A district court judge in Washington, D.C., threw out Thursday a challenge to the constitutionality of parts of the Dodd-Frank financial reform act. The plaintiffs have pledged to appeal the decision.
The State National Bank of Big Springs, Texas, two advocacy groups, and 11 states sued last year to challenge the constitutionality of several parts of the 2010 Dodd-Frank Act, which overhauled the financial industry.
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Judge Ellen Segal Huvelle, who sits on the U.S. District Court for the District of Columbia, ruled that the plaintiffs do not have the proper legal standing to challenge the law and that the claims are not sufficiently ripe for judicial review.
Boyden Gray, the lead lawyer for the case, called the ruling "deeply flawed" and said that the plaintiffs would appeal.
"State National Bank of Big Spring is a community bank that has served its community for generations," Gray said in a statement, "and it is disturbing that the opinion—and the government—ignored the very real harm Dodd-Frank has inflicted on it and the customers who rely on the bank to provide loans for everything from their home to their small business."
"Similarly, the court's decision misconstrues the real and immediate loss of substantive rights that the states have suffered because of Dodd-Frank," Gray said.
Dodd-Frank creates a new way to liquidate financial institutions that imperils state pensions that are invested in these institutions, Gray argued.
A representative for the Consumer Financial Protection Bureau, a primary defendant in the suit, declined to comment. The Justice Department did not return a request for comment.
Advocates of the law say that it is necessary to prevent another financial crisis similar to the one in 2008.
Critics say it is based on a fundamentally flawed understanding of the crisis and will hurt the economy’s growth.