Olens takes on another federal overreach: Dodd-Frank

In Washington, Congress passes and the president signs a vast expansion of federal power over a large and critical industry.

In corporate boardrooms, business executives believe that law usurps their rights. In state capitals, attorneys general believe it infringes on states’ sovereignty and puts them at great financial risk. The two groups come together and sue to overturn the law.

A recap of the Obamacare lawsuit decided by the U.S. Supreme Court last summer? Yes, but it’s also the lead-up to another legal battle stemming from Democrats’ dominance of Washington in 2009 and 2010.

Last month, Georgia joined a lawsuit seeking to overturn major portions of the Dodd-Frank financial reform law of 2010. The law’s stated intent was to avoid failures of “too big to fail” banks and subsequent market panics, of the kind we saw in autumn 2008.

There are good arguments that the law’s authors got the policy wrong, and enshrined “too big to fail” in federal law rather than preventing it. But this lawsuit is not about policy preferences, state Attorney General Sam Olens said in a recent interview.

“We do not disagree that the consumer needs to be protected,” he said. “We feel the laws and regulations must be consistent with the Constitution.”

Among other things, the suit contends the law robs financial firms — including, critically, ones in which Georgia’s pension funds have investments — of due process and allows federal regulators to “treat similarly situated creditors differently” as part of its Orderly Liquidation Authority.

The problem would begin, Olens said, when federal regulators decide a financial firm is in danger of failing and should be liquidated:

“Upon which [regulators] give notice to the institution and you have 24 hours to have a federal judge issue a ruling. If the judge does not issue a ruling within 24 hours, [their] action is affirmed.

“The ruling and the proceeding are closed to the public. The filings are closed to the public. And you are limited to an ‘arbitrary and capricious’ standard to thereafter appeal the decision, which is also closed to the public.”

Worse, Olens continued, even a successful appeal could be too late, because the law blocks courts from delaying the firm’s liquidation. “So it violates numerous separation of powers issues in our Constitution,” he said.

As a firm was liquidated, the law could result in Georgia and other creditors losing their priority over others — as when Chrysler made some bondholders, including Indiana’s pension fund, secondary to labor-union pension funds and other unsecured creditors during its 2009 bankruptcy proceeding. That, Olens said, would violate Georgia’s property rights.

If it seems like Olens and other state attorneys general are more active in opposing federal actions than their predecessors did, from EPA rules to presidential recess appointments, “that’s because you’re seeing a lot more out of Washington, D.C., than you ever have before,” said Alan Wilson, attorney general for South Carolina, which is also a party to the Dodd-Frank lawsuit. (The other nine state plaintiffs include Alabama, Michigan, Ohio and Texas; there are also three private-sector plaintiffs.)

“I do believe it’s our role to challenge [the federal government] when it does overstep,” Wilson argued during a joint press conference with Olens last week, “and that’s what we’ll continue to do.”

– By Kyle Wingfield

298 comments Add your comment

Charles

March 4th, 2013
5:54 am

I cannot thank you enough Attorney General Sam Olens, for standing up for Americian Citizens.

Aynie Sue

March 4th, 2013
6:09 am

The Dodd-Frank financial reform law of 2010 is a watered-down attempt to reign in the financial institutions, financial traders, and underhanded practices that brought down the world economy in 2008-09. After being bailed out in 2009, the miscreants promptly resumed their assault on the world economy.

Leaving financial regulation to the hayseed attorneys general of the 50 states didn’t work before and should not be expected to work in the future. The nefarious financial abuses are interstate and international. The financial dirty work is done in New York City, London, and the off-shore tax havens.

What we are dealing with is a financial racket conducted with complex, outrageously over-leveraged financial instruments in which big-time investors park their capital, instead of invest it in job-creating enterprises. This financial racket makes a mockery of serious capital investment and destabilizes our economy.

Financial regulation alone cannot prevent another financial services fiasco; tax law changes are needed to make undesirable financial practices less lucrative and more accountable. The most urgent need is to eliminate the “carried interest” tax dodge whereby the dealers and traders pay a low tax rate on their vast incomes and commissions. Next, favorable tax treatment intended to promote private investment in the economy should be denied to capital transactions other than job-creating enterprise.

