It’ll be at least Monday — and quite possibly later next week — before we get the Supreme Court’s ruling on Obamacare. In the meantime, a Texas bank filed a federal lawsuit today seeking to overturn a key provision of the other major legislative achievement of the Obama era: the Dodd-Frank banking law. From The Hill:
A Texas community bank is filing suit in U.S. District Court to challenge the constitutionality of the Dodd-Frank financial reform law.
In particular, the suit will contend that the Consumer Financial Protection Bureau (CFPB), created by the law, lacks sufficient checks and balances and, in the words of the CEO of State National Bank, is “simply unconstitutional.”
“No other federal agency or commission operates in such a way that one person can essentially determine who gets a home loan, who can get a credit card and who can get a loan for college,” said Jim Purcell, head of the Big Spring, Texas, bank. “Dodd-Frank effectively gives unlimited regulatory power to this so-called Consumer Financial Protection Board, also known as CFPB, with a director who is not accountable to Congress, the President or the Courts.”
News of the filing is just now getting out, so details are still scarce. The American Enterprise Institute’s James Pethokoukis posted a press release from the plaintiffs about their filing that gets into more detail about the constitutional complaints:
– Congress exercises no “power of the purse” over the CFPB, because the agency’s budget — administered essentially by one person — comes from the Federal Reserve, amounting to approximately $400 million that Congress cannot touch or regulate.
– The President cannot carry out his constitutional obligation to “take care that the laws be faithfully executed,” because the President cannot remove the CFPB Director except under limited circumstances.
– Judicial review of the CFPB’s actions is limited, because Dodd-Frank requires the courts to give extra deference to the CFPB’s legal interpretations.
The plaintiffs claim in their suit that Dodd-Frank gives an agency of unelected government bureaucrats unrestrained power. They argue this unaccountable power over the daily lives of the American people results in a lack of public accountability, creating a power grab over every U.S. citizen.
The language about “power grab over every U.S. citizen” certainly reminds one of the constitutional complaints about Obamacare’s individual mandate. The three-pronged attack on each branch of government’s inability to rein in the CFPB will make for a very interesting legal case.
On a side note: The attorney for the plaintiffs is a man named Boyden Gray, a former White House counsel for George H.W. Bush and, under George W. Bush, the U.S. envoy to the European Union — in which capacity I got to know him during my time in Brussels. Gray is regarded as an expert in administrative law, and I always found him to be not only intelligent and thoughtful but very serious. He clearly favors a light regulatory touch, but he does not strike me as the kind of lawyer to take on a frivolous legal challenge to a major piece of legislation. His involvement leads me to believe there may be a substantive case here.
– By Kyle Wingfield