The primary authors of the Dodd-Frank financial reform law have joined a court fight over one of its central powers.
A group of 20 current and former lawmakers, all Democrats, filed an amicus brief Thursday arguing a judge missed the mark ruling against regulators in a critical test of the law’s powers.
Among those signing on to the effort is former Sen. Chris Dodd (D-Conn.) and former Rep. Barney Frank (D-Mass.).
In the brief, the lawmakers argued that if a district judge’s ruling stands, it would “fundamentally undermine” Congress’s vision for Dodd-Frank as drafted. Both have since retired from office.
"By substituting its own judgment for that of [regulators], the district court undermined not only the statutory scheme that Congress put in place in Dodd-Frank, but also the nation’s ability to prevent another financial crisis,” they wrote.
Other lawmakers signing on to the brief include House Minority Leader Nancy Pelosi (D-Calif.), and Senate Minority Leader Harry ReidHarry Mason ReidHarry Reid calls on Democrats to plow forward on immigration Democrats brace for tough election year in Nevada The Memo: Biden's horizon is clouded by doubt MORE (D-Nev.). Sen. Sherrod BrownSherrod Campbell BrownAmerica can end poverty among its elderly citizens Senate GOP signals they'll help bail out Biden's Fed chair Building back better by investing in workers and communities MORE (D-Ohio), the top Democrat on the Senate Banking Committee, and Sen. Elizabeth WarrenElizabeth WarrenDemocrats narrow scope of IRS proposal amid GOP attacks Overnight Health Care — Presented by Carequest — FDA moves to sell hearing aids over-the-counter FDA proposes rule to offer over-the-counter hearing aids MORE (D-Mass.) were also among the signers.
In March, a federal judge ruled that financial regulators erred in determining that the insurance giant MetLife was a “systemically important financial institution,” or SIFI. Dodd-Frank gave regulators the power to make such designations, which carry with them heightened regulations and oversight.
The Financial Stability Oversight Council, another Dodd-Frank creation that gathers the heads of all major financial regulators and charges them with monitoring the health of the overall financial system, hands out such designations. All the nation’s biggest banks are considered SIFIs, as well as other large companies like General Electric and American International Group.
But some of those designations are in question now, after MetLife mounted the first legal challenge to that process. In her ruling, District Judge Rosemary Collyer claimed the government failed to weigh all the factors in assigning the label. The government appealed the ruling days later.
In its own 98-page brief filed earlier this month, the government argued that Collyer was in the wrong in her ruling, and that the law gives regulators broad powers to monitor the financial system. It also pushed against Collyer’s criticisms that the government failed to consider the likelihood MetLife would fail, or the costs that would come with a SIFI label, arguing those weren’t required by law.
The case is currently pending before a U.S. appeals court.
This post updated at 3:35 pm.