On February 13, 2013, Georgia Attorney General Sam Olens announced that Georgia has moved to join a lawsuit challenging the constitutionality of the Dodd-Frank Act. The lawsuit Georgia seeks to join was originally filed by a small Texas community bank in June 2012. The suit requested the court to invalidate Dodd-Frank because it gives the federal government “unprecedented, unchecked power, and it violates the Separation of Powers Clause by creating an unaccountable agency to exercise those powers.” Georgia, Alabama, Kansas, Montana, Nebraska, Ohio, Texas, and West Virginia are the latest plaintiffs to join the suit that Michigan, Oklahoma, and South Carolina joined the suit in September 2012.
The States are focusing their challenge on Title II of the Dodd-Frank Act, which gives the secretary of the Treasury so-called “Orderly Liquidation Authority.” This authority allows the Treasury secretary to order the Federal Deposit Insurance Co. to take over and liquidate a nonbank determined to be “in default or in danger of default, if its collapse would have a serious adverse effect on the financial stability of the United States.”
Olens said “Dodd-Frank violates basic principles of separation of powers and government that is accountable to the people…the law puts the State of Georgia’s financial assets at risk. Nels Peterson, Georgia’s Solicitor General said, “the assets at risk are bonds the state has purchased. The concern is that if the Treasury secretary were to liquidate the companies holding the bonds, the Dodd-Frank law does not require that creditors, such as Georgia, be treated equally.”
The “Orderly Liquidation Authority” has never been invoked. Furthermore, the Dodd-Frank Wall Street Reform and Consumer Protection Act, was a federal law passed in July 2010 to help increase the protection of investors and make significant changes to financial regulation and Wall Street in the wake of the late-2000s financial crisis/recession. The states challenging this act are undermining its goals, and intent, of protecting investors and tightening the regulations on Wall Street firms.
Jason Doss is the owner of The Doss Firm, LLC, an Atlanta-based law firm devoted to representing consumers across the country in a variety of areas including investment disputes and consumer class action litigation. Mr. Doss earned his J.D. from Florida State University in 2002 and his B.A. from the University of Florida in 1997.