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Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every

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Speaker 1: day we bring you insight and analysis into the most

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Speaker 1: important legal news of the day. You can find more

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Speaker 1: episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud,

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Speaker 1: and on Bloomberg dot com slash podcasts. Yesterday, the US

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Speaker 1: Senate took the most concrete steps so far to rollback

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Speaker 1: rules adopted in the wake of the two thousand eight

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Speaker 1: financial crisis by passing a bill amending the Dodd Frank

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Speaker 1: Act and providing considerable regulatory relief to smaller lenders such

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Speaker 1: as regional and community banks the name's sake of the

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Speaker 1: Dodd Frank Bill. Former Congressman Barney Frank spoke with Bloomberg

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Speaker 1: about the proposed Senate changes last Tuesday. Um, I I

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Speaker 1: think some of the critics in the Laptop being too our.

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Speaker 1: It has one good thing. If this bill passes, that's

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Speaker 1: the end of the debate over the over the financial

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Speaker 1: reform bill. In other words, yes, this film makes changes

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Speaker 1: the cup but which I don't like. But by the

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Speaker 1: very fact that it doesn't change almost everything else, it's

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Speaker 1: going to confirm them. Joining us is Robert Hockett, a

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Speaker 1: professor at Cornell University Law School. Bob, what's your reaction

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Speaker 1: to what Barney Frank said about this bill being the

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Speaker 1: end of the debate over the financial of over financial reform.

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Speaker 1: H Well, thanks so much for having me on. So

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Speaker 1: I'm gonna surprise you, uh, in one sense, I think

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Speaker 1: and say that I actually kind of agree with Barney

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Speaker 1: Frank on this one. That being said, I do nevertheless

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Speaker 1: think it's a good idea for the Senators, and I'm

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Speaker 1: sorry the Dems in the Senate who object to the

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Speaker 1: change to kind of keep sounding the alarm, because this

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Speaker 1: is not the end of it, right. We now have

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Speaker 1: Representative Henzerling's bill over in the House to be reconciled

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Speaker 1: with this one, and that one is far more radical.

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Speaker 1: And so I think by kind of maintaining, you kind

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Speaker 1: of holding the line as they are in the Senate,

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Speaker 1: the progressive Dems there are i think, signaling that we

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Speaker 1: won't go any fur. They're by way of retreat from God. Frank. Bob,

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Speaker 1: what are the core changes in the Senate bill? Frank? Yeah, so,

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Speaker 1: on the surface, um, you might say the optics are

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Speaker 1: especially bad. On the surface, they look pretty extensive, But

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Speaker 1: then when you look sort of underneath, they're not nearly

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Speaker 1: as bad as one might thought or expected. Again getting

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Speaker 1: given to sort of control right in the in the house.

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Speaker 1: So first of all, the old Siffy threshold of fifty

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Speaker 1: billion has been raised to two hundred fifty. Now at

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Speaker 1: first that sounds quite remarkable, right. It essentially releases about

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Speaker 1: two thirds of the large banks from sort of fifty designation. Uh.

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Speaker 1: And in that sense, you know, optically, that looks terrible.

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Speaker 1: They would have been a much better way to do

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Speaker 1: this if you wanted to sort of differentiate between the

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Speaker 1: mega banks and they're not so megabanks, you might have

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Speaker 1: raised it to a hundred or hundred fifty or something.

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Speaker 1: On the other hand, again, under the surface, things aren't

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Speaker 1: quite as bad as they might look. Because the thing is,

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Speaker 1: the Fed retains the discretion to regulate the banks that

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Speaker 1: are under that new cify side size but still above

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Speaker 1: tend above a two billion in the same way that

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Speaker 1: it has. It's just that it's not required by legislation

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Speaker 1: to do so. So things might very well stay the

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Speaker 1: same if the said makes prudent decisions about how best

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Speaker 1: to regulate those sub dollar banks that are still over

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Speaker 1: fifty billion dollar branks now shared Brown. Other senators, Progressive

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Speaker 1: senators like Elizabeth Warren, have warned that these changes would

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Speaker 1: harm consumers and increase risk in the financial system. Do

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Speaker 1: you see that from this particular bill, Well, they certainly

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Speaker 1: opened the door to that possibility. Um. At the same time, however,

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Speaker 1: possibility itself is probably a little bit remote at this point.

