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Connecticut’s Attorney General has accused the federal government of blocking states’ attempts to protect crisis-hit homeowners. Richard Blumenthal was giving testimony before a Senate hearing on sub prime mortgage lending.

The Senate Commerce Committee hearing examined the state of consumer protection efforts in sub prime lending, especially the role of the Federal Trade Commission. Connecticut’s Attorney General Richard Blumenthal told the panel efforts by the states have recovered a billion dollars in restitution for victims of predatory loan schemes, while federal actions have brought in only around a third as much.

"The federal agencies have been AWOL. Federal enforcement has been lax and lackadaisical. But even more insidiously, the federal government has increasingly pre-empted and blocked the states from enforcing their laws to protect consumers."

Blumenthal gave his support to recently introduced legislation that would strengthen the role of the Federal Trade Commission in regulating sub prime lending, and promote a partnership with the states. He said protection efforts are still urgently needed to prosecute new scams that now prey on homeowners worried about foreclosure.