Seemingly awash in funds and enjoying a surplus of lawyers, state Attorney General Luther Strange joined yet another lawsuit against the federal government Wednesday.
This one, Strange assured taxpayers in a press release distributed the same day, was essential to protect Alabamians from arbitrary federal “decisions that will affect Alabama families and businesses.”
The suit attacks the constitutionality of the Dodd-Frank Act, which Strange called “Obamacare for the financial sector.” There is no logical relationship between the two laws, but apparently he hopes to tap into popular resentment of the Affordable Care Act, also signed by President Barack Obama.
While Strange’s press release focuses on the law’s alleged delegation to U.S. finance officials of the ability “to liquidate banks with only 24 hours’ notice and no notice to creditors or shareholders,” one of the main challenges in the lawsuit is against the Consumer Financial Protection Bureau.
The law is imperfect, but its purpose was to prevent another financial meltdown. A major cause of the recession was deregulation of financial institutions during the administration of former President George W. Bush. In a race for short-term profits and ever-larger bonuses, bank officials took reckless actions that led to a near collapse of the banking system in late 2007 and triggered a recession that cost thousands in Alabama their jobs and their homes.
Before taking office, Strange was a registered Washington lobbyist for clients that included Mortgage Bankers Association of America, Wachovia Bank and Bank of Alabama.
In case Strange is worried, the financial wizards of Wall Street are doing fine. They have recovered nicely from the recession they helped to start. It is the rest of the people — especially in Alabama, with a 18 percent poverty rate and a median per-capita income of $22,711 — who continue to struggle.
Dodd-Frank is an annoyance to banks, including the Texas bank that initiated the suit Strange joined. It requires banks and other financial institutions to be more transparent than they would like. It also takes steps to prevent a domino effect that destroys multiple banks, crippling the economy, when one fails. Many experts believe Dodd-Frank is not nearly stringent enough.
The law also created the Consumer Financial Protection Bureau, the sole function of which is to protect consumers from unfair financial practices. Some in Congress are frustrated because they want more control over the bureau, and no wonder. The bureau protects consumers from the same financial institutions that lavish campaign contributions on members of Congress.
Strange’s suggestion that his latest lawsuit against the federal government is designed to benefit Alabama families is insulting. Faced with a decision on whether to support the financial institutions that helped cause the economic crisis or the consumers who suffered most, the former lobbyist sided with Wall Street. The greatest irony is that any litigation costs will be borne by the struggling Alabama residents that Dodd-Frank was designed to protect.