Dykema Gossett PLLC
Dykema Gossett PLLC

Consumer Financial Protection Bureau Law Blog

CFPB Law Blog

News and analysisi of the priorities, initiatives and regulatory actions and proceedings of the Consumer Financial Protection Bureau

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Eight More States Seek to Join Legal Challenge to Dodd-Frank

The plaintiffs in State National Bank of Big Spring v. Wolin have asked the U.S. District Court for the District of Columbia for permission to file a second amended complaint adding eight new states to the suit challenging the constitutionality of certain provisions of Dodd-Frank Act and Director Cordray’s recess appointment. If approved, these states—Alabama, Georgia, Kansas, Montana, Nebraska, Ohio, Texas and West Virginia—will join Oklahoma, South Carolina and Michigan in contesting the constitutionality of the provisions in Section 204(a) of Dodd-Frank Act granting the Treasury Secretary with "orderly liquidation authority" over financial services companies. The states are not joining the challenge to Cordray’s recess appointment or to the constitutionality of the CFPB and the Financial Stability Oversight Council. Texas Attorney General Greg Abbott explained that his state was joining the suit because, “Under this law, unelected federal bureaucrats can unilaterally liquidate financial institutions in which the state invests taxpayer dollars. The State of Texas could be denied basic due process rights and taxpayers’ dollars could recklessly be put at risk.”

The United States has filed a motion to dismiss this claim, arguing that the states do not have standing to challenge the Dodd-Frank Act because they have not suffered any injury. The Plaintiffs’ response to the motion was due on February 13, 2013, but they have sought additional time pending a ruling on their motion to amend the complaint and, if the motion is granted, the United States’ decision on whether they wish to amend or stand on their current motion to dismiss. Stay tuned to CFPB-lawblog for further updates on this challenge to Dodd-Frank and the CFPB.