A side benefit to amending tax laws to favor only job-creating investments would be a big revenue increase for the federal government and more generous funding of charitable and cultural projects. Boehner & Company are against tax reform (“more tax increases”) that would clean up the financial services racket because the reforms would penalize the wealthy investors who choose to invest in American politics but not in American enterprise.

DeborahinAthens

March 4th, 2013
6:32 am

When Georgia elects officials that put into place banking regulators that have the best interests of the people of this state instead of serving the “Good ‘Ol Boy” bankers who seem to adore having a board of directors made up of their “Good ‘Ol Boy” developer friends, THEN, and only THEN, can Olens and his ilk open their stupid mouths. Does he not realize that, since 2008, the state of Georgia has had more bank failures than any other state in the union. Why do you think that is the case? Because we have the most lax banking laws. We have no banking regulators that watch these bozos. Every time a bank in Podunk Georgia fails, the FDIC has to either close it down ( not done because the harm to depositors is enormous) or find some other healthy bank to take the over. Our failed banks work with the other failed banks to suck the money from the FDIC. And this costs the consumers money. Meanwhile, not one single bankers has been accused, tried and found guilty of a crime. We are beginning to see some of these small bankers being sued by the FDIC to get money from them, but all of the bankers that looked away while their minions were destroying the wealth of their customers are fat, rich and happy. “What credit default swap? ” “I didn’t know my traders were shorting the very things they were selling my customers.” “Who….me?” When does this BS end? We cannot sustain another meltdown such as we had in 2008. Olens needs to crawl back into his hole. He knows nothing about banking, and he obviously, along with the rest is our Georgia officials, doesn’t give a damn about the people of Georgia.

Aesop's Fables and other Lib Economic Theories

March 4th, 2013
6:41 am

At least get the name of it changed – isn’t this so socialist, the two people most responsible for crashing and burning the housing markets are tasked with “fixing” them.

This financial racket makes a mockery of serious capital investment and destabilizes our economy.

Then quit feeding it obozo bucks.

Cutty

March 4th, 2013
7:13 am

Cons care about consumers so much, they all but refuse to allow a vote for the head of the Consumer Protection Board. #1 in bank failures, and its somehow the feds fault.

Wrong on Obamacare. Will be wrong on Dodd-Frank. Keep it up cons, you’re doing great!

Real Athens

March 4th, 2013
7:40 am

Why doesn’t our State Attorney General and dutiful champion of the Fourth Estate take on some real crooks — the Southern Company, Georgia Power and the jokes at the “Public Service” Commission regarding their soaking of Georgia taxpayers for the debacle at Plant Vogtle?

Real Athens

March 4th, 2013
7:42 am

Woops! ‘State’s’ and Vogel. More coffee.

Thomas Heyward Jr

March 4th, 2013
7:44 am

Betwixt the Obama/Chicago/AxelGrease Federal Lawyer Army and the ……………….Georgia Bar,
I’m sure that the melting middle-class wage slave is well represented.
.
lol

Cherokee

March 4th, 2013
7:59 am

Thanks Aynie Sue and Deborah.

Too bad our intrepid blogger couldn’t offer up that kind of detailed information about the law.

Cherokee

March 4th, 2013
8:01 am

When the attorneys general of Alabama, Texas, Georgia, and South Carolina are against something, it’s probably something that should stay in place.

Bob

March 4th, 2013
8:03 am

Deborahinathens calling someone stupid ? Dodd retired to avoid the Countrywide fallout. He got a VIP loan then tried to tell us he thought everybody got the same VIP loan, maybe deborahinathens believed him but most did not. Barney Frank was openly sleeping with one of Fannie Mae’s top lobbyist and Fannie and Freddie have bled billions, maybe deborahinathens thinks banging lobbyists and then giving them billions is ok but most do not. Frank and Dodd were instrumental in the mortgage meltdown so letting them author a bill in financial reform is just wrong. These two men need an ethics course.

