Although lovers of the CFPB (and you folks in the trade press are easily identifiable by your brown noses) were crowing about the dismissal last week of the lawsuit eleven states and a bank in Big Spring, Texas, filed to have Dodd-Frank declared unconstitutional, an article in Law360 offered a number of pundits' opinions that other foes of Chris-Barney might fair better than the recently "dissed" (although they've publicly vowed to appeal). Jeffrey Jamison, for instance, thinks plaintiffs may need to "go small" (a technique favored by absolutely none of the women I dated in my single days).
"The problem that these plaintiffs had, as you'll see in a lot of cases like this, is when they don't have an actual injury, they have to go broad," Jamison said. "And so, if you've got somebody who's been hit with something smaller and have actual injuries, they can come in and challenge that one provision of Dodd-Frank because they've been injured by it, and then go forward."
In other words, your "injury" would have to be real enough that, if you were in grade school, your mother would actually let you stay home for the day.
Others think that "living large" is the way to roll.
And that's where Prudential Financial Inc.'s challenge to FSOC's decision earlier this year to designate the Newark, N.J.-based firm as a nonbank SIFI could prove more effective, said Ballard Spahr LLP of counsel Keith Fisher.
The firm has said it will appeal FSOC's designation and, if its appeal to the council fails, could choose to go to court.
"There, they are directly affected by the FSOC decision. By being designated as a SIFI, they are becoming subject to different levels of regulation," Fisher said.
A potential problem with that scenario is, after exhausting administrative remedies, the plaintiffs might have to show that the decision of the council was arbitrary or without a reasonable basis. We all saw how well jumping over that high hurdle worked for United Western Bank in its lawsuit against the OCC. On the other hand, taking the line that either the entire act or the relevant portion is unconstitutional bypasses that requirement, so Keith is on to something, although the issues on appeal are not likely to extend to the constitutionality of the entire law.
The article also mentions another case in which the CFPB's authority to demand confidential information is being challenged. Again, the provisions of the act in question in that case are limited.
Thus, unless the plaintiffs in the just dismissed State National Bank lawsuit are successful on appeal (and the prevailing weight of professional punditry appears to be against them), haters of the law may have to be satisfied with minor victories and the slim hope that the law might eventually bleed out from many minor wounds rather than a rapier through the heart.