Three States Join Court Challenge To Dodd-Frank
Objections Grow To New Orderly Liquidation Authority
Washington, D.C. – The states of Oklahoma, South Carolina, and Michigan today joined a lawsuit challenging the constitutionality of the Dodd-Frank Wall Street Reform and Consumer Protection Act, according to a report in the Competitive Enterprise Institute.
The states are asking the U.S. District Court for the District of Columbia to review the constitutionality of the Orderly Liquidation Authority, established under Title II of Dodd-Frank. The three states are joining the original plaintiffs in the lawsuit: State National Bank of Big Spring, Texas; the 60 Plus Association; and the Competitive Enterprise Institute.
Plaintiffs said the authority threatens financial companies and investors, putting state pension funds at risk without due process. “We must challenge Dodd-Frank to protect Oklahoma taxpayers and our financial stability,” stated Oklahoma Attorney General Scott Pruitt. “The law puts at risk the pension contributions and tax dollars that the people have entrusted us to protect.”
The Orderly Liquidation Authority (OLA) gives the Treasury Secretary the power to liquidate any financial company as along as the Federal Deposit Insurance Corporation and the Federal Reserve are in agreement.
Alan Wilson, Attorney General of South Carolina, characterized power given to the OLA to seize assets of private companies as “unbridled.”
“If a large financial institution fails, holding state pension contributions and tax dollars, the states have very little ability to recover their citizens’ assets,” he said.
Michigan attorney general Bill Schuette also blasted Title II. "Michigan's public-employee pension funds hold substantial fixed-income investments in large financial institutions," he said. “Dodd-Frank gives the U.S. Secretary of the Treasury essentially unlimited power – with no judicial or Congressional oversight – to pick winners and losers among creditors when these large financial institutions go bankrupt.”
The lawsuit was originally filed in June 21, 2012.
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