- Air Force cadets ‘revolt’ after officials remove biblical verse from whiteboard
- Rep. Lee: Paul Ryan out of touch with urban Americans
- House votes down resolution to force Issa to apologize
- Kremlin blocks opposition websites; Kasparov fears Putin plans ‘something drastic’
- Saving trees? EPA wastes $1.5 million storing unneeded pamphlets in warehouse
- Scott Brown Senate bid in New Hampshire may launch soon
- Jeffrey Corzine, son of ex-N.J. governor, dead at 31
- Australian surfing magazine sorry for calling indigenous surfer ‘apeish’
- Records: Man in Fla. theater shooting also was texting
- The Putin problem: U.S. needs Russian rockets for spy satellites
GRAY: No checks, no balance in reform law
The attention paid to the meetings over the weekend in Basel, Switzerland, to set new bank capital standards should raise a question about the purpose of the recently enacted Dodd-Frank financial reform legislation: If bank capital rules are the most important protection against banks' potential contribution to any new economic meltdown, and reform of Fannie Mae and Freddie Mac and related government housing-policy rules, so far ignored by Congress and the White House, are the most important government reforms — what is the point of 800 pages of new regulatory authority in Dodd-Frank?
A quick look at arguably the two most important provisions — the functions of the new Financial Stability Oversight Council and the new Consumer Financial Protection Bureau — will illustrate that the grants of power are so broad and ill-defined that the purpose of the new law is essentially whatever these two new entities say it is, unchecked by any real judicial, congressional or even White House oversight.
The sweeping breadth of the new law poses a profound violation of the core constitutional principles of separation of powers. Central to the protection against the dangers of big government is the fundamental principle that Congress cannot enact — and the president should not sign nor the Supreme Court approve — a law that combines executive authority with the functions of both the legislature and the judiciary, thus eliminating all of the checks and balances incorporated into the Constitution.
Critics will be quick to point out that the Supreme Court has not directly used the separation of powers since the famous 1930s Schecter Poultry case, which threw out the notoriously sweeping National Recovery Act as an unconstitutional combination of legislative and executive power. But that was such an important and clear case that Congress has never again proposed anything as sweeping as the National Recovery Act, and the Supreme Court has always stepped in to narrow any legislation that even comes close to the breadth of the National Recovery Act.
What are the problems?
In two words, no limits. The Stability Council has the authority to require the Federal Reserve Board to supervise otherwise unregulated non-bank financial companies pursuant to heightened but undefined standards without any guiding principles from Congress other than the council's own determination that the "nature, scope, size, scale and/or mix of the activities" of the company "could pose a threat" to the financial stability of the United States.
There is little a court could do to supervise the exercise of this authority because the vague pretext for regulating — the "scope," or "nature" or "mix" of activities — incorporates no guiding standard. But just in case the Supreme Court were to try to interpret the statute to contain limiting principles, as it has frequently in the past, the statute expressly allows the courts to reverse the council only if it is found to be "arbitrary and capricious," a standard that itself has no meaning if divorced from legal or constitutional considerations that the statute forbids the courts to consider.
The Consumer Bureau is only worse. It has the authority to implement all consumer-related laws involving finance in any way it sees fit only so long as it is ensuring that "all consumers have access to markets for consumer financial products" and that consumer financial markets are "fair, transparent, and competitive." It can rewrite the laws of some 18 specified statutes pursuant to no standard more defined than above, and has the exclusive authority to override the agencies originally put in charge of implementing these statutes — and be given the same deference by the reviewing courts "as if the Bureau were the only agency authorized" to implement them.
The courts have limited review authority — because (as noted above) they must defer to the bureau as though it were the only agency assigned the task of implementing all 18 consumer laws. More importantly, the statute gives the bureau independent funding forever from the Federal Reserve Board itself, directing that these funds from the Fed "shall not be subject to review by the Committees on Appropriations of the House of Representatives and the Senate."
Thus, the normal safety valve of a congressional direction to limit funding for specific actions by the bureau will be totally unavailable. And neither the Federal Reserve nor the White House can affect anything the bureau does.
These statutory directions of severely limited judicial review, ousted congressional direction and White House exclusion present as stark and sweeping a violation of the constitutional separation of powers as can be imagined. The problem is not just the elimination of the lines between the three branches of government. It is that by eliminating these lines, the statute also blurs the line between the government and anyone engaged in finance — with totally unknown consequences to competition and free markets.
• C. Boyden Gray is a former U.S. ambassador to the European Union.
© Copyright 2014 The Washington Times, LLC. Click here for reprint permission.
TWT Video Picks
By Bob Dole
The industrious island has proved itself worthy of U.S. inclusion
- FBI blocked in corruption probe involving Sens. Reid, Lee
- F-35 secrets now showing up in Chinas stealth fighter
- USS Kidd sent to Indian Ocean after 'indication' of Malaysian jet crash
- MILLER: Law enforcement realizes good people with guns deter crime
- U.S. pilot scares off Iranians with 'Top Gun'-worthy stunt: 'You really ought to go home'
- CURL: Calm down, conservatives: Obama's 'Two Ferns' bit was brilliant
- Rep. Sheila Jackson Lee claims Constitution is 400 years old
- Bill Clinton poses for photo with Bunny Ranch prostitutes
- NRA shirt gets N.Y. high school student suspended
- PRUDEN: Sink sank own campaign in Florida special election
Chaos as Manhattan building explodes
Pope Francis meets his 'mini-me'
Celebrity deaths in 2014
Winter storm hits states — again