Judge sides with Obama admin, throws out states’ suit against Dodd-Frank

posted at 2:31 pm on August 3, 2013 by Erika Johnsen

Last summer, I was practically giddy at the prospect of a Texas bank and some free-enterprise groups mounting a suit challenging the constitutionality of the Dodd-Frank Wall Street Reform and Consumer Protection Act. They argued that Consumer Financial “Protection” Bureau — created by that esteemed law whose ostensible purpose is to regulate the oh-so-greedy financial industry but whose actual purpose is to cover the federal government’s behind for their driving role in the financial crisis — was being granted an unprecedented amount of unchecked regulatory authority. Eleven states ended up joining in on the suit, hoping that they could help in the effort to get the frighteningly complex and powerful law a little judicial attention.

Dagger.

Most unfortunately, a federal judge granted the Obama administration’s motion to dismiss the entire suit against the financial regulation overhaul last week, via Bloomberg:

U.S. District Judge Ellen Segal Huvelle in Washington ruled in yesterday’s decision that the states and the State National Bank of Big Spring, Texas, didn’t have legal standing to bring their claims. She also said they “did not come close” to showing they would suffer financial injury as a result of the overhaul. …

The plaintiffs claimed the law establishing the Consumer Financial Protection Bureau violates the U.S. Constitution because Congress doesn’t appropriate its budget, the president has limited powers to remove its director and the courts face restrictions in reviewing its actions. …

C. Boyden Gray, lead attorney for the plaintiffs called the ruling “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,” Gray said.

Part of the reason for the big holdup over confirming President Obama’s executive nominees in the Senate was Republicans’ hope that they could manage to finagle some checks on the CFPB’s terrifying huge amount of power, like appropriations from Congress and a bipartisan board instead of a single director. Nothing doing, though, and while the Texas bank, et al have said that they’ll appeal the ruling, the Dodd-Frank rulemaking and all of its economically damaging dogma are already well underway.


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Our legal aristocracy always knows best.

Punchenko on August 3, 2013 at 2:36 PM

An old roommate of mine from school is a lifelong democrat from Boston who works as a banker now. About 2 months ago I talked with him and he was bitching about all the crap he now has to do because of Dodd-Frank. As soon as I mentioned that government regulations like that mess up everything he replied “he we go again”. No matter how much they hate their own rules, it never occurs to them to oppose them.

Flange on August 3, 2013 at 2:42 PM

Hugo Chavez is alive and well here in the USA.

Pardonme on August 3, 2013 at 2:43 PM

Eventually, can we all wake up to the fact that our system will never work again – can we stop hoping and relying on elections and the judicial system to fix things?

The sooner we get to that full realization, the sooner we can begin to earnestly discuss what a return to the way it’s supposed to be will entail.

Midas on August 3, 2013 at 2:45 PM

obama won 2012 like Putin and Chavez did.

He’s just as legitimate as they are.

Still, Putin lectures the US/obama, because he can.

Schadenfreude on August 3, 2013 at 2:53 PM

OT, but all things are on topic now…the land is in deep trouble.

Schadenfreude on August 3, 2013 at 2:55 PM

The plaintiffs claimed the law establishing the Consumer Financial Protection Bureau violates the U.S. Constitution because Congress doesn’t appropriate its budget, the president has limited powers to remove its director and the courts face restrictions in reviewing its actions. …

What this amounts to is congress creating a dictatorship.

If congress can create a rogue agency.. that works outside of the constitution.. in other words… an agency accountable to no one. Completely independent of the people, the courts, congress and the President… what prevents congress from creating an individual with the same powers? One man or woman who has complete autonomy from the courts, congress and the President and yet has complete and total power over all our lives. Complete unchecked power?

This is incredibly dangerous. 10 years from now this agency will be making decrees and issuing edicts about anything and everything. Who would stop them?

JellyToast on August 3, 2013 at 3:03 PM

OT, but all things are on topic now…the land is in deep trouble.

