A coalition of 21 attorneys general penned letters this week urging federal regulators to force nationally chartered banks to cooperate with AGs’ investigations into violations of state laws.

The AGs urged the Office of the Comptroller of the Currency to issue supervisory guidance, and the Consumer Financial Protection Bureau on Wednesday to “take appropriate action to make clear to the Banks that [not cooperating with state AG investigations] creates a material risk that may give rise to unfair or abusive acts or practices.”

The coalition alleged that national banks often decline such cooperation, despite being required to do so by the Dodd-Frank Act.

“Big banks should not be able to evade investigations by state attorneys general. Unfortunately, we've seen that happen time and again. Today, my fellow attorneys general and I are emphatically saying: No more,” said California Attorney General Rob Bonta in a press release. “The OCC and CFPB can and should move expeditiously to fix this situation.”

A 2004 rule adopted by the OCC exempts national banks from state laws and actions brought by state AGs, which the AGs allege permits banks to "claim immunity from state law enforcement.” Additionally, the rule’s 2004 time frame "preceded the explosion in subprime and predatory lending that resulted in the most destructive financial crisis in the United States since the Great Depression,” the AGs assert.

The Supreme Court, however, found the rule “did not comport with the National Bank Act" and when “a state attorney general brings suit to enforce state law against a national bank,” the state AG is legitimately acting as a “sovereign-as-law-enforcer.” Additionally, the Dodd-Frank Act codified “the authority of any attorney general ... of any State to bring an action against a [bank] in a court of appropriate jurisdiction to enforce an applicable law or to seek relief as authorized” by state law.

When a big bank refuses to submit to state law, it is “unsafe and unsound,” the AGs allege in their letters.

“The result is that State AGs can enforce the law but many Banks regularly refuse to provide the documents or testimony necessary to shed light on their practices — at times with the blessing of the OCC. This is untenable and unworkable,” they wrote. “It forces State AGs who have reason to suspect legal violations to sue first and ask questions later. It leaves the Banks in an adversarial posture vis-à-vis the State AGs rather than a cooperative one, resulting in costly litigation rather than collaborative dialogue. And it leaves consumers behind most of all, neutering the vanguard of consumer protections in this country and saddling them with the consequences.”

Evasions of state law enforcement, the AGs said, are “only likely to grow” as state-chartered institutions are re-chartered into federally chartered institutions.

Alongside Bonta are attorneys general of Arizona, Colorado, Connecticut, Hawaii, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, the District of Columbia, the Northern Mariana Islands and the Virgin Islands, as well as the executive director of the Hawaii Office of Consumer Protection.   

The OCC declined to comment, as a spokesperson said the agency does not “comment on correspondence.”

A spokesperson for the CFPB did not return a request for comment by press time.