USC-69

March 4th, 2013
8:09 am

Thanks Real Athens. I am with you – coffee or not. These busy bodies keep trying to overturn majority popular opinion in favor of corporate profits (with a little racial motivation as well). The Medical Insurance Corporations came close to bankrupting the U.S. middle class and are still attempting to grab as much as they can. Time for a new Governor (taxing us twice for an inferior Medicaid Program) and a new Attorney General that can deal with Georgia corruption and keep his mind on the business at hand.

Bob

March 4th, 2013
8:11 am

http://www.youtube.com/watch?v=Yga7TlsA-1A

Here is how dems handled the Fannie Mae mess.

Aesop's Fables and other Lib Economic Theories

March 4th, 2013
8:13 am

(with a little racial motivation as well).

Don’t have a serious argument to present, no brain between your ears and you are a coward? Then pull the race card.

Cutty

March 4th, 2013
8:20 am

#1 in bank failures and the AG is upset w the way the feds takes over said failed banks. You can’t make this stuff up.

Real Athens

March 4th, 2013
8:22 am

” ‘no’…argument to present, no brain between your ears and a … coward?” then stoop to insults.

Aesop's Fables and other Lib Economic Theories

March 4th, 2013
8:23 am

It looks like the libs really have given up on the “assualt” weapons ban -

Homeland Buys 2,700 Light-Armored Tanks…

Better make sure that sucker has a big fire extinquisher in it.

Aquagirl

March 4th, 2013
8:23 am

Don’t worry, citizens of Georgia, you don’t need the Federal gub’mint bullying those poor financial firms. Sam Olens is looking out for your interests.

Aesop's Fables and other Lib Economic Theories

March 4th, 2013
8:26 am

ra – Yeah, I forgot, when your little liberal mind gets overwhelmed and you start screaming racism, you are really just projecting your own beliefs on others. When have I, or my political party, ever divided people into groups and then stuck them in the ghettos?

Deep Cover

March 4th, 2013
8:27 am

“We do not disagree that the consumer needs to be protected,” he said. “We feel the laws and regulations must be consistent with the Constitution.”

When GOPers do their post mortem of “why” they are losing national elections they need to look no further than this comment…SMDH.

Bob

March 4th, 2013
8:28 am

From deborahinathens “Meanwhile, not one single bankers has been accused, tried and found guilty of a crime. We are beginning to see some of these small bankers being sued by the FDIC to get money from them, but all of the bankers that looked away while their minions were destroying the wealth of their customers are fat, rich and happy. “What credit default swap? ” “I didn’t know my traders were shorting the very things they were selling my customers.” “Who….me?” When does this BS end? ”

deborah, ask the obama admin why no charges are being filed by Holder. And you should understand that had Clinton not signed a bill allowing for credit default swaps then bankers would not be able to ask, what credit default swaps ?

President Clinton’s tenure was characterized by economic prosperity and financial deregulation, which in many ways set the stage for the excesses of recent years. Among his biggest strokes of free-wheeling capitalism was the Gramm-Leach-Bliley Act, which repealed the Glass-Steagall Act, a cornerstone of Depression-era regulation. He also signed the Commodity Futures Modernization Act, which exempted credit-default swaps from regulation. In 1995 Clinton loosened housing rules by rewriting the Community Reinvestment Act, which put added pressure on banks to lend in low-income neighborhoods.

dems gave us the mortgage meltdown and if that hed not happened we would not have needed Dodd/Frank. It was not repubs that decided Fannie and freddie should guarantee NINJA loans that allowed the fat cats that deborah seems to despise to lend money to anyone walking in the door.

Aquagirl

March 4th, 2013
8:40 am

When GOPers do their post mortem of “why” they are losing national elections they need to look no further than this comment…SMDH.

It’s only 8:30 and this place is near collapse under examples of conservative GOP fail. By 10 the clot of regulars will be knee-deep in their usual slop, screaming at everyone who doesn’t look like Sam Olens.

Just another day of the circular firing squad.

Aesop's Fables and other Lib Economic Theories

March 4th, 2013
8:41 am

This guy doesn’t get it -

But Mr. Graham said he is open to the type of major agreement that would raise about $600 billion in revenue by closing tax loopholes and eliminating deductions. That money, he said, then could be put toward reforming Medicare and other entitlement programs.

Hows this any different than just straight up raising tax rates?

