“The Dodd-Frank law is bad for banks, harmful to businesses and worse for consumers who want to borrow money," Texas Attorney General Greg Abbott said tonight. "It gives too much power to the federal government—and puts taxpayer dollars at risk."
Abbott issued an announcement shortly after 6 p.m. (CST) indicating that the State of Texas is joining the multistate challenge to the Obama Administration’s Dodd-Frank financial reform law.
"Under this law, unelected federal bureaucrats can unilaterally liquidate financial institutions in which the state invests taxpayer dollars," Abbott explained. "The State of Texas could be denied basic due process rights and taxpayers’ dollars could recklessly be put at risk.”
Texas joins a coalition of 10 other states with legal action against Title II of Dodd-Frank.
Title II 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."
The Texas Treasury Safekeeping Trust Company is an organization that manages and invests funds for the state and various subdivisions and this 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 choosing—including liquidating a financial institution—without 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.
Last September House Republicans held a news conference concerned about Treasury Secretary Timothy Geither's promise that the law would not add new regulation. However, the Dodd-Frank law has done the opposite.
Among those condeming Obama's new law were House Republican Conference Chairman Jeb Hensarling (R-TX), Rep. Francisco Canseco (R-TX), Randy Neugebauer (R-TX) and House Financial Services Committee Chairman Spencer Bachus (R-Ala.).