Schadenfreude on August 3, 2013 at 2:55 PM

Not a bug, it’s a feature!

Midas on August 3, 2013 at 3:04 PM

A Clinton appointee married to a labor laywer…

U.S. District Judge Ellen Segal Huvelle

Not that there’s anything wrong with that….

Drained Brain on August 3, 2013 at 3:04 PM

The CPFB is an affront to American style governance.

This is what dictatorships do.

p0s3r on August 3, 2013 at 3:10 PM

I, for one, plan to explore how I can make a sh!tload of money out of the coming sh!tstorm which is going to impact the LIV and entitlement culture most. If they want to strap me financially, I[ll just have to fight them on their own turf.

ExpressoBold on August 3, 2013 at 3:16 PM

Biographical Directory of Federal Judges
Huvelle, Ellen Segal

Born 1948 in Boston, MA

Federal Judicial Service:
Judge, U.S. District Court for the District of Columbia
Nominated by William J. Clinton on March 25, 1999, to a seat vacated by John Garrett Penn. Confirmed by the Senate on October 15, 1999, and received commission on October 26, 1999.

Education:
Wellesley College, B.A., 1970
Yale School of Architecture, M.C.P., 1972
Boston College Law School, J.D., 1975

Professional Career:
Law clerk, Hon. Edward Hennessey, Supreme Judicial Court of Massachusetts, 1975-1976
Private practice, Washington, D.C., 1976-1990
Lecturer, University of Virginia School of Law, 1997-1999
Associate judge, Superior Court of the District of Columbia, 1990-1999

CrazyGene on August 3, 2013 at 3:18 PM

The CPFB is an affront to American style governance.

This is what dictatorships do.

p0s3r on August 3, 2013 at 3:10 PM

There is no way in the world this agency will not become dictatorial. It has been established to be dictatorial.. out of reach of any oversight. It is impossible for it not to become dictatorial. It will eventually rule over everything. You think welfare has grown the last 50 years? The DEA? EPA? That will be nothing compared to this agency! This one agency will become the head of them all… wait and see! It has to be.. complete unchecked power! There it is! An agency that will insert itself into everything financial. And everything is financial. And if you don’t like it’s edicts.. who will stop it? .. oh.. and write this down. Wait until it buys arms. It will fund it’s own little police force. Wait and see. It’s going to happen… like night follows day.. this agency will arm itself.

JellyToast on August 3, 2013 at 3:19 PM

This is a catastrophe of the highest order. The Consumer Financial Protection Agency will bring down the economy to the same extent that the Fannie Mae and Freddie Mac did in 2008. It’s worth destroying the filibuster to get rid of this beast.

thuja on August 3, 2013 at 3:20 PM

Surprise, Surprise

How is it that human beings allow the state to exist and to rule, and even love it and bow down to it and have almost religious feelings towards it?

If you look at the central argument in favor of the state, it is very easy to recognize that there is a fundamental flaw involved. So it is really a miracle that the state got off the ground.

The argument in favor of the state is simply this: There exists scarcity in the world and because there is a scarcity in the world, conflicts are possible between different people. What do we do about these conflicts that break out? How do we create peace among people? And the proposal that is made by statists, from Thomas Hobbs on to the present, was because there are constantly conflicts going on, contracts among the various individuals will not be sufficient. What we need is one ultimate decision-maker who decides who is right and who is wrong in every case of conflict. And this ultimate decision-maker in a given territory, this monopolist of ultimate decision-making in a given territory is defined to be a state.

Now, if you think about this, the flaw in the argument becomes apparent once you realize that if there is an ultimate decision-maker in every case of conflict, then the implication is that there must be — that this institution also rules who is right and who is wrong in cases of conflict that this institution itself has with other individuals. It is not only an institution that decides who is right and wrong in conflicts that I have with someone else; it is also deciding who is right and wrong in cases where itself is involved in conflicts with others. And once you realize this, then it becomes immediately apparent that such an institution can itself cause conflicts and then decide, of course, in its own favor who is right and who is wrong.

