Legal victories against Dodd-Frank provisions will help members in Congress who support bills to repeal President Obama’s 2,319-page law, according to one financial expert.
Jim Powell, a senior fellow at the Cato Institute, said that now is the time to challenge Dodd-Frank in court as it’s restriction of revenues in the financial services industry is causing perverse consequences, including Bank of America’s recent announcement that it will lay off at least 30,000 employees, Forbes.com reports.
In order to challenge a Dodd-Frank regulation, a suit has to be filed against the agency that issued it. The majority of rules are coming from the Securities and Exchange Commission, which has already lost one Dodd-Frank battle in court.
In July, the U.S. Court of Appeals for the District of Columbia Circuit found that the SEC failed to take into account the potential economic consequences of a proposed regulation.
Other agencies responsible for carrying out Dodd-Frank regulations include the Commodities Future Trading Commission, the Federal Reserve and the newly created Consumer Financial Protection Bureau, according to Forbes.com.
Last Oct., TCF National Bank legally challenged the constitutionality of the Durbin Amendment. The bank claimed that the price controls amounted to a regulatory taking of their revenue without due process and just compensation in violation of the Fifth Amendment.
The District Court of South Dakota eventually ruled that a business deserved constitutional protection in such cases only if it was a public utility or a monopoly.
“Nobody in the history of rate regulation has ever thought that competitive firms should be more vulnerable to government expropriation than firms that possess monopoly power,” attorney Richard Epstein, who represented TCF, later wrote, according to Forbes.com. “Yet that was the explicit assumption driving this case.”
Powell said a Congressional repeal movement will continue to gain momentum with legal challenges that present evidence showing that Dodd-Frank is causing significant harm and higher unemployment.