Reimagining State Banking Regulators: How the Principles Underlying the Consumer Financial Protection Bureau Can Serve as a Blueprint for a New Regulatory Federalism

With hundreds of millions of Americans owing more than $14 trillion in combined household debt, a robust consumer financial protection framework is necessary to protect consumers when accessing critical credit markets. America relies on a complimentary system of regulatory federalism to uphold these protections, premised on robust state oversight and enforcement. However, the current implementation of this system is failing to meet the needs of this moment. Since the Great Recession, federal policymakers and regulators have devoted significant energy and resources to strengthen the oversight and accountability mechanisms of the consumer finance market—but these efforts have largely overlooked the need for comprehensive reform at the state level. This article analyzes the nation’s consumer financial protection framework through the lens of the student debt crisis. After the last financial crisis, policymakers and regulators promised the American people, “never again.” And yet, tens of millions of consumers teeter on the edge of a $1.7 trillion student debt cliff. The nation’s response to the student debt crisis provides key insights into both the shortfalls and opportunities for progressive consumer protections at every level of government. Drawing on the lessons learned from the systemic failures that necessitated the creation of the Consumer Financial Protection Bureau, along with the Bureau’s subsequent successes, this article defines the principles upon which states can revolutionize consumer protections across all consumer finance markets through the creation of state consumer bureaus—thereby completing the unfinished work of financial reform