That can be illustrated in particular by institutions such as supreme courts, for instance. If we have a conflict with some governmental entity, the ultimate decision-maker, who is right or who is wrong — the state or I, myself — this is decided by supreme courts or constitutional courts. And constitutional courts are part of the same institution with which I have a conflict. And of course, it is then easy to predict what the outcome of this conflict arbitration will be. It will always be, “I, the state, am right and the people who complain about me are wrong.” It is a prescription for increasing the power of this institution continuously; causing conflicts and then deciding in favor of itself; and then telling the people who complain about the state how much they need to pay for these judgments that are made by the state itself. So it is easy to see what the fundamental flaw in the construction of an institution such as the state.

May the chains rest lightly on you ankles.

roflmmfao

donabernathy on August 3, 2013 at 3:20 PM

that’s ok. this wasn’t the hill to fight on, let’;s fight on that hill over there.

This is the end result of the GOPe appeasement policy with Obama. the same thing will happen with the obamacar if funding is not cut.

unseen on August 3, 2013 at 3:38 PM

I figure I got maybe 25 years left on this earth.

Will it all be over by then?

Every day, EVERY FRICKING DAY it’s somthing, and it’s NEVER GOOD NEWS!

F’em ALL!!

Scrumpy on August 3, 2013 at 3:54 PM

I’m guessing the judge is a Carter, Clinton or Obama appointee…

devan95 on August 3, 2013 at 3:55 PM

Texas can always stop pretending to be part of the United States… The only thing making Texas a “State” in the USA is a treaty that gets renewed periodically.

Texas was never ratified as an actual state of the union via the Constitutionally defined process.

I guess TX likes to Federal money too much. At least if we* were on our own we could finally secure the damn border.

Let it burn.

* I wasn’t born in Texas, but I got here as fast as I could.

Neo on August 3, 2013 at 3:57 PM

Good for you! I am about 45 mins from TX border, I just might hop across :)

Scrumpy on August 3, 2013 at 3:59 PM

unseen on August 3, 2013 at 3:38 PM

It’s all going to pot.

We have power mad people who could care less how they are destroying this country.

I am so mad I could spit bullets!!

There ain’t a damn thing I can do about it but watch it ‘melt’ down.

These no good no account sunsabiatches, can all rot in hell…

** SPIT **

Scrumpy on August 3, 2013 at 4:02 PM

I’m guessing the judge is a Carter, Clinton or Obama appointee…
devan95 on August 3, 2013 at 3:55 PM

The article didn’t mention it – the telltale sign. Someone said it above: Clinton.

crrr6 on August 3, 2013 at 4:03 PM

actual purpose is to cover the federal government’s behind for their driving role in the financial crisis

Not even Wall Street would describe the government as playing a ‘driving’ role in the financial crisis. That’s just bizarre. Perhaps the government is also responsible for the Libor scandal or bank-driven price fixing in aluminum and other commodities. If only those regulators would go away!

The sooner we get to that full realization, the sooner we can begin to earnestly discuss what a return to the way it’s supposed to be will entail.

True, the financial sector may never operate as a thinly veiled casino again. People need to finally accept responsibility for attaining the right education and training instead of blaming the government. In the global economy, you can’t beat China, Germany, and other competitors with a second-rate education.

bayam on August 3, 2013 at 4:11 PM

I figure I got maybe 25 years left on this earth.

Will it all be over by then?

Every day, EVERY FRICKING DAY it’s somthing, and it’s NEVER GOOD NEWS!

F’em ALL!!

Scrumpy on August 3, 2013 at 3:54 PM

If we were over at AoSHQ, I’d sock something about PlaceboCare’s Death Panels halving that.