These mccainbots running around speaking on behalf of fiscal Conservatism is our biggest problem. He wants to jack up the size of government by 600 billion dollars, right after the giant death struggle to cut 86 billion, and use other people’s money to fund it. And besides which, “medicare” is just the hostage that obozocare is hiding behind, this is really 600 billion to fund obozocare

This guy is not on our side at all.

Real Athens

March 4th, 2013
8:45 am

Bob:

Were you aghast when Chip Rogers (he of $150,000 a year pension forcefully bestowed by Nathan Deal courtesy of GPT) and Tom Graves (Tea Party darling from a town with a population of 115) were not prosecuted by the Feds or state AG’s office for defaulting on a $2.2 million loan which led to the collapse of a small Georgia bank? Were you enraged that collapse and liquidation cost American taxpayers (FDIC) $69.5 million. Were you appalled that in their legal defense Graves and Rogers argued that the bank had been at fault for loaning them money that they knew couldn’t be repaid, making the signed personal guarantees invalid?

indigo

March 4th, 2013
8:51 am

It’s looks as though competing groups are shouting “show me the money”!!!!!

td

March 4th, 2013
8:55 am

Real Athens

March 4th, 2013
8:45 am

Is it not true that everyone that walked away from their houses when the market starting going down was no different then what Rogers and Graves did? How about all the people that run up credit card bills and then file bankruptcy? I personally think it is unethical for anyone to not pay for items they bought and hold up their end of a contract but until we start prosecuting ALL of the deadbeats then why should we just pick and choose some?

independent thinker

March 4th, 2013
9:01 am

Ah it is so nice to be in a state that prides itself on successful bank regulation taking strong action. Olens is right – if only states like Georgia could teach the rest of the country how to regulate banks there would be far fewer bank failures.
My quick read- if a state is stupid enough to put money in a bank that it helped regulate and the bank fails the state goes to the bank of the line. Its called taking responsibility for your ineptness.

Aquagirl

March 4th, 2013
9:13 am

How about all the people that run up credit card bills and then file bankruptcy?

Filing for bankruptcy has negative consequences—basically nobody will loan you money for several years. You might get turned down for jobs when potential employers check your credit.

Chip Rogers was re-elected, then stashed in a cushy job when he walked out on his district, costing the taxpayers thousands more for a special election.

Jack Murphy was appointed Chair of the banking committee after Integrity (lol) bank ran into the rocks. Little things like civil and Federal lawsuits didn’t bother his employer—the Pro Tem Senate leader.

So nice try at deflection and whining about unspecified deadbeats, what price are YOUR deadbeats paying?

Real Athens

March 4th, 2013
9:18 am

TD:

To answer your question, and I’ll put it as simply as possible: Morgan Akin (the chairman of Bartow County Bank) said the only he approved the loan to Graves and Rodgers was, “They were well-respected members of the community, and we took that into account.”

They used their political gain in an attempt to make a profit, then used that same political favor to avoid criminal prosecution. WOuld the outcome have been the same if Graves and Rogers had a (D) next to their name?

I will tell you this: had you and I been accomplices in the same behavior (as ludicrous as that seems, lol) as Graves and Rogers we’d be sitting in Reidsville right now. That much is fact.

Finn McCool (The System isn't Broken; It's Fixed)

March 4th, 2013
9:18 am

Good challenge.

I still think we need a transaction tax on all Wall Street market transactions. That will remove some of the “casino” nature of the industry.

Chip

March 4th, 2013
9:22 am

I wish all those darn conservatives would just shut up! If we all just obey Obama, and submit ourselves to his will, everything will be wonderful.

After all, his massive life experience at… well… hmmm… let’s see… community organizer… rabble rouser… golf junkie… hmmm….

