Tong pushes for greater consumer protection
Connecticut Attorney General William Tong is pushing again for legislation that would strengthen his office’s ability to investigate and take civil-enforcement action against banks and other financial-services institutions, reform that he argued was essential to protecting consumers from unfair and unscrupulous practices.
Comparable to legislation that was proposed in the previous two years, Senate Bill 121 would allow the attorney general’s office to conduct investigations of allegedly deceptive and anti-consumer practices.
The legislation would also provide the attorney general’s office the investigatory power to enforce certain Consumer Financial Protection Act protections against banks chartered in other states, such as Buffalo, N.Y.-headquartered M&T, which has been the focus of about 425 complaints submitted to the attorney general’s office following the conversion of People’s United Bank accounts to M&T accounts in September 2022.
“This is really important to people here in Connecticut, after we saw what happened to Connecticut consumers with M&T Bank,” Tong said during remote testimony to the state legislature’s Banking Committee on Tuesday. “It would have been helpful with M&T to have clarified that we had that pre(law)suit investigative authority.”
The legislation’s scope extends far beyond banks, however. Tong said that federal authorities and other state attorneys general have used the authority provided by the bill to investigate and bring civil-enforcement actions against payday lenders, debt collectors, cash advance companies, for-profit colleges, tribal lending entities and purported law firms operating mortgage-relief schemes.
“It would be helpful in taking on, for example, for-profit student colleges that maybe encouraged students to take out tens of thousands of dollars in student loans and then the school closes,” Tong said. “That might have given us the opportunity to protect students here in Connecticut — for example, students like those at Stone Academy.”
Last year, Tong sued Stone Academy, alleging that the nursing-school operator deceived hundreds of students and denied them their promised education. Stone Academy, which had campuses in East Hartford, Waterbury and West Haven, shut down in February 2023, amid pressure from state regulators, who accused Stone of inadequate staffing and a failure to meet requirements related to clinical hours.
Tong added that the bill would help protect consumers in Connecticut against companies such as Florida-MV Realty, which has been sued by several states for allegedly deceptive practices, such as locking vulnerable homeowners into 40year exclusive-listing agreements. MV is also the subject of an active investigation by Tong’s office.
Last year, the Banking Committee passed a comparable bill. But during a busy session that was dominated by negotiations over the state budget, that bill did not subsequently come up for votes on the floor of the legislature’s House of Representatives or Senate.
When they passed last year’s bill, some Banking Committee members said then that they wanted any enacted version of the legislation to further clarify the lines of authority between the attorney general’s office and the state Department of Banking. Some of those who submitted testimony about last year’s bill, including the Connecticut Bankers Association, expressed similar concerns.
Tong and banking department officials said that they have been working to resolve those issues.
“The discussions have been fruitful. We’ve been able to come to an agreement, particularly around the entities and individuals that are subject to the jurisdiction of the (banking) commissioner,” Matt Smith, the Department of Banking’s director of government relations and consumer affairs, said during inperson testimony on Tuesday. “We have a long and productive working relationship with the office of the attorney general. This really highlights and underscores that relationship. The department supports the AG’s efforts and authority to enforcement the CFPB Dodd-Frank Wall Street Reform Act.”
Several committee members and representatives of financial-services advocacy groups said that they were pleased to learn of the talks between the attorney general’s office and the banking department.
“We’re actually very heartened to hear that there are good conversations going on between the attorney general’s office and the Department of Banking,” Thomas Mongellow, CEO and president of the Connecticut Bankers Association, said during in-person testimony to the committee on Tuesday. “As we reported to you folks last year, one of the key things we’re looking for in any type of bill that moves forward would be to preserve the current protocols and cooperative that currently exist between the Department of Banking and the AG.”
The Credit Union League of Connecticut is also closely following the bill’s development.
“There is a longstanding history of cooperation and collaboration between these agencies, and we anticipate that the current discussions will yield language that preserves this effective and beneficial relationship,” Bruce Adams, the CEO and president of the Credit Union League of Connecticut, said in written testimony.
Among others weighing in on the bill was John Erlingheuser, senior director of advocacy for AARP Connecticut, which represents people over the age of 50.
“This bill would ensure that the attorney general would have its normal tools for investigating and enforcing rules that are in place for Connecticut’s financial industry, regardless of the type of charter or license each institution operates under,” Erlingheuser said in written testimony.
Banking Committee members did not vote Tuesday on SB 121. They have not yet set a date for doing so, but they will likely vote on the bill sometime in March.