It will be all over for the first Constitution. Whether a Sultunate/Caliphate or Spanish-speaking empire takes it all over, or whether a second Constitution applies in some parts of what was once the US I don’t know.

Steve Eggleston on August 3, 2013 at 4:20 PM

“No Standing”

Covers everything.

Wander on August 3, 2013 at 4:21 PM

Another activist lunatic-left d-cRAT socialist excuse for a “judge” has been found !

TeaPartyNation on August 3, 2013 at 4:42 PM

Elections have consequences

JEM on August 3, 2013 at 4:42 PM

There needs to be congressional action on the issue of “standing”. It seems to be a bullet proof method for these liberal judges to protect everything liberal without even getting into the issues.

Spartacus on August 3, 2013 at 4:45 PM

About 5 million people should march in DC and not leave until they repeal laws. Egypt had one third of it’s population rise up to throw out a dictator names Morsi.

This agency is an an abomination. I admit.. I wasn’t really following this one. I was watching the other 289.. this one slipped by me. How in the world could any freaking congressman in good faith with any sense create an agency with such power?! It is worse than the IRS! How can it not be? If it isn’t stopped really really soon .. it will be over.

Oh.. and what a beautiful name.. “Consumer Financial “Protection” Bureau.” How sweet! They should’ve just named it “The Pretty Little Kitty Agency” when in reality it is the freaking “Mother of All Government Bureaucracies!” Pure unchecked raw power over all things financial!

JellyToast on August 3, 2013 at 4:45 PM

Also, it seems that women are not only more liberal than men, but much more likely to excuse constitutional violations (the means) to achieve their ends (socialist utopia, also unconstitutional).

Spartacus on August 3, 2013 at 4:46 PM

Oh.. and what a beautiful name.. “Consumer Financial “Protection” Bureau.” How sweet! They should’ve just named it “The Pretty Little Kitty Agency” when in reality it is the freaking “Mother of All Government Bureaucracies!” Pure unchecked raw power over all things financial!
JellyToast on August 3, 2013 at 4:45 PM

They used “Consumer” instead of “People’s” because that would be too obvious.

Cleombrotus on August 3, 2013 at 5:07 PM

Also, it seems that women are not only more liberal than men, but much more likely to excuse constitutional violations (the means) to achieve their ends (socialist utopia, also unconstitutional).
Spartacus on August 3, 2013 at 4:46 PM

I gotta be honest with you and tell you that that was the FIRST thing I noticed even before I assumed she was a Clinton or Obama appointee.

Sorry, ladies, but I think, on balance, you’ve done more harm than good in the political realm.

Cleombrotus on August 3, 2013 at 5:10 PM

actual purpose is to cover the federal government’s behind for their driving role in the financial crisis

Not even the anonymous Democrat Wall Street economists I always cite would describe the government as playing a ‘driving’ role in the financial crisis. That’s just bizarre.

bayam on August 3, 2013 at 4:11 PM

Yeah, it’s not as if Clinton’s DOJ threatened to sue lenders back in the 1990s unless they started making more subprime loans-the number of which tripled during the Clinton era.

F-

Del Dolemonte on August 3, 2013 at 5:15 PM

I’m no legal expert (I just play one on HotAir) so I can’t really speak to the issue of the states having standing in this suit. However, I would think these community banks would most certainly have standing. Why don’t a group of them get together and bring the suit?

Bitter Clinger on August 3, 2013 at 5:23 PM

There needs to be congressional action on the issue of “standing”. It seems to be a bullet proof method for these liberal judges to protect everything liberal without even getting into the issues.
Spartacus on August 3, 2013 at 4:45 PM

There can be no “congressional action” on the issue of standing. Standing is a constitutional requirement under Article III in order for a federal court to exercise jurisdiction over a plaintiff’s claim. So absent a constitutional amendment overturning centuries of law and allowing federal courts to render advisory opinions, we’re stuck with it.

righty45 on August 3, 2013 at 5:25 PM

actual purpose is to cover the federal government’s behind for their driving role in the financial crisis

Not even the anonymous Democrat Wall Street economists I always cite would describe the government as playing a ‘driving’ role in the financial crisis. That’s just bizarre.

bayam on August 3, 2013 at 4:11 PM

Yeah, it’s not as if Clinton’s DOJ threatened to sue lenders back in the 1990s unless they started making more subprime loans-the number of which tripled during the Clinton era.

