Monday, September 24, 2012

Dodd-Frank challenge expanded

The Blog of Legal Times Friday reported that a lawsuit filed last June in U.S. District Court for the District of Columbia by a Texas community bank, the Competitive Enterprise Institute and the 60 Plus Association, challenging the constitutionality of the Dodd-Frank Act, in complaining that it gives the government too much power to take over and liquidate nonbank companies whose failure would jeopardize the financial system., was joined by Michigan, Oklahoma and South Carolina.

While "the original suit focused in large part on the Consumer Financial Protection Bureau, complaining that it 'aggregates the power of all three branches of government in one unelected, unsupervised and unaccountable bureaucrat,'" the post relayed, "the three states specifically decline going after Dodd-Frank on those grounds., limiting their participation to a new challenge added to an amended complaint asking the court to review the constitutionality of the Orderly Liquidation Authority, established under Title II of Dodd-Frank."

"Intended as a so-called third way between bankruptcy and bailout," the post explains, quoting Oklahoma Attorney General Scott Pruitt, "the new authority allows the secretary of the Treasury to order the Federal Deposit Insurance Co. to take over and liquidate a nonbank determined to be 'in default or in danger of default,' and if its collapse would have a 'serious adverse effect on the financial stability of the United States.' Such a substantial power is fundamentally inconsistent with our constitutional framework and checks and balances, making this is a very important case."

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