U.S. judge dismisses suit against Dodd-Frank financial reform law
WASHINGTON -- A federal judge has dismissed a lawsuit by a Texas bank, two free-market advocacy groups and 11 states against the Dodd-Frank Wall Street reform law, saying they did not show the likelihood of financial harm from the new government authority.
The suit specifically targeted the centerpiece of the law, the Consumer Financial Protection Bureau, charging the agency was granted too much power and that its director, Richard Cordray, was installed unconstitutionally with a recess appointment in 2012.
Cordray was confirmed by the Senate last month after a deal was struck with Republicans, removing the questions about the legality of his appointment.
And on Thursday, U.S. District Judge Ellen Segal Huvelle granted the Obama administration’s motion to dismiss the entire suit.
She said the plaintiffs “have not faced any adverse rulings” under the law and so they did not have standing to challenge the law and their claims were not ready for review.
The suit was filed in June 2012 in the U.S. District Court in Washington by the State National Bank of Big Spring, Texas; the 60 Plus Assn., a senior citizen advocacy group in Alexandria, Va.; and the Competitive Enterprise Institute, a Washington public policy group.
The suit later was joined by the attorneys general of 11 states, including Georgia, Michigan, Ohio and Texas.
They said the government’s new power to liquidate large, non-bank financial companies that are on the brink of failure was unconstitutional and threatened to impose unequal treatment of state pension fund investments.
Huvelle said the states “do not face a future harm that is ‘certainly impending’ ” because many contingencies would have to take place before their pension funds would be at risk.
The State National Bank of Big Spring had argued it already has been harmed by new consumer bureau regulations requiring the disclosure of fees for remittances sent to foreign countries and faced harm from pending rules on mortgages.
But Huvelle said the bank did not demonstrate it was financially harmed or faced imminent harm from the bureau’s rules.
Sam Kazman, general counsel for the Competitive Enterprise Institute, said the group planned to appeal the ruling.
He said Huvelle erred in questioning many of the facts of the suit. Those determinations are important, but are not supposed to be made in deciding whether to dismiss a suit, he said.
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