I’ve previously written about the constitutional challenge to Dodd-Frank. A group of plaintiffs, including a Texas community bank and the Competitive Enterprise Institute, filed a lawsuit in June challenging the Consumer Financial Protection Bureau and the Financial Stability Oversight Council.
Yesterday afternoon, the attorneys general of several states — Michigan, Oklahoma, and South C arolina — joined the lawsuit (complaint here), challenging Dodd-Frank’s Orderly Liquidation Authority.
As CEI’s press release explains:
The state attorneys general are challenging Title II of Dodd-Frank, which gives the Treasury Secretary the ability to liquidate financial companies with only 24 hours notice. There is no meaningful legal recourse for the company, there is an immediate gag order placed on all parties and it carries criminal penalties if violated; in short, this creates death panels for American companies.
Dodd-Frank also “delegates effectively unlimited power to the Treasury Secretary to determine that a company should be liquidated under the Orderly Liquidation Authority and to the FDIC in carrying out that liquidation.”
Importantly, the lawsuit is about more than just the loss of one check on government power. The lawsuit acknowledges prior cases and, as in the Obamacare litigation, argues that this law took things a step beyond what the Court has ever sanctioned:
While the Supreme Court may have approved the constitutionality of any single removal of a check or balance in isolation—e.g., a limit on the Congress’s power of the purse—the Court has never approved all of Title II’s delegations, and eliminations of checks and balances, in a single law. In particular, the Supreme Court has never sustained the constitutionality of a statute that prohibits any meaningful judicial review of the Government’s action in the manner of Title II of the Dodd-Frank Act. Title II’s combinations of delegations, and eliminations of checks and balances, is unprecedented and unconstitutional.
I will continue to report on this case as it develops, and I wish the state AGs the best of luck.