Certified Forensic Loan Auditors, LLC

 
  Upcoming Classes

Search CFLA's Article Archive:

Main Street Challenges Dodd-Frank’s Chipping Away at the Constitution

  

spectator.org | February 2, 2015

By John Berlau

“Wall Street Chips Away at Dodd-Frank,” blared a recent front-page headline in the New York Times about bipartisan measures that have passed the U.S. House of Representatives and/or been signed into law that ever-so-slightly lighten the burden of the so-called financial reform rammed through Congress in 2010. “GOP Pushes More Perks For Wall Street...” reads the home page of the Huffington Post under the picture of establishment pillar Jamie Dimon, CEO of JP Morgan Chase.

Yet, what these articles don’t say is that the firms putting their resources on the line to challenge Dodd-Frank in court are the furthest thing from Wall Street high rollers. They are decades-old firms selling stable, time-tested financial products to everyday consumers.

At first glance, the national insurance firm MetLife and the Texas community bank State National Bank of Big Spring might seem to have little in common. But they both are solid financial firms that never took a bailout and never had their hand in the toxic mortgages—spurred on by the government-sponsored enterprises Fannie Mae and Freddie Mac and mandates of the Community Reinvestment Act—that caused the financial crisis.

And now, the firms are both doing their customers and all Americans a favor by bringing suit against Dodd-Frank’s Financial Stability Oversight Council (FSOC), one of the many opaque entities in Dodd-Frank that lack accountability to Congress and the public.

In its lawsuit filed January 13 of this year, MetLife raised many of the same constitutional issues as did State National Bank in its pending legal challenge brought in 2012 in collaboration with the Competitive Enterprise Institute, at which I work. CEI and the conservative seniors group 60 Plus Association are co-plaintiffs with the bank, and CEI attorneys are working with the esteemed C. Boyden Gray—the former White House Counsel—in providing representation to the parties.

In an open letter to its customers that ran in full-page ads in the New York Times, Washington Post, and Wall Street Journal, MetLife CEO Steven Kandarian explained his objections to the firm being designated as a “systemically important financial institution,” or SIFI, by FSOC. “We do not believe MetLife poses systemic risk, and we are concerned that our designation will harm competition among life insurers and lead to higher prices and less choice for consumers.” In that sense, a court victory for MetLife would greatly benefit the public as well.

To its credit, MetLife is rejecting not only the burdens of being designated a SIFI but also the benefits—benefits that seem to be eagerly embraced by both MetLife’s competitors (such as the infamous AIG) as well as the biggest banks. Being designated a SIFI means the federal government considers MetLife to be “too big to fail,” making it subject to the same Dodd-Frank bailout regime set up for big Wall Street banks like Goldman Sachs and JPMorgan Chase.

As CEI, 60 Plus Association, and the State National Bank argue in our legal challenge to the Dodd-Frank Act, the SIFI designation confers on a firm a strong competitive advantage, as investors and creditors know the government won’t let it fail.

We argue that the tiny State National Bank “is injured by the FSOC’s official designation of systemically important nonbank financial companies, because each additional designation will require the Bank to compete with yet another financial company—i.e., a newly designated nonbank financial company—that is able to attract scarce, fungible investment capital at artificially low cost.”

But MetLife recognized that these privileges of being a SIFI also come at a cost of overhauling its successful business model due to heavy-handed regulation. And unlike its competitors, it decided that this cost wasn’t worth the benefits of being “systemically important.”

Fred Smith, CEI’s founder and director of our Center for Advancing Capitalism, says of the decision to challenge Dodd-Frank by both MetLife and the State National Bank, “We should all be grateful that capitalists both small and large have decided they would rather be free than wards of the state, and have become aware that protection from failure comes at the cost of preventing success.”

As I have written in the Hill, the Federal Reserve has interpreted other provisions of Dodd-Frank as imposing on insurance companies with a small thrift operation—or even those, like MetLife, without any banking component but deemed a SIFI by the FSOC—the same capital standards as banks. This includes the controversial international Basel III capital rules, which are costly and counterproductive for banks, but absolutely absurd—according to nearly all recognized experts—for insurance companies.

Imposing Basel and other bank-like capital standards on insurers would raise costs for life-insurance consumers by $5 billion to $8 billion, according to the economic consulting firm Oliver Wyman. These costs could hit policyholders through both higher premiums and reduced benefits. And some policies simply could become unavailable as insurers “exit certain product lines,” the Oliver Wyman study found.

