Trump administration’s policy changes.
“Maryland’s got to look out for Maryland if there’s a change coming in Washington,” Gensler said.
Busch, an Anne Arundel County Democrat, said the commission, which included appointees of Republican Gov. Larry Hogan, made its recommendations unanimously.
“It was a bipartisan effort. Everyone came together,” Busch said.
Miller, a Calvert County Democrat, pointed to the Trump administration’s moves to de-fund the federal Consumer Financial Protection Bureau.
“The states have got to step up,” he said.
Sen. James C. Rosapepe, Senate sponsor of the bill that created the panel, said he soon will introduce legislation to carry out its recommendations.
“Most people understand that if you turn off the traffic lights on Wall Street, the financial vehicles start crashing into consumers,” said the Prince George’s County Democrat. He said that’s what happened before the financial crash of a decade ago.
Rosapepe said that while the Trump administration is seeking to roll back provisions of the federal Dodd-Frank law adopted to restrain financially risky practices in the wake of the 2008 crash, that law allows the states to act on their own. He said the proposed legislation would provide resources for the state to undertake such efforts.
“We can’t protect the people of California. We can’t protect the people of Texas, but we can protect the people of Maryland,” Rosapepe said.
Del. Bill Frick, a commission member, said he expects to sponsor the bill in the House along with Del. Susann Aumann, a Baltimore County Republican.
“Maryland has been a leader on consumer issues and we will continue to be,” Frick said.
The legislation is expected to call for new funding for the Attorney General’s Office to pursue cases of abuses against consumers. Whether legislative leaders could enforce such a mandate for increased spending is in question.
Last year, the General Assembly enacted legislation requiring Hogan to provide $1 million in his budget to finance litigation by Attorney General Brian E. Frosh against the Trump administration, but the governor refused to do so. Instead, Hogan said Frosh could use money his office has on hand for consumer protection litigation.
Spokespersons for Hogan had no reaction Friday to the Assembly leader’s announcement of their legislative package.
One provision of the legislation would be a Student Loan Bill of Rights intended to protect borrowers against harmful practices. Among other things, the bill would create a state ombudsman to protect student loan borrowers.
The legislation also would allow Maryland to monitor financial innovations such as the “crypto-currency” Bitcoin and take steps to protect consumers from abuses.
Another provision would require credit reporting agencies such as Equifax, which had a major data breach last year that affected millions of Americans, to promptly report such occurrences.
The legislation would seek to address at the state level some areas in which the Trump administration has scrapped policies implemented under President Barack Obama. Among other things, the bill would require the state to take over enforcement of a rule requiring financial advisers to act as fiduciaries on behalf of their clients — putting their clients’ interests first in managing their money.
Gensler, a former chairman of the federal Commodity Futures Trading Commission and undersecretary of the U.S. Treasury Department, said the panel also recommended increasing penalties for infractions by financial services companies. He said Maryland had not raised those penalties in more than 30 years, leaving the state in 46th place in terms of the severity of its fines.
The General Assembly passed the legislation creating the commission last year in response to the changes anticipated as the result of Trump’s election. The bill went into effect without Hogan’s signature.