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July 31, 2013

July 9, 2013 – House Financial Services Oversight Subcommittee hearing entitled "Examining Constitutionality Deficiencies and Legal Uncertainities in the Dodd/Frank Act.'

At issue are two authorities provided to regulators in the Dodd/Frank Act that, in the opinion of some legal scholars, may be inconsistent with constitutional guarantees of due process. Further, the structure of a new regulatory body, namely the FSOC, may be incompatible with the Constitutions’ separation-of-powers principle.Constituional questions involve the FSOC’s authority to subject non financial institutions to Federal Reserve regulation and the FDIC’s authority to liquidate systemically risky institutions.

Chairman McHenry’s opening statement left no doubt that he believes Dodd/Frank codifies the too-big-to-fail theory and thus supports judicial challenges to the constitutionality of the new law. Ranking Member Green made a pragmatic argument that the new law is the best public policy avenue to deal with avoiding serious economic situations.

The legal views of the three witness disagreed and the hearing evolved into a forum for a debate of constitutional law issues.

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