On Financial Reform, Obama and AGs Team Up

Conservative state attorneys general have gotten a lot of attention for battling the White House over health care reform and greenhouse gas regulations. But, on preemption issues in financial reform, President Obama is the best ally that AGs have.
by | May 14, 2010

I'll have a feature in the June issue of Governing that offers some context on the efforts of Republican attorneys general to thwart the Obama White House (on health care reform, climate change, etc.). While reporting the story, Iowa Attorney General Tom Miller made the case to me that the tension is overblown.

“My view,” Miller told me, “is that the litigation against the federal government is the exception. Overall, the attorneys general have the best relationship with the Department of Justice in decades. That includes Democrats and Republicans.”

Exhibit A in Miller's argument was the financial reform legislation that the U.S. Senate is debating right now. His point was that states and state AGs overwhelmingly oppose federal preemption of state regulations in the law. Their ally in this fight is President Obama.

This dynamic became even clearer yesterday. From Reuters:

(Reuters) - An amendment to the Wall Street reform bill in the Senate to give the federal government more power than states to regulate banks would seriously harm efforts to protect consumers, the White House and two state attorneys general said on Thursday.

Several Democratic senators are supporting the amendment -- also co-sponsored by 10 Republicans -- to give federal regulators more power to preempt state regulations, saying there should be one strong central regulator.

The White House said states had to help regulate the 115,000 financial service providers across the United States.

In this context, Miller's right that the health care suits are an exception. But, given that health care reform is the most notable legislative victory of any Democratic president since Lyndon Johnson, it's a pretty big exception.

Josh Goodman
Josh Goodman  |  Former Staff Writer

More from Politics