Financial Regulatory Bill Approved by House Gives Feds Power to Subpoena Any Record from Any Financial Institution Without Establishing Any Probable Cause
By Matt Cover
The final version of President Barack Obama’s financial regulatory bill, hammered out in negotations between House and Senate Democrats, contains a provision that grants the federal government the power to subpoena any financial information it wants from any financial institution without showing probable cause that a crime has been committed.
The 4th Amendmnent to the U.S. Constitution says: “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.”
The final bill was approved by the House (237-192) on June 30. It now awaits only a Senate vote to be sent to President Obama for his signature. The goal of the Chris Dodd-Barney Frank Wall Street Reform and Consumer Protection Act is to increase federal regulation the financial services and banking industries.
The subpoena provision in the bill creates the Office of Financial Research and empowers it to collect “any data or information” from “any non-bank financial company or bank holding company” it deems necessary to monitor the nation’s financial system.
“The Council may receive, and may request the submission of, any data or information from the Office of Financial Research, member agencies, and the Federal Insurance Office, as necessary – (A) to monitor the financial services marketplace to identify potential risks to the financial stability of the United States,” the bill reads.
It further states: “The Council, acting through the Office of Financial Research, may require the submission of periodic and other reports from any non-bank financial company or bank holding company.”
The “Council” referred to is the Financial Stability Oversight Council, which is tasked with monitoring the financial industry to ensure that financial firms are not engaging in what government bureaucrats consider risky behavior.
The Office of Financial Research is designed to be the brains of the council, collecting the information necessary for the council to carry out its mission. To do this, the office is empowered to collect information from “any financial company.”
“The Office may, as determined by the Council or by the Director in consultation with the Council, require the submission of periodic and other reports from any financial company,” the proposed law states.
If any financial firm does not agree that the government needs to check into every detail of its business, and does not comply with an order from the Office of Financial Research, the office is empowered to serve the company with a subpoena forcing it to divulge its information.
“GENERAL.-The Director may require from a financial company, by subpoena, the production of the data requested,” by the Office.
A Senate vote on the Dodd-Frank legislation could occur as early as next week.