Wednesday, February 13, 2013
|Texas' challenge to Dodd-Frank|
The legal action filed by the State of Texas and a coalition of 10 other states challenges Title II of Dodd-Frank, which gives the U.S. Treasury Secretary and the Federal Deposit Insurance Corporation (FDIC) broad, unilateral authority to simply take over and liquidate large financial institutions. Because the Texas Treasury Safekeeping Trust Company -- an organization that manages and invests funds for the state and various subdivisions -- has investments in financial institutions that fall within Dodd-Frank’s scope, the law poses a risk to taxpayer funds.
Under Dodd-Frank’s sweeping federal law, unelected federal officials are empowered to take virtually any action of their choosingincluding liquidating a financial institutionwithout obtaining the approval or consent of creditors or shareholders like the State of Texas. The new federal regime is a highly secretive process that effectively prohibits the State from challenging this federal action in court.
The State of Texas is joined in the legal challenge by the States of Alabama, Georgia, Kansas, Michigan, Montana, Nebraska, Ohio, Oklahoma, South Carolina, and West Virginia, as well as the State National Bank of Big Spring, Texas, and the Plus 60 Association.