“Consumer protection has largely fallen into the hands of the state legislature,” Eva Weber, analyst at Aite Group and author of the report, said. “While concerns over the current economic climate and the possibility that subprime mortgage lending will lead the country into recession have resulted in saber rattling by the U.S. Congress and federal regulators, several states are already putting laws in place to protect their citizens.”

“Financial institutions must remain focused on consumer measures and be prepared to act on state legislature,” Weber said, noting that tracking information about state regulation can be hard since regulators largely operate independently.

Pending bills on identity theft fall in three categories: 58% address the issue of security freezes, and in particular the rights of consumers to have their credit reports locked down in cases where identity theft is suspected or possible. New bills would allow victims of identity theft to request a security alert be placed on their credit report.

Meanwhile, 24% of bills are broad measures that define identity theft, including a revision of the definition of “personal identifying information,” as well as prevention methods and potential solutions. Finally, 18% of bills focus on breach of information requirements and the response a financial institution must adhere to when personal information is mishandled.

Overall, Aite said more than 1,300 bills covering a range of issues that could impact financial institutions are currently pending before the 50 U.S. state legislatures.

Other hot button issues besides identity theft include mortgage lending, payday lending and credit card operations.

New York has the highest number of pending bills - 284, followed by Illinois (85), Connecticut (72) and New Jersey (63).