MetLife, other insurers, and their policyholders may get some relief now that during the lame duck session Congress passed a law — the Insurance Capital Standards Clarification Act — making it clear that the Fed has the authority to not impose bank capital regulations on insurers. But it’s unclear whether the Fed, some of whose officials are members of the FSOC, will use its new discretion to grant insurers this relief.

In the meantime, FSOC exercises its power secretively and without accountability. This is by Dodd-Frank’s design as the law specifically exempted FSOC from open meetings laws and gave it lots of escape clauses from the Freedom of Information Act (FOIA). And this lack of transparency is becoming contagious among agencies enforcing Dodd-Frank.

MetLife notes in its court filing that after sending ten FOIA requests about the designation to FSOC, the Federal Reserve Board, the Federal Insurance Office, and the Federal Housing Finance Agency, “FSOC and FIO did not produce a single document; FHFA produced a single, heavily redacted document; and [the Fed] produced 241 pages of documents that were already publicly available.”

MetLife argues that this opacity constitutes part of a blatant denial of its constitutional due process “right to be heard and respond fully and meaningfully to the flaws in FSOC’s designation determination.” The firm further argues, as CEI and the State National Bank do, that the structure of FSOC’s violates the “separation of powers” by combining executive, legislative, and judicial functions with limited input from Congress and very limited judicial review.

Rather than the headline reading “Wall Street Chips Away at Dodd-Frank,” the real headline should read “Main Street Fights Dodd-Frank’s Chipping Away at the Constitution.” And the fight for financial freedom has only just begun.

 

Back to February 2015 Archive

CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

SEE BELOW- http://www.certifiedforensicloanauditors.com

Call us toll free at 888-758-2352

Bookmark and Share
spacer
Facebook Like us on Facebook
Twitter Follow us on Twitter
YouTube View our YouTube Videos
LinkedIn Connect to us on Linkedin
 
BBB Logo

 

spacer
Contact us or view our Sample Documents & Audits by completing the form below.

  • Reload
  • Should be Empty:


 

DVD Sets Only $99

 

FREE Mortgage Fraud Analysis

 

Order Cutting-Edge Services Now

 

Quiet Title Packages from Licensed Attorneys

 

Affiliate Services

 

CFLA Sponsored Attorney Links

 

Take-Home Education Package

 

ALB Law Firm

 

Advocate Legal

 

The True News Network

 

Sutton Law Firm, P.L.L.C.

 

Rubenstein Business Law

 

Atighechi Law Group

 

Scunziano & Associates

 

Get Certified to Perform Mortgage Securitization Audits

 

CFLA Training Academy

 

Expert Witness Services

 

Cutting Edge Expert Securitization Reports

 

CFLA Credit Cards

 

Breaking News

 

Letters to the Editor

 

CFLA Weekly Newsletters

 

Code of Ethics

 

Testimonials

 

Instructional Videos

 

Job Opportunities

 

License Opportunities

 

MARS Rule

 

Product Samples

 

Resource Links

 

Servicer Information

 

Foreclosure Laws

 

REST Report

 

Quiet Title Packages from Licensed Attorneys

 

Advertise on CFLA

 

Advertising Space: Mortgage Securitization, Quiet Title

 

Certified Forensic Loan Auditors, LLC
13101 West Washington Blvd.
Suite 444
Los Angeles, CA 90066

Phone: 832-932-3951
Toll Free: 888-758-CFLA (2352)
Mobile Users: CLICK TO CALL
info@certifiedforensicloanauditors.com

   
 
CFLA IS NOT A LAW FIRM AND DOES NOT PROVIDE ANY LEGAL ADVICE. CFLA DOES NOT OFFER FORECLOSURE CONSULTING OR FORECLOSURE RELIEF
SERVICES. CFLA DOES NOT OFFER OR ASSIST WITH ANY LOAN MODIFICATION SERVICE. CFLA ALWAYS RECOMMENDS THAT CLIENTS RETAIN COMPETENT COUNSEL IN THEIR RESPECTIVE JURISDICTION. CFLA HAS A FREE PROGRAM TO REFER CFLA CLIENTS TO LAW FIRMS IN NEARLY EVERY STATE AND CFLA
DOES NOT CHARGE OR OBTAIN REFERRALS FEES FOR THESE SERVICES. SERVICES NOT OFFERED TO RESIDENTS OF THE STATE OF NEVADA.

 
Home About Us Privacy Policy Terms of Service Disclaimer SERVICES Careers Contact Us
 
COPYRIGHT © 2007-2016 Certified Forensic Loan Auditors ™ All rights reserved