State AGs get career boost from Dodd-Frank

State AGs get career boost from Dodd-Frank


‘Outside The Box’
Thursday, Nov. 4, 2010
STATE AGs GET CAREER BOOST FROM DODD-FRANK
Commentary: Watch for attorneys general to move up politically
By JOSHUA SPIVAK
    With all the excitement of the House and Senate races, the state attorneys general campaigns were pretty much ignored. Too bad. AGs are the first-round draft picks of the political world.
    Unlike lieutenant governor, which is frequently a dead-end job, or statehouse legislative leaders, the AGs are in great position to move up to the governor’s mansion or the Senate. And thanks to a new change in the financial regulatory law, they may be playing a leadership role in cleaning up the banking mess.
    Looking at top elected positions throughout the country shows how well AGs have done: eight former AGs in the Senate, eight serving as governor, one in the Cabinet, and one former president (Bill Clinton). This election saw three attorneys general elected to the governor’s mansion, and one to the Senate. The position is so good, that one former U.S. senator, Ohio’s Mike DeWine, ran for and won the job. See our complete coverage of Election 2010.
    It’s not a surprise that the attorney general is such a popular stepping stone. Though the AG job is not well understood — it handles an array of functions, including acting as the state’s civil attorney, but they don’t really handle violent crimes — voters like the crusading lawyer motif. The model for the job has become a consumer protection advocate.
    In recent years, the most popular AGs have been those playing the crusading prosecutor against wayward industries, especially when federal regulators don’t seem to act. The attorneys general went after the tobacco industry and got the lion’s share of credit for the more than $200 billion settlement. In New York, before being elected governors, Elliot Spitzer made his name as the Sheriff of Wall Street, and Andrew Cuomo took on the student loan industry.
    Over the past few years, the AGs have also been at the vanguard of the foreclosure fight. And, on the Republican side of the aisle, a group of GOP AGs have taken on the new Obama health-care law. All of these attorneys general have burnished their reputations, and political standing, in these battles.
    Consumer protection
    While the attorney general position has given the crusading lawyers a chance to shine, they are about to step into some new, much bigger, shoes. Thanks to Dodd-Frank, the financial-regulatory-reform law, attorneys general are now empowered to go after national banks for violations of state consumer protection laws, something that federal regulators have been criticized for ignoring.
    Prior to this change, attorneys general were prevented from suing federal thrifts and national banks because of pre-emption laws. With that pre-emption protection lessened or stripped away, the attorneys general will take a hard look at banking practices, and in a time of great consumer anger against financial institutions, will take full advantage of their new powers to investigate and sue banks.
    We can be certain that the attorneys general throughout the country will be driving hard to the bank’s hoop very soon. The potential political benefits for the individual AGs — who can be viewed as taking a leadership role in finally cleaning up the banking mess — are great. We may have ignored their races, but to see the longer-term trends in politics watch those newly empowered first-round picks in the AG office. They’ll be running for higher office soon enough.
    Joshua Spivak is a Senior Fellow at the Hugh L. Carey Institute for Government Reform at Wagner College in New York.