Texas joins Dodd-Frank lawsuit
By Collin Eaton
Houston Business Journal
February 14, 2013
Texas is joining 10 other states in a lawsuit that challenges the constitutionality of the way the Dodd-Frank Act gives financial regulators authority to order the dismantling of a bank.
The lawsuit alleges that a section of Dodd-Frank “empowers the (U.S.) Treasury Secretary to order the liquidation of a financial company with little or no advance warning, under cover of mandatory secrecy, and without either useful statutory guidance or meaningful legislative, executive, or judicial oversight.”
Texas’ move comes at the same time seven other states declared they would join the lawsuit, which was filed last June on behalf of a small Big Spring, Texas-based community bank, State National Bank of Big Spring, and two political groups.
The suit names the U.S. Treasury, the Consumer Financial Protection Bureau, Federal Reserve Chairman Ben Bernanke and others as defendants, and it targets Dodd-Frank’s provision that gives regulators “new authority for the ‘orderly liquidation’ of financial institutions.”
“Under this law, unelected federal bureaucrats can unilaterally liquidate financial institutions in which the state invests taxpayer dollars,” Texas Attorney General Greg Abbott said in a Feb. 13 statement. “The State of Texas could be denied basic due process rights and taxpayers’ dollars could recklessly be put at risk.”
In addition, the suit challenges Dodd-Frank’s formation of the young Consumer Financial Protection Bureau and the President Barack Obama’s appointment of Richard Cordray to the role of director at the CFPB.
