California Attorney General Rob Bonta has joined a coalition of 16 attorneys general in opposing a proposed federal rule that would significantly scale back oversight of banks, warning the move could weaken consumer protections and increase the risk of another financial crisis.
In a comment letter submitted to the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation, the attorneys general urged federal regulators to abandon the proposal, which would limit the authority of banking supervisors to monitor banks and enforce federal banking laws. The coalition argues the rule would reduce proactive supervision and leave regulators with fewer tools to address unsafe or risky practices before they harm consumers or threaten financial stability.
“Proactive and robust supervision of banks is crucial for our nation’s financial health and to protect the millions of Americans who rely on our financial system,” Bonta said in a statement. He warned that the proposal echoes regulatory rollbacks that preceded the Great Recession, which nearly collapsed the U.S. economy.
The proposed rule would shift away from long-standing supervisory practices that allow regulators to issue warnings and address potential problems before they become crises. According to the attorneys general, effective supervision has led to tangible consumer benefits in recent years, including the identification of potentially illegal overdraft fee practices and nearly $250 million in refunds to customers.
Critics say the rule would prohibit regulators from examining emerging risks that are not yet imminent, such as the rapid growth of cryptocurrency-related products, private credit offered by nonbank firms, and large-scale investments tied to artificial intelligence. They also argue the proposal would unwind protections enacted by Congress to ensure federal regulators address significant consumer protection issues.
Bonta joined attorneys general from New York, Arizona, Colorado, Connecticut, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, and the District of Columbia in submitting the letter.
The opposition is part of Bonta’s broader efforts to defend consumer financial protections. In recent months, he has challenged actions by the Trump Administration that he says undermine the Consumer Financial Protection Bureau, including filing lawsuits and briefs opposing efforts to reduce the agency’s funding and authority. He has also publicly opposed rollbacks of overdraft fee limits and other consumer protection rules, arguing such changes disproportionately harm lower-income consumers and communities of color.
Read Mayor and City Council of Baltimore v. Consumer Financial Protection Bureau and in National Treasury Employees Union v. Vought.
