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July 30, 2015 By Richard Bowen

Dodd–Frank challenged in court! A Win for Community Banking and the American Public

In what is being hailed as “a win for the American public,” the D.C. Court of Appeals granted standing to challenge in court the constitutionality of certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The D.C. Circuit Court handed down a favorable ruling in the Competitive Enterprise Institute’s (CEI, a D.C. free market public policy group, established in 1984), case challenging the constitutionality of key provisions in the Dodd-Frank Act.

Sam Kazman, CEI general counsel stated, “The D.C. Circuit’s ruling today (July 24th), opens the door to a court test of the Consumer Financial Protections’ Bureau constitutionality. Since Dodd-Frank’s enactment five years ago this month, the CFPB has inflicted damage on huge segments of our economy. Its powers are so free-roaming that they are unprecedented in our history. The fact that our standing to challenge the CFPB has been upheld is great news for us, the plaintiffs, and even greater news for the American public (ruling in State National Bank of Big Spring Texas, et al v. Lew, et al).”

cei_logo_trimmed

Five years after its passing, the Dodd-Frank Wall Street Reform and Consumer Protection Act (pub. L111-203, H.R.4173), otherwise known as Dodd-Frank, is under intense scrutiny by several think tanks, the community banking industry and prominent deregulators.

The Act, signed into law by President Obama on July 21, 2010, was passed as a response to the worst financial recession in US history. It brought the most significant changes to financial regulation in the United States since the regulatory reform that followed the Great Depression. The law  places significant regulations on financial institutions to prevent unnecessary risk-taking and abusive lending practices.

Dennis McCuistion
Dennis McCuistion

The Dodd-Frank Act includes the Financial Stability Oversight Council that monitors banks from becoming too big to fail. It made changes in the financial regulatory environment that affect all federal financial regulatory agencies and virtually every part of the financial services industry.

Dodd-Frank has its share of critics. Some say it did not go far enough to prevent more bailouts and another financial crisis, while others, including several lawmakers opposed to strict government policing of the financial industry, argue the Act went too far and unduly restricted financial institutions.

According to Dennis McCuistion, a Director at the National Center for Policy Analysis (NCPA), “Unlike most agencies, the CFPB does not have aboard, does not report to Congress or get authorized funding  since it is housed at the Fed. It’s ironic, given the Fed’s birthing of the crisis. In short, it can, and does run rampant particularly over community banks (though the promise was that it would only affect big banks).”

Allen West, Photo credit: Gina Carr, FreedomFest 2015
Allen West, Photo credit: Gina Carr, FreedomFest 2015

Allen West, former congressman and the President and CEO of NCPA, says “Through Dodd-Frank, we have seen the lifeblood to small businesses, small community banks, being decimated by the legions of regulations and regulators that swarm them.”

The bottom line is Dodd-Frank was written primarily to control the TBTF banks, and yet those same banks and their lobby are systematically gutting those provisions directed at them. An example of this is the elimination of the prohibition of using insured deposits to gamble with derivatives. 

This is leaving much of the rest of Dodd-Frank, such as the Consumer Finance Protection Bureau and the related huge new compliance costs falling disproportionately on the community bankers.

[tweetthis url=”http://buff.ly/1MvNT6x”]Much of #DoddFrank falls disproportionately on community bankers.” ~ @RichardMBowen #cfpb #cei [/tweetthis]

Ironically , the largest banks will still not be effectively controlled and will be the only banks able to afford the dramatically increased compliance costs associated with the CFPB and the other new regulations associated with Dodd-Frank.

Community banks and their important role in our communities are being threatened. They’ve had enough and are fighting back, challenging the constitutionality of some of the provisions of Dodd-Frank, including the CFPB.

They have a big fight ahead of them. I wish them luck.

Related articles:

How Dodd-Frank Harms Main Street

Senator Warren: Enough is Enough with “Too Big To Fail” Citigroup

Behavioral Ethics: Too Big To Fail and the Financial Crisis
Bamboozling by Banks and Regulators Reaches An All Time High!

Tagged With: Dodd-Frank, Wall Street

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Richard Bowen is widely known as the Citigroup whistleblower. As Business Chief Underwriter for Citigroup during the housing bubble financial crisis meltdown, he repeatedly warned Citi executive management and the board about fraudulent behavior within the organization. The company certified poor mortgages as quality mortgages and sold them to Fannie Mae, Freddie Mac and other investors.

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William D. Cohan"Richard Bowen is one of my heroes. His is a story of human fortitude at its best and Wall Street at its worst."

~ William D. Cohan, NY Times Best Selling Author
2017-06-30T10:08:59+00:00
"Richard Bowen is one of my heroes. His is a story of human fortitude at its best and Wall Street at its worst." ~ William D. Cohan, NY Times Best Selling Author
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2014-12-28T19:48:17+00:00
"Richard's speech at the April Financial Executives International dinner was informative, interesting, riveting, and fast moving.  The feedback from members was overwhelming positive, and Richard received one of the few standing ovations given by our membership." ~ Jim Farrell, Program Chairman, Dallas Chapter, Financial Executives International
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Dennis McCuistion"Richard Bowen has been there, done that, and has the scars to prove it, and his message of corruption at the highest levels of industry and government needs to be heard. I only wish that more bankers had the courage that Bowen exhibits. He is not only one of the most talented bankers I have ever met, he has more integrity than all the bankers on Wall Street put together. If his former employer had listened to him taxpayers would not have had to bail out Citi for the third time in the last 30 years."

~ Dennis McCuistion, Host of the McCuistion TV program
2014-12-28T19:48:06+00:00
"Richard Bowen has been there, done that, and has the scars to prove it, and his message of corruption at the highest levels of industry and government needs to be heard. I only wish that more bankers had the courage that Bowen exhibits. He is not only one of the most talented bankers I have ever met, he has more integrity than all the bankers on Wall Street put together. If his former employer had listened to him taxpayers would not have had to bail out Citi for the third time in the last 30 years." ~ Dennis McCuistion, Host of the McCuistion TV program
https://www.richardmbowen.com/testimonials/533/

Betty Garrett"Richard Bowen is a dynamic, entertaining speaker and story-teller - a CPA with a great personality!"

~ Betty Garrett, Garrett Speakers International
2014-12-28T19:47:50+00:00
"Richard Bowen is a dynamic, entertaining speaker and story-teller - a CPA with a great personality!" ~ Betty Garrett, Garrett Speakers International
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fred-timmons"I believe Richard Bowen is the only keynote speaker to ever receive a standing ovation from the Texas Society of CPA’s at any of its annual conferences."

~ Fred Timmons, Chairman of The Texas Society of CPA's
2014-12-28T19:47:22+00:00
"I believe Richard Bowen is the only keynote speaker to ever receive a standing ovation from the Texas Society of CPA’s at any of its annual conferences." ~ Fred Timmons, Chairman of The Texas Society of CPA's
https://www.richardmbowen.com/testimonials/530/

Presentation Topics

Playing for High Stakes: The Principles and Practice of Ethical Leadership

Dark Citi: The Story of a Whistleblower

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Now an ethical leadership speaker, Richard Bowen was Citigroup's Business Chief Underwriter during the housing bubble.

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