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Posted at 3:05 PM ET, 02/11/2011

I guess this was predictable

By Ezra Klein

The Cato Institute invites you to a Policy Forum:

Is Dodd-Frank Constitutional?

Mark Calabria
Director of Financial Regulatory Studies, Cato Institute

Hon. C. Boyden Gray
Former White House Counsel

Timothy R. McTaggart
Partner, Pepper Hamilton LLP, and former Delaware State Bank Commissioner

moderated by
Ilya Shapiro
Senior Fellow in Constitutional Studies, Cato Institute

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 was intended to "promote the financial stability of the United States by improving accountability and transparency in the financial system, to end 'too big to fail,' to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes." The law is extraordinarily complex, requiring almost a dozen federal agencies to complete anywhere between 240 to 540 new sets of rules, plus about 145 studies that will affect rulemaking. There has been much debate over whether the law will accomplish its stated intent, but there are also growing concerns about its constitutionality, primarily due to separation of powers, vagueness, and due process issues. Central to that discussion is the fact that Dodd-Frank grants administrative agencies — including the newly created Financial Stability Oversight Council and Bureau of Consumer Financial Protection — broad and unchallengeable discretionary authority. Does Dodd-Frank provide effective oversight by any branch of government — Congress, the president, or the judiciary? How can constitutional concerns about the law's grants of regulatory power be resolved? Please join us for a discussion of these important issues.

Tuesday, February 15, 2011

You can sign up to attend here.

By Ezra Klein  | February 11, 2011; 3:05 PM ET
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This is probably symptomatic of what conservatives feel is a court that is currently in their favor. It's a tool they will continue to go to, because they will become increasingly more frustrated by the lack of movement from the leadership of the GOP on their causes.

Nothing to be concerned about as Dodd Frank was an essentially insignificant piece of legislation, all thunder but no lightning.

Posted by: johnmarshall5446 | February 11, 2011 3:14 PM | Report abuse

Agree with john on point 1.

Everything the Dems do that is considered important may be challenged in this way.

Posted by: lauren2010 | February 11, 2011 3:36 PM | Report abuse

of course , if obama had the balls ( and wasn't a corporate lackey) he would have broken up the "too big to fail" and we wouldn't have to deal with all the rest of the this.

But it's hard to attack your families future

Posted by: newagent99 | February 11, 2011 3:40 PM | Report abuse

"but there are also growing concerns about its constitutionality, primarily due to separation of powers, vagueness, and due process issues."


I think the whole "Interstate Commerce" clause kind of kicks this in the teeth, the Constitution itself OWNS vagueness.

Posted by: arm3 | February 11, 2011 3:46 PM | Report abuse

How is it that Glass-Steagall — which is arguably more draconian than Dodd-Frank — passed constitutional muster but that Dodd-Frank wouldn't?

Posted by: tomcammarata | February 11, 2011 7:35 PM | Report abuse


That's an easy one, look at the date 1933. It's the same reason the Patriot Act is constitutional, even though it isn't! LOL

Posted by: johnmarshall5446 | February 11, 2011 10:31 PM | Report abuse

This issue is not or should not be about the "constitutionality" of granting administrative agencies the authourity to regulate financial institutions, but the absolute necessity thereof which apparently CATO disagrees with.

I began receiving snail mail from CATO while Bush was in office, but it did not rail against government overreach anywhere near the extent it does now. Actually just prior to the 2008 elections, CATO started sending literature filled with ominous warnings of doom and gloom scenarios that would become a certainty with democrats in charge. The fear mongering was way, way over the top.

Although CATO describes itself as a "libertarian" organization, it would be better described as an ideological, right-wing organization given its strong opposition to government oversight and regulation in general including healthcare reform, but more to the point, specifically, financial reform.

Libertarians do not like government telling them what to do, I get that. They don't want government interfering in their lives. I get that, too. Nevertheless some take liberty to the extreme. Government is supposed to protect all its citizens & keep them safe not just from foreign invasions, but everything from financial ruin to food poisoning. A society left to its own devices, absent protections and laws, would not be civilized for long. Likewise the "free" market left to its own devices absent regulation and oversight, unfettered and unrestrained, would tank the economy just as it has done time and time again. After all the world was just down that road and is still trying to dig its way out.

While no one nation is the sole arbitrator, the US is certainly a major player in the global economic system. Yet CATO is challenging financial reforms based on "constitutionality" concerns which ought to give everyone pause, if not cause for alarm considering the US economy is inextricably linked to the world economy.

The International Monetary Fund (IMF) chief and managing director, Dominique Strauss-Kahn, stated that the only way the global economy survived the financial crisis in 2008 was due to the cooperation of the international community which is important in and of itself. But he warned, too, that the global imbalances that gave way to the crisis: large and volatile capital flows, exchange rate pressures and rapidly growing excess reserves are back on the front burner again.

Granted monetary reforms are probably not going to prevent the next crisis or the one after that due to human error, they can, however, bolster the system to help stabilize the economy during volatile disruptions in the market.

So, let me reiterate, this issue is not or should not be about the "constitutionality" of granting administrative agencies the authourity to regulate financial institutions, but the absolute necessity thereof. Otherwise as long as these issues remain unresolved surviving the next global economic crisis remains to be seen.

Posted by: serena1313 | February 12, 2011 5:41 AM | Report abuse

How does Dodd-Frank "end too-big-to-fail"? I think the Cato Institute is giving it too much credit. Finance reform is shaping up to be plenty tough on the "not big enough" operations that had nothing to do with the economic collapse. Meanwhile, more and more of the economy slips into the hands of a select few, who are still rewarded with obnoxious bonuses for doing nothing to create jobs.

Posted by: onexister | February 14, 2011 3:38 PM | Report abuse

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