Pub. 8 2018 Issue 3

8 www.azbankers.org Just Stating the Facts: F EDERAL LAW VERSUS STATE LAW – A PUSH AND PULL OF THE AGES. THE TWO CAN WORK SIDE BY SIDE WITH NO PROBLEMS MOST DAYS. HOWEVER, WHEN THERE IS A CONFLICT, FEDERAL LAW DOES END UP WINNING OUT. THOUGH, THE FACT THAT FEDERAL LAW IS THE ULTIMATE VICTOR IN INSTANCES OF CONFLICT DOES NOT TAKE AWAY FROM THE FACT THAT STATE-SPECIFIC LAW AND TRENDS HAVE THE VERY REAL POTENTIAL TO IMPACT: (1) THE FEDERAL, REGULATORY TIDE AND (2) OTHER STATES’ LAWS. SO, IT BEHOOVES A BANKER TO PAY ATTENTION TO STATE LAW SHIFTS EVEN WHEN THE STATE SHIFTING IS NOT THE GREAT STATE OF TEXAS. Two major Acts have recently passed their respective state legisla- tures that will be discussed in this article: the Maryland Financial Consumer Protection Act of 2018 (“MFCPA”) and the California Consumer Privacy Act of 2018 (“CCPA”). The MFCPA deals, in part, with enhanced protections and regulatory bite in regards to “unfair, abusive, or deceptive trade practices,” whereas the CCPA deals with enhanced protections and rights in respect to consumer privacy. The MFCPA, amended in October of this year, adds the term “abusive” to the already existing law against unfair and deceptive trade practices. It also includes violations of service member-related federal statutes like the Servicemembers Civil Relief Act and the Military Lending Act as “per se” violations of UDAAP, while also upping the penalties for first-time and repeat offenders. Another noteworthy part of the MFCPA is that it gives state regulators the ability to impose heftier fines for violations. What does this mean for other states? Maryland is pretty split down the middle of the political spectrum. So, it could be said to be a good litmus test for states that are not all red (generally, in favor of less regulations in the financial institution context) nor riding the blue wave (generally, in favor of more regulations). And what about federal regulators? Of course, we can only spec- ulate – but the more we see states imposing these expansions of UDAAP and state regulatory power, the more plausible it would be for federal regulators to tighten the reigns despite the current administration’s stance on deregulation of the financial industry. And the burning question – what does this mean for Texas banks? At the moment, there is not much talk of expanding either state regulatory power nor definitions within the current state equivalent of UDAAP. This is not to say that the Texas legislature will not consider either of these issues during its upcoming session. The other piece of state legislation we are keeping a close eye on is the CCPA. This Act is said by many to be a direct result of recent, State Law Shifts and the Impact On the Financial Community