Well, never mind. Dear Ruler knows all, and if we litte people, we bitter clingers, would just shut up and stop interfering with His magnificent brilliance, we’ll all end up with rainbows over our government apartments and our own personal unicorns in the (environmentally sustainable) corral.

fair and balanced

March 4th, 2013
9:27 am

Feds should give Georgia cons their banking and consumer independence they want. After isn’t the federal government subservient to the states???Just pull the FDIC out of all Georgia banks due to excessive bank failures and remove federal banking approval for any bank in Georgia. Let directors and investors in banks get preference if a Georgia bank folds. Ban FNMA,and FHA loans in Georgia. No need for a lawsuit. See how fast the money investment money flows into the state banks.Way to go Sam and the cons.

independent thinker

March 4th, 2013
9:33 am

Here’s a good place to start some austerity cutting and reduce the deficit:
“”"”"”"”"”"”The price tag for some of the worst loans made by Georgia’s failed banks has passed the $1 billion mark.
Since the nationwide banking crisis began in 2008, the Federal Deposit Insurance Corp. has paid about $1.2 billion to banks that acquired the loan portfolios of failed Georgia-headquartered banks. Most banks that acquired the assets, deposits and loan portfolios of failed banks agreed to be compensated by the FDIC on loans for which little or no payments could be recovered.
Georgia leads the nation in the number of banks that have failed since 2008, with 57. Georgia’s $1.2 billion in loss-coverage payments accounts for about 13 percent of the approximately $9 billion that the FDIC has paid nationwide.”"”"”"”"”"”"”"
http://www.bizjournals.com/atlanta/print-edition/2011/03/25/fdics-tab-for-bad-georgia-bank-loans.html?page=all

Olens should definitely do something about that excess FDIC money flowing into Georgia.

Lil' Barry Bailout - OBAMAPHONE!!!

March 4th, 2013
9:45 am

Obozo and the Democrats do love them some huge, unaccountable bureaucracies answerable and accountable to no one. Americans are thankful for folks like Sam Olens who take on these liberal fascists.

Jefferson

March 4th, 2013
9:48 am

That drug comercial the Olens is a waste of money, not to mention it is lame.

His office must be bored to death.

independent thinker

March 4th, 2013
10:00 am

those liberal fascists who dared to close those wonderful state regulated banks in Georgia paid out over a billion dollars to those stupid redneck trailer trash depositors- what a bunch of fascists !!!!!!!!!!!!!
Almost as bad as that Reagan guy giving telephone rebates to poor people and some clown named W giving away even more money for free cell phones- Little Barry is absolutely right -sue the SOBs for stealing money from wealthier states and giving it to the trash who vote for the stupid party in the South!!!! Those cons are just a bunch of closet socialists in drag.

Lil' Barry Bailout - OBAMAPHONE!!!

March 4th, 2013
10:00 am

Seems our local progs have a big problem with their little messiah being challenged.

Lil' Barry Bailout - OBAMAPHONE!!!

March 4th, 2013
10:05 am

The trailer trash depositors paid for that FDIC insurance so there is no reason for them not to expect their deposits to be protected.

Obozo’s loser base, on the other hand, has no deposits to protect and are left to their poutrage over an economic system that has passed their sorry arses by.

zeke

March 4th, 2013
10:13 am

HMMM! Dodd-Frank? Where have we heard this before?? Oh, the housing collapse! Ignorant leftist democrat morons thinking they know better than the experts at whatever situation arises! they caused the housing collapse and in turn the financial collapse, and, the severe recession! IT IS TIME FOR THE SUPREME COURT TO PUT A KINK IN THE FEDERAL CENTRAL RADICAL GOVERNMENT ON A CONSTITUTIONAL BASIS! There is no Constitutional authority for about 99% of the crap they put on us and the states!!!

breckenridge

March 4th, 2013
10:14 am

Dodd-Frank is a very poor piece of legislation that did nothing to remedy the cause of the last fiscal crisis. Two simple steps should have been taken 1) require all home buyers to put down 20% up front and 2) require lenders to keep at least 25% of each home loan for the duration. Instead they came up with this convoluted piece of crap, no doubt at the behest of banking interests and their heavy “campaign contributions” since they didn’t want to take the riverboat casino element out of the financial markets.

Rafe Hollister preparing for an Obamanist America

March 4th, 2013
10:31 am

Libs apparently do not save money, as they are always looking enviously on others savings. Finn wants a tax on fund transfers and Wall Street activity and Aynie Sue wants more regulations to shut down the greedy. Some want a tax on our 401k’s and IRA’s. I guess we should just spend everything we make, give the rest to the poor, and throw ourselves on the system, like the Dems. They seem to fail to recognize that if everyone joins the system, no one will be left to pay the tab.

