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Three states join challenge to Dodd-Frank legislation


By Jonathan Ames

24 September 2012 at 13:12 BST


At least three US states are gearing up to launch a legal challenge to landmark financial services regulation designed to remedy the disease that brought on the 2008 banking crisis.

Authorities in Michigan, Oklahoma and South Carolina have joined a law suit maintaining that the Dodd-Frank Wall Street Reform and Consumer Protection Act – implemented by President Barack Obama in July 2010 – is unconstitutional.

Too much power

According to a report on the Legal Times web site, the three states claim the legislation gives the federal government ‘too much power to take over and liquidate nonbank companies whose failure would jeopardise the financial system’. The states have just joined an action originally launched in June by a Texas bank.
The report says the three state attorneys general maintain the legislation involves no judicial oversight for its processes. They point to provisions in the legislation that allow companies to challenge a Treasury Department decision, but the court only has 24 hours to rule on the matter; if the court doesn’t take a view within that time, says the Legal Times, the federal government’s action is automatically approved.
The publication quotes Oklahoma Attorney General Scott Pruitt as describing such a ‘substantial power’ as being ‘fundamentally inconsistent with our constitutional frame work and checks and balances’.

 
   
 
 
 

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