Adverse District Court Opinion on Dodd-Frank Deeply Flawed, Case Now on Appeal
Washington, D.C., August 2, 2013 - A federal judge on Thursday dismissed a lawsuit brought by CEI, 11 state attorneys general, and the State National Bank of Big Spring challenging the constitutionality of several sections of the Dodd-Frank financial reform act. The case will now be appealed.
Statement from C. Boyden Gray, lead counsel for plaintiffs in the lawsuit challenging the Dodd-Frank Act:
"The district court's opinion is deeply flawed. State National Bank of Big Spring is a community bank that has served its community for generations, and it is disturbing that the opinion -- and the government -- ignored the very real harm Dodd-Frank has inflicted on it and the customers who rely on the bank to provide loans for everything from their home to their small business. Specifically, Dodd-Frank's complex new regulatory regime has forced State National Bank, like many other banks, to expend thousands of dollars simply to ensure that they are in compliance with the CFPB's new policies. Furthermore, Dodd-Frank caused the Bank to substantially change several of the services that it traditionally provided customers. Contrary to the government's assertions, and the court's opinion, these costs are not self-inflicted.
"Similarly, the court's decision misconstrues the real and immediate loss of substantive rights that the states have suffered because of Dodd-Frank. If this decision stands, taxpayers and pension holders across the country will have no guarantee of being treated fairly or made whole in the event of a future financial crisis. Instead, Dodd-Frank creates a "star chamber" procedure that provides states and other creditors with no notice of impending bank "liquidations" until after they have begun, after which Dodd-Frank denies the states meaningful judicial review to protect their rights and their financial investments--including the states' pension funds. We will file a notice of appeal today."
Statement by Sam Kazman, CEI General Counsel:
“Despite the fact that the court was ruling on the government’s motion to dismiss, it repeatedly engaged in factual determinations rather than accepting the plaintiffs’ allegations as correct. The end result is that while Dodd-Frank continues to impose economic hardship nationwide, the test of its constitutional validity will be delayed. Hopefully, it won’t be delayed for too long.”
Statement by John Berlau, CEI financial policy expert:
“Judge Ellen Huvelle ruled that community banks have not suffered legally redressable injuries from Dodd-Frank's enshrinement of too-big-to-fail and thousands of pages of rules that cost dollars and man hours. We respectfully disagree, as does much of the American public, and will appeal."
> View the District Court grant of Motion to Dismiss
> Read more about the lawsuit at cei.org/doddfrank