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:
TEXAS COMMUNITY BANK, SENIORS AND
FREE ENTERPRISE GROUPS FILE SUIT CHALLENGING DODD-FRANK
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.”
No Checks and Balances
According to the complaint, there are no effective checks and balances to assure the public of accountability. Most importantly:
· Congress exercises no “power of the purse” over the CFPB, because the agency’s budget – administered essentially by one person – comes from the Federal Reserve, amounting to approximately $400 million that Congress cannot touch or regulate.
· The President cannot carry out his constitutional obligation to “take care that the laws be faithfully executed,” because the President cannot remove the CFPB Director except under limited circumstances.
· Judicial review of the CFPB’s actions is limited, because Dodd-Frank requires the courts to give extra deference to the CFPB’s legal interpretations.
The plaintiffs claim in their suit that Dodd-Frank gives an agency of unelected government bureaucrats unrestrained power. They argue this unaccountable power over the daily lives of the American people results in a lack of public accountability, creating a power grab over every U.S. citizen.
“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.
While some in the Obama Administration argue that the CFPB will be overseen by the Dodd-Frank Financial Stability Oversight Council, the FSOC’s review is practically nonexistent. It can overturn a CFPB regulation under only limited circumstances, and even then only if seven of the 10 FSOC members, including the CFPB Director himself, vote to overturn the CFPB’s rule. Most importantly, the Council has no power to oversee the CFPB’s enforcement activities, which is the CFPB’s preferred method of lawmaking.
More to come …