F-

Del Dolemonte on August 3, 2013 at 5:15 PM

Are you bookmarking my old posts? Even if a full third of $250 bil in submprime loans turned into foreclosures, that represents a rounding error in the massive US financial sector. Direct losses on subprime loans never posed a existential threat to the US financial sector.

During the housing bubble, some banks such as Washington Mutual adopted lending policies that failed to recognize any risk in subprime loans, and that had nothing to do with fed regulations. Chase and Wells Fargo exited the crisis relatively unscathed as those banks identified the possibility of an asset pricing correction and didn’t see every home loan, regardless of buyer credit rating, as a loss-proof addition to the corp balance sheet.

bayam on August 3, 2013 at 5:32 PM

♫♫♫ Somone has nekid pictures of someone ♫♫♫♫

avagreen on August 3, 2013 at 5:57 PM

True, the financial sector may never operate as a thinly veiled casino again. People need to finally accept responsibility for attaining the right education and training instead of blaming the government. ***

bayam on August 3, 2013 at 4:11 PM

Because of what you see as the sins of large banks, you have enacted laws that put the small community banks out of business because they do not have the scale to spread the cost of regulatory compliance. Thus the large banks who get virtually free capital from the government also are protected from small competitors. Some punishment for their alleged sins. The government rackets called Fanny and Freddy made all the dodges possible and even for the unsuspecting seem respectable and safe. They are still around too. So much for liberal justice–protect the guilty punish the innocent.

KW64 on August 3, 2013 at 6:21 PM

Imagine that…I liberal judge siding with liberals. I assume the judge is a liberal since she has two last names. I’m not familiar with a conservative woman that does that.

cajunpatriot on August 3, 2013 at 6:55 PM

Texas was never ratified as an actual state of the union via the Constitutionally defined process.

Neo on August 3, 2013 at 3:57 PM

Not originally, but the process for bringing Texas back into the union after the war between the states negated all that. Texas is a regular state now. Even the guys in the Texas Secession movement are just hoping to sue their way out of the union. I think Austin needs a lot more clean up done before I would trust it to become a national capitol.

Kafir on August 3, 2013 at 7:10 PM

Because of what you see as the sins of large banks, you have enacted laws that put the small community banks out of business because they do not have the scale to spread the cost of regulatory compliance.

That is factually incorrect. Dodd-Frank exempts small financial institutions from the costlier regulatory requirements. For example, many regulations only apply to BHCs with total consolidated assets of $50B or more.

righty45 on August 3, 2013 at 7:12 PM

They used “Consumer” instead of “People’s” because that would be too obvious.

Cleombrotus on August 3, 2013 at 5:07 PM

They should have named it the Circumlocution Office.

Difficultas_Est_Imperium on August 3, 2013 at 7:16 PM

I’m guessing the judge is a Carter, Clinton or Obama appointee…

devan95 on August 3, 2013 at 3:55 PM

.
The way too many Reagan/Bush41/Bush43 appointees have ruled in some cases, that’s not necessarily true.

But the judge is most certainly a “Carter, Clinton or Obama” ideologue.

listens2glenn on August 3, 2013 at 8:30 PM

Not even Wall Street would describe the government as playing a ‘driving’ role in the financial crisis. That’s just bizarre. Perhaps the government is also responsible for the Libor scandal or bank-driven price fixing in aluminum and other commodities. If only those regulators would go away!

bayam on August 3, 2013 at 4:11 PM

.
Dodd/Frank DID … force Banks to loan (“give”, actually) money to people who obviously couldn’t afford to pay-off the loan.