If you think, Obama has really trampled the Constitution with his governing by Exec Orders, regulation nation, Obamacare, Dodd/Frank, failure to enforce the laws he doesn’t like, and his assignation of American’s abroad with drone strikes, you are correct, but haven’t seen anything yet, if he is able to flip the House in 2014.

Tiberius - pulling the tail of the left AND right when needed

March 4th, 2013
10:33 am

“Meanwhile, not one single bankers has been accused, tried and found guilty of a crime.”

Yes, DeborahinAthens.

Even in the last 4 years.

It ain’t the law, libs, it’s the Administration’s willingness to enforce the laws on the books.

And President Incompetent is no better than any previous president, except that he talks tougher, but still does NOTHING.

Rafe Hollister preparing for an Obamanist America

March 4th, 2013
10:39 am

breckenridge

Is correct, Congress rarely tries to solve problems, preferring to keep them around for campaign issues. They usually try to do enough to quiet the critics, but not step on their big money supporters and eliminate the campaign issue. If they required Banks to retain some liability for bad mortgages, the problem would most likely be eliminated. As long as you have a guaranteed buyer for the mortgage, you are just going to take your cut, and pass on the liability. Responsibility is some far off notion, that they have no experience in dealing with.

breckenridge

March 4th, 2013
10:41 am

“And President Incompetent is no better than any previous president, except that he talks tougher, but still does NOTHING.”

That’s because when Obama needed campaign money he went to Wall Street, hat in hand. And suddenly the talk of closing Wall Street tax loopholes vanished in the night. Poof!

You can read about this and more in “The Party Is Over: How Republicans Went Crazy, Democrats Became Useless and the Middle Class Got Shafted” by Mike Lofgren, a republican and former GOP staffer. Great book.

Dumb and Dumber

March 4th, 2013
10:48 am

Well said Real Athens.

One thing you haven’t seen Kyle and other republicans question is the Georgia Legislature’s deal that allows the Southern Company to make a profit on its cost-overruns at the expense of ratepayers – while shielding its stockholders and the company.

This is one area where some in the Tea Party are absolutely correct — but you won’t see the Georgia GOP addressing this giveaway. And the dems? We’ll lets just say what does it matter what they think?

Tiberius - pulling the tail of the left AND right when needed

March 4th, 2013
10:48 am

“Democrats Became Useless”

Democrats are ALWAYS useless.

Except at taking things from others they haven’t earned.

Rafe Hollister preparing for an Obamanist America

March 4th, 2013
10:51 am

OK, as td points out Graves/Rodgers walked away from a very bad mortgage on an old motel, and were not punished. How is that different from every person, who determined that their home was not worth what the owed on it, and decided to walk away from the loan. Georgia should have prosecuted Graves/Rodgers and the Justice Dept should have at least prosecuted those they could prove willfully took advantage of the mortgage system by walking away from their mortgages. So far, neither act has been addressed.

cj

March 4th, 2013
10:52 am

The NY Times just reported that over the last decade, corporate profits have risen 20 times faster than the wages of workers. I am by no means a Socialist… but at some point we need to get this country back on track.

Tiberius - pulling the tail of the left AND right when needed

March 4th, 2013
10:53 am

“One thing you haven’t seen Kyle and other republicans question is the Georgia Legislature’s deal that allows the Southern Company to make a profit on its cost-overruns at the expense of ratepayers – while shielding its stockholders and the company. ”

Your blog name is appropriate, Dumb and Dumber.

Let’s see – Southern Company is building a new power plant, and they want to charge higher rates to pay for the construction of the plant.

According to your thinking, if the cost of beef goes sky-high, your Happy Meal shouldn’t go up one bit.

In case you missed it (and you obviously did), companies charge for goods and services according to the cost of materials and operations. That’s how they stay in business.

clem

March 4th, 2013
10:54 am

thank the repubs in the state for the foreclosure mess and predatory lending dating back to 2003 or so. they only made it worse. barnes was right on this.