The Middletown Press (Middletown, CT)
Legislators OK bill to bolster AG’s consumer protection powers
The General Assembly has passed a bill that would strengthen the Connecticut attorney general's ability to investigate and take civil action against financial-services firms, culminating several years of efforts to advance such reform.
After it's signed into law by the governor, Senate Bill 121 would allow the attorney general's office to investigate allegedly deceptive and anti-consumer practices. It would also enable the attorney general's office to enforce key provisions of the federal Dodd-Frank bill against banks chartered in other states. That would include Buffalo, N.Y.-headquartered M&T Bank, which has been the focus of several hundred complaints submitted to the attorney general's office since the conversion of People's United Bank accounts to M&T accounts in September 2022. The bill also aims to hold accountable a range of other businesses providing financial services.
“This is a powerful step toward protecting Connecticut families and small businesses from deceptive and anti-consumer banking practices,” Tong said in a written statement on Wednesday. “Whether it is the kind of mass customer service failures we saw with the M&T/People's United transition, or payday lenders, debt collectors, or mortgage relief scams, this bill extends strong new investigative tools to the Office of the Attorney General.”
Senate Bill 121 was passed unanimously by the state Senate last Friday and approved by the state House of Representatives with a 130-13 vote on Tuesday. It has advanced farther than two comparable bills that were, respectively, approved last year and in 2022 by the General Assembly's Banking Committee, but not passed by the full legislature.
To be enacted, Senate Bill 121 would need to be signed by Gov. Ned Lamont. David Bednarz, a spokesperson for Lamont, said Wednesday that, “the governor and his staff need to review the final language that was included in this bill.”
An analysis of the bill by the Office of Legislative Research explains how it would expand the attorney general's “pre-trial investigative authority” to enforce the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. The bill would authorize the attorney general, “to issue subpoenas for documentary material, testimony or responses to written interrogatories,” according to the OLR's review. The OLR also noted that, “it generally makes information (the attorney general) collects under subpoenas confidential and specifies when and to whom it may be disclosed. The bill also allows him to apply to Hartford Superior Court to enforce a subpoena, including requesting the court impose a civil penalty of up to $10,000.”
During a Feb. 27 hearing of the Banking Committee, Tong said that in addition to protecting bank customers, the bill could have been used to protect students at Stone Academy. Last year, Tong sued Stone Academy, alleging that the nursingschool 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 the school of inadequate staffing and a failure to meet requirements related to clinical hours.
Tong added in his testimony that the bill could have helped safeguard consumers against companies such as Florida-based MV Realty. That firm has been investigated by Tong's office and sued by several states for allegedly deceptive practices, such as locking vulnerable homeowners into 40-year exclusivelisting agreements.
When they passed last year's bill, some Banking Committee members said 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 last year, including the Connecticut Bankers Association, expressed similar concerns.
In the past few months, Tong and Banking Department officials have said they have been working to resolve those issues.
“This bill represents the hard work and collaboration between the Office of the Attorney General and the Department of Banking,” Jorge Perez, the Department of Banking's commissioner, said Wednesday. “Together with the Banking Committee and the entire legislature, we have enhanced consumer protections for Connecticut residents. We look forward to working with the attorney general in enforcing the provisions of the bill.”
During the Feb. 27 hearing, several committee members and representatives of financial-services advocacy groups said that they were encouraged by the collaboration 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,” said Thomas Mongellow, CEO and president of the Connecticut Bankers Association. “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.”