Bench Memos

Dodd-Frank Is Unconstitutional

A group of plaintiffs, including a community bank in Texas and the Competitive Enterprise Institute, have filed a lawsuit (complaint here) challenging the constitutionality of Dodd-Frank. The plaintiffs are represented by former White House counsel Boyden Gray, one of the law’s most outspoken critics.  (He first outlined his legal arguments against Dodd-Frank in this Federalist Society white paper.)

The lawsuit, which has been filed in the U.S. District Court for D.C., challenges the structure of the Financial Stability Oversight Council (Title I) and the Consumer Financial Protection Bureau (Title X). The plaintiffs allege that “Titles I and X of the Dodd-Frank Act comprise unprecedented violations of ‘the basic concept of separation of powers and the checks and balances that flow from the scheme of a tripartite government.’” Indeed, the law attempts to shield the CFPB’s director from accountability to Congress, the president, and the courts, in a way that I don’t think any other agency has ever been shielded.


The complaint zeroes in on the impact the law will have on consumers, and I thought this particular excerpt was worth sharing:

Title X’s open-ended grant of power to the CFPB, combined with the absence of checks and balances limiting the CFPB from expansively interpreting that grant of power, creates a cloud of regulatory uncertainty that forces banks to censor their own offerings—a chilling effect that, for example, left the Bank with no safe choice but to exit the consumer mortgage business and not return until the CFPB’s authority and discretion are defined with greater specificity, transparency, and accountability.

That’s right.  Dodd-Frank gives this one agency such vast and unchecked power that community banks may be exiting the consumer mortgage business altogether for fear that they might end up on the wrong side of Richard Cordray’s vast discretion. Anyone who followed the U.S. Fish and Wildlife Service’s raids of Gibson Guitar plants has an idea of how ruthlessly and arbitrarily such discretion can be employed by agencies that are subject to congressional oversight.  So imagine what an agency could do if it was insulated from congressional oversight, accountability to the president, and meaningful review by courts?


I will continue to report on the case as it develops, and look forward to joining Mr. Gray and others in the effort to educate the public about the impact this law could have on our economy and on our system of government.

Most Popular


Two Truth-Tellers, Brave as Hell

Yesterday, the Human Rights Foundation hosted an event they called “PutinCon” -- a conference devoted to the Russian “president,” Vladimir Putin: his rise and his deeds, both at home and abroad. Participating were both Russians and well-wishing foreigners. It was, above all, a day of truth-telling -- a ... Read More
Economy & Business

The Swamp: Navarro Nucor Edition

The Wall Street Journal has a story today about the ties between President Trump's trade adviser, Peter Navarro, and the biggest steel company in the U.S. -- Nucor Corp. It is particularly interesting in light of the stiff steel tariffs successfully pushed by Navarro, which he championed ever since he joined the ... Read More


EMPIRICAL   As I can fathom neither endlessness nor the miracle work of deities, I hypothesize, assume, and guess.   The fact that I love you and you love me is all I can prove and proves me. — This poem appears in the April 2 print issue of National Review. Read More
Politics & Policy

Rolling Back Dodd-Frank

The Senate on Wednesday passed a bill that would roll back parts of Dodd-Frank. The vote was 67–31, with 17 members of the Democratic caucus breaking party lines. If the legislation passes the House and is signed, it will be the largest change to the controversial financial-reform package since it became law in ... Read More
Politics & Policy

Samantha Power Regrets

‘I’ve had a lot of bad ideas in my life,” former U.N. ambassador Samantha Power tells Politico. “Though none as immortalized as that one.” Wow. It’s a major concession. And what might “that one” be? Not standing idly by in the White House while Iranians protested a fixed election in 2009, then ... Read More