Texas bank launches constitutional challenge to Dodd-Frank financial reform law

American Enterprise Institute

If the U.S. Supreme Court throws out President Obama’s healthcare law this month, the only other remaining major achievement from the president’s first term would be, arguably, the Dodd-Frank financial reform law.

But that may be in jeopardy, too.

A Texas community bank is today filing a challenge to Dodd-Frank, arguing that aspects of the Consumer Financial Protection Bureau and the Financial Stability Oversight Council violate the U.S. Constitution’s separation of powers. Here is the press release:



Unchecked Power of Consumer Financial Protection Board Unconstitutional

WASHINGTON, D.C., June 21, 2012 – The State National Bank of Big Spring, Texas, today filed a lawsuit asking the U.S. District Court for the District of Columbia to hear its case challenging the constitutionality of provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Competitive Enterprise Institute and the 60 Plus Association are also joining this community bank as plaintiffs in the same action, requesting the Court to invalidate the law because of the unprecedented, unchecked power it gives the government.

“No other federal agency or commission operates in such a way that one person can essentially determine who gets a home loan, who can get a credit card and who can get a loan for college,” said Jim Purcell, CEO of State National Bank. “Dodd-Frank effectively gives unlimited regulatory power to this so-called Consumer Financial Protection Board, also known as CFPB, with a director who is not accountable to Congress, the President or the Courts. That is simply unconstitutional.”…

…“As a whole, Dodd-Frank aggregates the power of all three branches of government in one unelected, unsupervised and unaccountable bureaucrat,” said former White House Counsel C. Boyden Gray, attorney for the plaintiffs and founder of Boyden Gray & Associates…

The complete article is at AEIdeas.

RelatedMoody’s Downgrades Global Banks 

Moody’s just took a hatchet to the credit ratings of the biggest global banks.

The rating agency on Thursday cut its rating for banks in the U.S., U.K. and Europe — 15 in all, including all of the “too big to fail” banks in the U.S.

Wall Street had months to prepare for the cuts, so they should have little additional effect on banks’ stock prices or banks’ ability to borrow money. But borrowing costs are already relatively high, and the downgrades will not help an industry still struggling with a weak global economy and the aftershocks of a financial crisis it helped create.

The cuts could also lead several banks to post billions of dollars in additional collateral and curb their ability to trade derivatives…

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