A lawsuit that challenges the constitutionality of the Dodd-Frank Act moved forward this week with plaintiffs filing a legal response to the government’s motion to dismiss the case.
Plaintiffs, who include State National Bank of Big Spring, Texas, and the attorneys general of 11 states, responded Wednesday that the government mischaracterized and trivialized the plaintiffs’ injuries that occurred as the result of various D0dd-Frank Act provisions.
State National Bank claim the substantial costs of D0dd-Frank compliance, particularly Title X that created the Consumer Financial Protection Bureau, gives the case standing.
The state attorneys general claim Dodd-Frank’s “Orderly Liquidation Authority” injures them because it removes their legal rights to fair treatment in the event the government liquidates big banks and puts its own interest before creditors like state pension funds.
Additionally, plaintiffs argued in Wednesday’s filing that Dodd Frank’s codification of so-called “too big to fail” is a real injury to small banks, because it gives big banks an “enormous competitive advantage.”
Sam Kazman, general counsel of private plaintiffs Competitive Enterprise Institute, said when the same federal appeals court hearing the Dodd-Frank suit ruled Jan. 25 that several National Labor Relationship Board recess appointments were unconstitutional, it effectively resolved one major issue in his case’s challenge against the constitutionality of CFPB Director Richard Cordray’s appointment.
“Rather than address the constitutional validity of this law, the federal government has, through its motion to dismiss, chosen to attack the standing of 11 states, two nonprofit groups, and one small but courageous community bank in Texas, as well as the ripeness of their claims,” Kazman said. “We look forward to the court’s resolution of these preliminary issues, and we are hopeful that we’ll be able to proceed to litigate the merits of our case.”
