My highlighted PDF copy of Dodd Frank (1) notes that Section
619 (“Volcker Rule”) runs from pages 246-257. Thus, it’s
619 (“Volcker Rule”) runs from pages 246-257. Thus, it’s
11 pages long.
It truly captures the imagination and attention then, when:
“On July 17, 2018, the Agencies published in the Federal Register
a notice of proposed rulemaking (proposal) that would amend
the regulations implementing section 13 of the Bank Holding
Company Act. Section 13 contains certain restrictions on the ability
of a banking entity and nonbank financial company supervised by
the Board to engage in proprietary trading and have certain
interests in, or relationships with, a hedge fund or private equity
fund. The proposed amendments are intended to provide banking
entities with clarity about what activities are prohibited and to
improve supervision and implementation of section 13.
a notice of proposed rulemaking (proposal) that would amend
the regulations implementing section 13 of the Bank Holding
Company Act. Section 13 contains certain restrictions on the ability
of a banking entity and nonbank financial company supervised by
the Board to engage in proprietary trading and have certain
interests in, or relationships with, a hedge fund or private equity
fund. The proposed amendments are intended to provide banking
entities with clarity about what activities are prohibited and to
improve supervision and implementation of section 13.
In response to requests from commenters regarding issues addressed
in the proposal, the public comment period has been extended for
30 days until October 17, 2018.” (2)
in the proposal, the public comment period has been extended for
30 days until October 17, 2018.” (2)
To summarize, by extending the time to comment on the proposed
amendments, interested parties would have more time to review and
analyze the somewhat lengthy proposal on proposed changes to the
“Volcker Rule”.
amendments, interested parties would have more time to review and
analyze the somewhat lengthy proposal on proposed changes to the
“Volcker Rule”.
However, rather than analyzing the proposal, I found myself
considering whether an argument can be made to strike section 13
of the Bank Holding Company Act (entirely or otherwise) on the
basis of the constitutional doctrine of “Unconstitutional
Vagueness” (3).
considering whether an argument can be made to strike section 13
of the Bank Holding Company Act (entirely or otherwise) on the
basis of the constitutional doctrine of “Unconstitutional
Vagueness” (3).
To construct a framework for such an inquiry, one must parse the
task into two sequential legal analyses; let’s call them 1.) a
threshold question and 2.) a substantive question.
task into two sequential legal analyses; let’s call them 1.) a
threshold question and 2.) a substantive question.
The Threshold question is:
Is section 13 of the Bank Holding Company Act (ie Section
619 Dodd Frank, ie “The Volcker Rule”) subject to constitutional
review (4)?
619 Dodd Frank, ie “The Volcker Rule”) subject to constitutional
review (4)?
The Substantive question is:
Is section 13 of the Bank Holding Company Act (ie Section 619
Dodd Frank, ie “The Volcker Rule”) vague and if so,
Dodd Frank, ie “The Volcker Rule”) vague and if so,
Does it rise to the level of “Unconstitutional Vagueness”?
The 1st question is important because if the answer to it is not
“yes” there is no point in going to the 2nd question. (IE, “even
if it is unconstitutionally vague, the doctrine is not applicable
bc…” is a contingency we have considered from the outset.)
“yes” there is no point in going to the 2nd question. (IE, “even
if it is unconstitutionally vague, the doctrine is not applicable
bc…” is a contingency we have considered from the outset.)
In order to reflect on the threshold question, we should consider
relevant Supreme Court caselaw that addresses when and
whether legislation is subject to constitutional review.
relevant Supreme Court caselaw that addresses when and
whether legislation is subject to constitutional review.
The seminal caselaw on judicial review is Marbury v. Madison, 5
U.S. 137, (1803) which established judicial review. Incidentally, it’s around five pages long.
U.S. 137, (1803) which established judicial review. Incidentally, it’s around five pages long.
The readers of this blog post are encouraged to more profoundly consider what arguments
may exist for and against our threshold question of whether Dodd Frank generally or the
Volcker Rule specifically is subject to judicial review.
may exist for and against our threshold question of whether Dodd Frank generally or the
Volcker Rule specifically is subject to judicial review.
Okay, 2nd question :)
Is Volcker vague?
If it is vague, does such vagueness rise to the level of
unconstitutional vagueness, such that it should be struck down, ala
Marbury v Madison?
unconstitutional vagueness, such that it should be struck down, ala
Marbury v Madison?
With regard to our 2nd question, it’s important to understand why
the doctrine of unconstitutional vagueness exists in the 1st place.
It’s about due process, which is super important in our judicial system.
the doctrine of unconstitutional vagueness exists in the 1st place.
It’s about due process, which is super important in our judicial system.
Here is an excerpt from an early 20th century tobacco case:
Collins V Kentucky 234 U.S. 634, 637 (1914):
“no standard of conduct that it was possible to know; that it
violated the fundamental principles of justice embraced in the
conception of due process of law in compelling men on peril
of indictment to guess”
violated the fundamental principles of justice embraced in the
conception of due process of law in compelling men on peril
of indictment to guess”
In other words, when a law (which when broken leads to enforcement)
has a standard that is unknowable, it is a violation of due process.
Another way to say this is: if it’s impossible to tell whether or not
one has broken the law, that’s just not fair, and thus repugnant to our
system of law.
has a standard that is unknowable, it is a violation of due process.
Another way to say this is: if it’s impossible to tell whether or not
one has broken the law, that’s just not fair, and thus repugnant to our
system of law.
After running some searches, around twenty SCOTUS cases
emerged(5) as those that are oft cited when the courts seek insight
on what the SCOTUS thinks about “unconstitutional
vagueness”. One thing that this short list tells us is that
“unconstitutional vagueness” is a doctrine that the court has not
considered with frequency.
emerged(5) as those that are oft cited when the courts seek insight
on what the SCOTUS thinks about “unconstitutional
vagueness”. One thing that this short list tells us is that
“unconstitutional vagueness” is a doctrine that the court has not
considered with frequency.
Some things to consider when perusing the cases is whether or not
the parties in those cases are anything like the potential parties in
our scenario and also, how analogous (or not) our theoretical
argument is to the facts and circumstances in the various cases.
the parties in those cases are anything like the potential parties in
our scenario and also, how analogous (or not) our theoretical
argument is to the facts and circumstances in the various cases.
Another thing to generally consider is whether, in the absence of
controlling law, a successful case can be brought at all.
controlling law, a successful case can be brought at all.
Again, will leave it to the reader of this blog post to consider
whether a legal challenge of the type above described would be met
with success and what costs and risks(6) would otherwise
attend such an endeavor.
whether a legal challenge of the type above described would be met
with success and what costs and risks(6) would otherwise
attend such an endeavor.
Happy autumn all! 🌇
1. Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203 et seq, (2010) link to act: https://www.law.cornell.edu/topn/dodd-frank_wall_street_reform_and_consumer_protection_act
5.Please see link to case table: https://docs.google.com/spreadsheets/d/1ir9IQ52pchZqGe7RrGUq4pquvRkQYsmloNYw0Huh16Q/edit?usp=sharing
6. Please enjoy: https://www.pokernews.com/strategy/understanding-what-it-means-to-be-pot-committed-20050.htm
