Three state attorneys general have joined a case challenging the constitutionality of the Dodd-Frank Act, American Banker reported Sept. 24. AGs from Michigan, Oklahoma and South Carolina filed an amended complaint to the suit initiated by a Texas bank.

The State National Bank of Big Spring in Texas originally filed suit in federal court in June, arguing that the creation of and powers given to the Consumer Financial Protection Bureau, an agency established under Dodd-Frank, are unconstitutional, as was the recess appointment of Richard Cordray as its head.

The three state attorneys general who joined the suit have expanded the unconstitutionality argument, alleging that Dodd-Frank’s methods for unwinding large financial institutions violate the Constitution, American Banker reported.

“The fact that AGs are bringing it gives it more credibility than if it just came from a standalone bank in Texas,” Ralph “Chip” MacDonald III, a partner at law firm Jones Day in Atlanta, told American Banker. “They’re committing their states’ funds and reputation to it.”

The AGs’ filing focused on Title II of Dodd-Frank, which they said gives the U.S. Department of the Treasury excessive authority to target failing financial firms while also allowing the Federal Deposit Insurance Corp. to favor certain creditors when resolving cases without sufficient oversight from third parties. “Title II of the Dodd-Frank Act empowers the Treasury secretary to order the liquidation of a financial company with little or no advance warning,” the new complaint states, American Banker reported.

“Our challenge in this case is not necessarily just about the effects on the financial system,” Oklahoma Attorney General Scott Pruitt told American Banker. “It’s about the fundamental concept of making sure our constitutional framework is upheld.” He said that he viewed Dodd-Frank as a way for Washington to further concentrate power over the nation’s financial system.

Some legal analysts said the new complaint doesn’t have teeth because the process for dismantling a firm under Title II strongly resembles existing FDIC procedures, which have never been found to be unconstitutional. Former FDIC General Counsel Michael Krimminger, an attorney with Cleary Gottlieb Steen & Hamilton LLP, told American Banker that “Regulators have an interest in the orderly resolution of such extensively regulated companies in the public interest.”

Krimminger further stated that “Title II is an option where the application of the bankruptcy code would have created systemic consequences. This is only a situation where the company would otherwise be resolved under bankruptcy.”

The political importance of the case, however, cannot be ignored, as the states’ interest in the lawsuit shows how unpopular Dodd-Frank remains. “Some of these elements of Dodd-Frank probably weren’t debated enough in Congress,” MacDonald told American Banker.