Attorney General Sam Olens announced today that the State of Georgia has moved to join a lawsuit in the United States District Court for the District of Columbia challenging the constitutionality of the federal takeover of the financial industry known generally as Dodd–Frank. The lawsuit, originally filed by a small Texas community bank in June 2012, requests that the Court invalidate the law because it gives the federal government unprecedented, unchecked power, and it violates the Separation of Powers Clause by creating an unaccountable agency to exercise those powers.
“Dodd-Frank was sold to the American people as a silver bullet to prevent another financial crisis and safeguard consumers,” said Olens. “In reality, it is a bureaucratic nightmare that puts Georgia taxpayers at risk and introduces more uncertainty into the economy. This is just another example of a power grab by the federal government attempting to dictate the operations of an entire industry.”
The passage of Dodd-Frank created government agencies with virtually unlimited bureaucratic power that can be imposed on the American people without any checks and balances. These agencies will, literally, be able to decide who can get a home loan, who can get a credit card, and who can get loan for college.
One of these agencies, the Consumer Financial Protection Board (CFPB) is run by one director alone, who is unaccountable both to the President and Congress. The CFPB’s budget is completely out of Congress’s control and power of the purse. Instead, the agency’s budget comes from the Federal Reserve and amounts to 10-12% of the Fed’s operating expenses. That is $400 million controlled, essentially, by one person with minimal oversight. The President cannot veto actions by the CFPB and can only remove the director for specific cause.
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. The private plaintiffs also are challenging the Financial Stability Oversight Council (Title I), the Consumer Financial Protection Bureau (Title X), and the validity of the Bureau Director’s appointment.
“Dodd-Frank violates basic principles of separation of powers and government that is accountable to the people. It also gives the federal government the power to pick winners and losers, putting the State of Georgia’s financial assets at risk,” added Olens. “By joining this lawsuit, we are standing up for the Constitution, standing up for our local communities, and protecting our State’s finances.”
In addition to the community bank, original plaintiffs include the Competitive Enterprise Institute and the 60 Plus Association. Attorneys General from Michigan, Oklahoma, and South Carolina, are also plaintiffs, and Alabama, Montana, West Virginia, and Texas are also part of Georgia’s motion to join the lawsuit.