Consider the following scenario: Congress passes an important economic regulation designed to address a major national problem over massive opposition from conservative and corporate interests. Defeated in the democratic process, these forces then launch a legal attack, using a novel theory to claim the law is unconstitutional. Right-wing media cheer the suit, claiming it is a fight for freedom.
Sound familiar? It should, given the unresolved fate of the Affordable Care Act, but this time the reform in the right's crosshairs is not health care. It's consumer financial protection. A new lawsuit and right-wing media campaign have taken aim at the Consumer Financial Protection Bureau (CFPB), created by the Dodd-Frank law in response to the 2008 financial market collapse. The purpose of CFPB is to “promote fairness and transparency for mortgages, credit cards, and other consumer financial products and services.” Although the legal arguments made in the suit are questionable, the case should not be dismissed as harmless. The right-wing media's proven ability to move dubious legal claims into mainstream debate combined with a conservative federal judiciary sympathetic to corporate interests mean the CFPB suit bears close scrutiny.
The lawsuit alleges that CFPB and another entity, the Financial Stability Oversight Council (FSOC), which oversees the law's “too big to fail provisions,” are unconstitutional because key provisions of Dodd-Frank are too vague and do not provide sufficient oversight of the agencies' actions. They also challenge President Obama's recess appointment of CFPB Director Richard Cordray following a Republican filibuster of his nomination.
Legal experts are already expressing skepticism on the suit's merits. Deepak Gupta, an appellate lawyer and former CFPB official, called the suit “more a political stunt than a serious legal challenge” and questioned whether the plaintiffs challenging the law have standing to do so. (“Standing” is a legal requirement that a party to a case be at least at risk of suffering a real harm from the action complained of.) A small community bank in Texas is a plaintiff in the case (along two conservative organizations), and an article in the American Banker questioned whether the bank is large enough to be subject to the provisions of which it complains.
A detailed analysis of constitutional complaints about the law by Timothy R. McTaggart, a financial services regulatory lawyer at the law firm of Pepper Hamilton LLP, concluded that it is “highly unlikely” that a court would find significant provisions of Dodd-Frank unconstitutional because of “general vagueness considerations.” McTaggart also argued that "[m]any regulatory mandates ... contain vague or expansive terms that are later defined by" regulatory agencies, and that courts rarely find constitutional problems with this sort of arrangement.
The suit has met no such skepticism in the right-wing media. Keying off a Wall Street Journal op-ed by the lawsuit's lead lawyer, C. Boyden Gray, and Jim R. Purcell, the president of the plaintiff bank, right-wing outlets weighed in with their support. Newsmax enthused that the “presence of Gray, who served President George H.W. Bush, gives added weight to the suit.” Steven Hayward wrote on Powerline that “Dodd-Frank is as unconstitutional as Obamacare.” The headline on Erika Johnsen's post at Hot Air pronounced the news of the suit to be “Glorious.” Ammon Simon of National Review Online pledged that he “will continue to report on the case as it develops, and look forward to joining Mr. Gray and others in the effort to educate the public about the impact this law could have on our economy and on our system of government.”
So, as with health care, the right-wing media have begun the process of turning obscure, highly technical, and dubious legal arguments into articles of conservative constitutional faith. But will the second element in the attack on health care -- judges willing to accept the arguments promoted by the right-wing media -- apply in this case? As the lawsuit has just been filed, it is too early to say. It is, however, worth noting that the lawsuit was filed in the federal district court in Washington D.C. Appeals from that court go to the U.S. Court of Appeals for the D.C. Circuit. Among the judges on the D.C. Circuit is Janice Rogers Brown, the unabashed libertarian who recently wrote an opinion in a D.C. Circuit case in which she lamented the passing of “cowboy capitalism” and called for judges to aggressively review and overturn economic regulations of all kinds. Another D.C. Circuit judge joined in this radical manifesto, while the third judge on the panel wrote that although he was “by no means unsympathetic” with his colleagues' opinions, he was reluctant to set forth his views. What would these judges think of the challenge to Dodd-Frank, if it reached them?
What of the Supreme Court? The Court's Republican-appointed five-justice conservative majority has been very favorable to corporate interests, and especially to their chief representative, the U.S. Chamber of Commerce. With the end of the Court's term just days away, the Chamber has a perfect record thus far this year. According to the Constitutional Accountability Center:
[T]he Chamber has declared victory in all seven of its cases that have reached a clear outcome ....
This string of seven straight victories brings the Chamber's overall win/loss rate before the Roberts Court up to 68% (60 of 88 cases). As we have reported in prior studies, this is significantly higher than the Chamber's success before the Rehnquist Court of 56% (45 of 80 cases from 1994-2005), and dramatically higher than its success rate before the Burger Court, when the Chamber only won 43% of its cases (15 of 35 from 1981-1986).
There is no way to know if the constitutional attack on Dodd-Frank will gain as much traction as the challenge to health care reform has achieved. But given the powerful media and legal forces that are lined up behind it, it is unlikely to just go away.