When Ford Motor Company paid $52m last December to resolve claims that it had misled consumers about the safety of its sports-utility vehicles, it settled not with America’s federal authorities, but with 50 state attorneys-general. When Household International paid $484m last October to settle allegations of predatory mortgage lending, it also settled with the states.
Over a year after WorldCom collapsed amid massive accounting fraud, Bernie Ebbers, the firm’s former chief executive, was this week having his fingerprints taken—not by federal prosecutors, but by officers instructed by Drew Edmondson, attorney-general of Oklahoma.
Not long ago the offices of most state attorneys-general were chasing nothing more exciting than petty fraud. Today, truly ambitious holders of office influence the way America does business, tackling issues ranging from antitrust and product liability to environmental regulation and customer privacy.
This year alone, the 500 lawyers under the command of Eliot Spitzer, New York’s attorney-general, have busied themselves with hedge-fund regulation (this week winning a $40m settlement from Canary Capital), conflicts of interest on Wall Street, predatory lending by consumer-finance firms, drug pricing and more.
Unlike consumer-protection groups and class-action lawyers, which pursue similar legal actions, state attorneys-general are usually presumed by the courts to be acting in the public interest, so they always get their cases heard.
Together, America’s 56 state attorneys-general (along with the 50 states come representatives from Guam, American Samoa and the like) field nearly 12,000 lawyers, according to their national association, NAAG. Together, they can bring simultaneous suits in over 50 jurisdictions.
Almost all of the states’ most celebrated settlements have been the product of such “multistate actions”—including, above all, their landmark $246 billion settlement in 1998 with America’s tobacco industry. NAAG does much of the co-ordinating, levying membership dues that fund a string of committees overseeing antitrust, bankruptcy, consumer protection, environment, health care and so on. Multistate actions, says Mr Miller, have helped to “move the balance of power” between big firms and state governments.