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68 preempted by federal regulators, who asserted that the state laws overlapped or conflicted with federal law. Dodd-Frank changed this dynamic by raising the standards that must be met before federal regulators can assert preemption. e change fundamentally increased the importance of the role of the states in the regulatory process, and will result in increased legislative and regulatory activity as states are further empowered to act independently to achieve their own policy goals based on local conditions. INCREASED IMPORTANCE OF STATE ATTORNEYS GENERAL As the individuals who enforce and often push for these laws, the state Attorneys General received a regulatory windfall under Dodd- Frank. Specifically, under § 1042, a "State regulator may bring a civil action or other appropriate proceeding to enforce the provisions of this title or regulations issued under this title with respect to any entity that is State- chartered, incorporated, licensed, or otherwise authorized to do business under State law…" State Attorneys General are rarely shy about using the power they have been granted and many have already brought actions by using these new Dodd-Frank powers—for example, the Illinois A.G. suing a predatory lender in Chicago; Connecticut and Florida in a joint lawsuit against a mortgage rescue company; and Mississippi bringing charges against a credit reporting agency. is power also extends to other state regulators who may have been previously hamstrung by the law of their own states. For example, under New York General Business Law § 349, the Attorney General is the only state official empowered to bring an action for an unfair or deceptive act or practice. Dodd-Frank, however, extended this power such that other state regulators can bring these types of actions. Benjamin Lawsky, the former Superintendent of New York's Department of Financial Services, was thus empowered, frequently wielding this new authority prior to his departure. INCREASED COOPERATION BETWEEN CFPB AND STATES As a result of this expanded role for state regulators, the relationship between the states and federal regulators—in particular the CFPB—takes on new importance. In order to aid in this relationship, state regulators and the CFPB have entered into agreements to enhance cooperation. For example, in 2011, the CFPB and Conference of State Bank Supervisors signed an agreement to work together to achieve examination efficiencies and to avoid duplication of time and resources. Also in 2011, the National Association of Attorneys General and the CFPB agreed to a Joint Statement of Principles, establishing a framework for regulation of financial products and services. is cooperation has resulted in numerous joint enforcement actions starting with the 2012 National Mortgage Settlement with the country's five largest mortgage servicers. is cooperative framework will lead to further public and private enforcement actions as the CFPB and states share information and cooperate to achieve common goals and objectives. WHO IS REGULATED? THE LARGER PARTICIPANT RULE Another major change caused by Dodd- Frank is re-defining the type of companies covered by federal regulation, including many companies that were previously regulated under state law, or perhaps not regulated at all. Dodd-Frank authorizes the Bureau to define by regulation larger participants of certain markets for financial products or services. ese "larger participant" rules extend the CFPB's oversight into markets which may not have been regulated in the past. Dodd-Frank § 1024 specifically gives the Bureau supervisory authority over all nonbanks offering three specific types of consumer financial products or services: (i) mortgages; (ii) private education loans; and (iii) payday loans. e law also grants CFPB supervisory authority over "larger participants" (as defined by the Bureau) in markets for other consumer financial products or services. While defining a company as a larger participant does not impose new substantive consumer protection requirements, it does subject these companies to the Bureau's regulatory and enforcement authority. e Bureau is authorized to supervise these entities for purposes of: (i) assessing compliance with federal consumer financial law; (ii) obtaining information about the companies' activities and compliance systems or procedures; and (iii) detecting and assessing risks to consumers and consumer financial markets. In order to accomplish this, the Bureau conducts formal examinations of these entities—or it may simply request information from supervised entities without conducting examinations. e Bureau prioritizes its activity among these companies based on, among other things, the size and risk to a particular market, the extent of relevant overlapping state regulation, and any market information that the Bureau has on the company, including, for example, any consumer complaints about the company which have been submitted to the Bureau. e Bureau has defined larger participants in five markets to date: consumer reporting, consumer debt collection, student loan servicing, international money transfers, and most recently, automobile financing. is regulatory expansion was an intended goal of Dodd-Frank which will continue in the future. HOW REGULATION HAPPENS Collection Consumer Complaints In addition to expanding the scope of what entities and industries are regulated by the CFPB, Dodd-Frank also instructs the Bureau on how it should make those determinations. One of the biggest changes as a result of Dodd- Frank is the reliance on consumer complaints to inform the regulatory agenda. In its 2015 Semi-Annual Report, the CFPB explains that information obtained from consumers "This extension is particularly intrusive—and unnecessary, considering we live in an age of social media which allows real-time feedback by consumers through a multitude of channels."

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