Home > #OWS, finance > Occupy the SEC, Dodd-Frank, and who has standing in financial regulation #OWS

Occupy the SEC, Dodd-Frank, and who has standing in financial regulation #OWS

October 21, 2013

A bit more than a week ago Akshat Tewery came to my Occupy group to discuss his chapter in the book we wrote called Occupy Finance [1].

Akshat is a member of Occupy the SEC [2] and came to talk to us about a short history of financial regulation, and how impressively well things worked in the middle of the last century, when Glass-Steagall was in effect and before it was gamed.

One thing he mentioned in his fascinating hour-long lecture was this lawsuit which I hadn’t heard about. Namely, Occupy the SEC sued the Federal Reserve, SEC, CFTC, OCC, FDIC and U.S. Treasury over not doing their jobs, specifically for the delay in finishing and implementing the Volcker Rule.

You see, Dodd-Frank is a law, and the Volcker Rule, which is supposed to be something like a modern Glass-Steagall act, is part of it. But the law just outlines the rules, and the regulators are supposed to actually turn that law into regulations which they then implement.

There was a deadline for that, and it has passed. So Occupy the SEC sued to make those guys get the job done.

And guess what? The judge found that they didn’t have standing to sue. I’m no lawyer but from what I can understand this means they were deemed not sufficiently relevant to the implementation of Dodd-Frank. They didn’t have enough skin in the game, in other words. Because they’re just, you know, citizens who care about having a functional regulatory environment. Not to mention taxpayers who have bailed out the banks and want to avoid continuing doing that.

That begs the question, who has skin in the regulation game? Answer: banks being regulated. So only those guys can complain to the courts about the regulation. And obviously their complaints will be different from Occupy the SEC’s complaints.

It seems like whenever I look around I see examples like this, where there are people getting away with crappy policies or even crappier deeds because it has a negative effect, but that negative effect is so dispersed that most people don’t have enough “standing” to sue or to even effectively quantify how they’ve been affected.

And I guess this is the land of class-action lawsuits, but that doesn’t seem sufficient. It really seems like there needs to be legal representation for taxpayers somehow. Who is looking out for the average non-insider? Who is keeping tabs on overall systemic risk? In an ideal world that would exist inside the regulators themselves, but we all know it’s not that ideal.

1. We’re out of copies, but if you don’t have a copy of Occupy Finance but you want one, go to our IndieGogo campaign and donate $10 and you’ll get a copy of the book as a thank you.

2.  Which, if you don’t know, consists of an amazing and wonky group of occupiers who write public commenting letters on financial regulation. Their Volcker Rule comments have made quite an impression on regulators, but they’ve also written numerous amicus briefs on various issues as well. Keep an eye on their work on their webpage.

Categories: #OWS, finance
  1. FogOfWar
    October 21, 2013 at 10:22 am

    You could spend a few days going into the technical aspects of the standing doctrine, but I think you got the core point right on the head.

    Here’s the 1972 case that’s usually cited when teaching standing for those who want to know a bit more:


    Definitely read the section on “Douglas’ Dissent”.

    My only technical nit is that it doesn’t matter how much (quantum) the regulations affect you & me as citizens, the legal point is more that we don’t have the direct nexus of impact that the banks do. So arguing that the Volker rule implementation is really really important to you & me isn’t relevant to a standing discussion.



  2. October 21, 2013 at 10:24 am

    But then how do we make our stakes as citizens part of the discussion?


    • Guest2
      October 21, 2013 at 5:24 pm

      We don’t. Failure to have standing is what was written into Dodd-Frank, apparently. Lobbyists got there first, again, I suppose. Ordinary citizens need not apply. Welcome to our legal system.


  3. FogOfWar
    October 21, 2013 at 10:51 am



  4. FogOfWar
    October 21, 2013 at 10:52 am

    That was somewhat tongue-in-cheek and somewhat true. There are big questions where there simply isn’t standing for ordinary people, or even members of Congress acting outside of their roles voting for Legislation. Article III (the Courts) just doesn’t provide an avenue for these questions–only legislation can make the change…


    • October 21, 2013 at 10:54 am

      Hard to vote pro-financial regulation when neither party discusses financial regulation. But in any case thanks for your perspective.


  5. Mark
    October 21, 2013 at 12:13 pm

    According to the Wikipedia entry offered by FogOfWar, Occupy the SEC could have created legal standing for itself by merely finding a single individual whose injury could plainly be argued. A hunter/fisherman could sue instead of Sierra Club on preservation of a natural tract of land. For example a ordinary depositer to an FDIC-bank-merged-to-Wall-Street would have standing in the case and could be reresented in court with the support of Ocuupy the SEC.

    On another note, cool to see for the first time the actual altbanking.net site. Cool to see the peeps too.


    • October 21, 2013 at 3:13 pm

      Akshat referred us to that Wikipedia article too, so he knows about it and I’m sure tried to argue that case.


    • FogOfWar
      October 21, 2013 at 6:50 pm

      What’s the direct harm caused to the depositor? Their money is still FDIC insured, no financial injury creating a “case or controversy”. It’s difficult in these “failure to regulate” cases. Members of congress have tried, unsuccessfully, to sue in similar situations.

      Also not unique to Dodd-Frank–this is a general judicial doctrine applicable to all legislation.



  6. marble_man
    October 28, 2013 at 10:54 pm

    I agree that regulatory failure is partly to blame for the crisis, but I’m not sure that repealing Glass-Steagall was one of the causes. The article linked below points out that most of the major players in the crisis were either pure investment banks (e.g. Bear Stearns, Lehman Brothers, Merill Lynch), insurance companies (AIG), or in the secondary mortgage market (Fannie/Freddie).

    Targeting derivatives, mortgage standards, and more transparency on bank balance sheets (esp. with regards to securitized assets) might have been some of the regulatory moves that would have mitigated some of the fallout.



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