Whether “Wall Street would describe the government as playing a ‘driving’ role in the financial crisis” or not, is irrelevant.

listens2glenn on August 3, 2013 at 8:38 PM

Del Dolemonte on August 3, 2013 at 5:15 PM

.
Are you bookmarking my old posts?

Del Dolemonte on August 3, 2013 at 5:15 PM

.
Most of us do.

listens2glenn on August 3, 2013 at 8:54 PM

State National Bank? Huh?

GWB on August 3, 2013 at 10:20 PM

( s i g h . . . . . . . . . . . . . . . . . . . . . )

Correction needed:

Del Dolemonte on August 3, 2013 at 5:15 PM
.

Are you bookmarking my old posts?

Del Dolemonte on August 3, 2013 at 5:15 PM
bayam on August 3, 2013 at 5:32 PM

.
Most of us do.

listens2glenn on August 3, 2013 at 8:54 PM

.
My apologies, Del Dolemonte.

listens2glenn on August 3, 2013 at 11:25 PM

I honestly have to wonder what bayam does for a living, because the logic he/she/it uses for it’s arguments suggest it has a fundamental lack of understanding regarding how businesses respond to regulation, especially the banking sector. But it does make up the cutest little straw men when trying to argue it’s side, don’t you think?

First of all, no one here (that I know of, at least) has ever said banks and mortgage lenders were innocent during the run-up to the GFC: for example, in a normal world, Citibank’s shareholders should have screamed bloody murder when that bank gave the non-profit group ACORN a $1 billion dollar loan portfolio and allowed the group to act as mortgage broker to poor people. That decision was just plain crazy, and should have resulted in someone at the executive level being shown the door…again, in a normal world.

But thanks to Clinton turbocharging CRA around 1998 (by creating MBS’s), the normal world went crazy: the reason Citibank’s shareholders were OK with this decision was because senior management were led to believe that actions like that would gain it good standing on CRA compliance, and that its non-complying loans would be guaranteed by Fannie and Freddie. CRS loans magically transmogrify into MBS’s, risk magically vanishes, and *POOF*! Everybody’s happy.

bayam also ignores the fact that W did try to introduce legislation to curtail Fannie and Freddie back in 2003, but Barney Frank – who, incidentally, was butt-welded to a senior marketing manager during the late 1990′s who happened to be employed by Freddie Mac – said there was no problem. If you want to blame Republicans for something here, blame those who got bought off the way Dodd did (Countrywide, anyone?) which caused the proposed legislation to fail.

This is ever the way of Democrats and leftists (BIRM) generally:

1. Distort markets based on emotional appeals that have the twin results of subsidizing more Democrat voters while destroying the market.

2. Once the market is destroyed, play up bad behaviour found in the market while conveniently ignoring the fact that the regulations which distorted it (and the legislators who were involved) set up the incentives by which participants acted unethically.

3. Use the market failure to introduce “reforms” that freeze out competition and stratify the market into a few, large players, who can then be extorted by Democrats at will with a Govt version of the casual suggestion, “great market you have there; it’d be a shame for somethin’ ta happen to it…”

4. As the market withers and dies, blame Republicans and capitalism.

Dodd/Frank and Obamacare will fundamentally ruin change this country in ways that we cannot yet imagine – unless, of course, we can imagine an America that is just as stagnant and lifeless as the EU – or eventually, Detroit.

Beware what you wish for, Democrats and leftists. Perhaps you should all move to Detroit and make it a better place?
Oh, wait…

Wanderlust on August 4, 2013 at 12:00 AM

Every page of paperwork required of banks by Dodd-Frank carries a “cost,” so the ruling of “No standing” is legal bulls**t. This can easily, although not inexpensively, be reversed on appeal.

johncorn on August 4, 2013 at 1:14 PM