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Speaker 1: So take two examples, UM, some of the underwriting, some

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Speaker 1: of the mortgage underwriting standards for banks under ten billion,

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Speaker 1: the so called community banks have been sort of rendered

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Speaker 1: a bit less stringent than they were made after that

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Speaker 1: of course, sounds terrible on the surface and a end

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Speaker 1: it's potentially dangerous, But there's a condition attached, um that

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Speaker 1: actually some extats a significant extent and mitigates the risk.

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Speaker 1: And that is that that particular relief is only afforded

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Speaker 1: the smaller banks if they're not selling on selling their

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Speaker 1: mortgages off to securitizers or to g S e s. Right.

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Speaker 1: In other words, UM, they enjoy that particular relief only

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Speaker 1: if they are not in effect communicating their possibly risk

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Speaker 1: your mortgages to the wider financial system. Now, of course

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Speaker 1: it could still imperil those banks, but because they're smaller.

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Speaker 1: When they're under ten billion, things look a little bit

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Speaker 1: less dangerous than you might initially have thought. So that's

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Speaker 1: not to say that I endorsed the change. I'm just

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Speaker 1: just I'm just saying that it's not quite as awful

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Speaker 1: as one might have fraught or expected. Sort Of similarly

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Speaker 1: with the Bulker rule. Right that the under ten billion,

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Speaker 1: the so called community banks are getting relief from the

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Speaker 1: so called Broker rule, and on the surface set doesn't

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Speaker 1: look very good either. Right. On the other hand of

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Speaker 1: the backstory here is that the smaller community banks don't

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Speaker 1: tend to do a lot of trading securities anyway, so

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Speaker 1: it's not altogether clear that the Folker rule would have

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Speaker 1: been making that much difference, Whereas the so called compliance

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Speaker 1: costs to sort of documenting what you're doings to show

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Speaker 1: that you're in compliance with Polker has been have been

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Speaker 1: perhaps a bit higher for the lower I mean for

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Speaker 1: the smaller banks at least as a proportion of their

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Speaker 1: total expenditures than they have to the larger banks. You

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Speaker 1: mentioned House Financial Services Committee Chairman Jeb Hensling, who has

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Speaker 1: said he wanted to include bigger revisions. Yeah, then we're

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Speaker 1: passed by the Senate. What is he referring to? What

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Speaker 1: has he had? What does he have in mind? Um,

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Speaker 1: he thinks have quite a few things in mind, and

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Speaker 1: in my view, almost all of them are are quite

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Speaker 1: irresponsible and indeed reckless. I mean, one case in point is, uh,

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Speaker 1: he actually wants to give um a a sort of

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Speaker 1: a regulatory pass to a number of very large private

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Speaker 1: equity firms that sort of build themselves as so called

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Speaker 1: business development companies. UM. So what they're essentially, what these

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Speaker 1: firms do is they're basically private private equity firms that

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Speaker 1: pretend to be doing and maybe sometimes actually far doing, um,

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Speaker 1: sort of venture capital type raising for small businesses. And

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Speaker 1: then they say, oh, you know, we're being up the

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Speaker 1: job creators and so forth. Um. But it's it's very

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Speaker 1: easy to sort of say that you're doing that and

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Speaker 1: nevertheless engage in very risky lending practice or risky investment practices.

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Speaker 1: And so it makes sense that firms like this would

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Speaker 1: be overseen by the regulators, and the idea of just

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Speaker 1: sort of letting them free, you know, sort of putting

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Speaker 1: them loose of all regulations, simply onto the pretext that

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Speaker 1: they are so called job creator business development companies. I

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Speaker 1: think it's just again highly highly risky, I mean highly reckless.

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Speaker 1: UM a lot of other things that ten really wants

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Speaker 1: to do as well. I think, at last last I checked,

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Speaker 1: he wants to remove even the FED discretion to regulate

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Speaker 1: the under two billion but above fifty billion dollar banks

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Speaker 1: as cities. UM wants to sort of cut back, in

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Speaker 1: other words, on the regulator's capacity to apply enhance potential

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Speaker 1: regulations to banks when they aren't really freshly. We'll have

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Speaker 1: to stop there and wait until he actually proposes these

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Speaker 1: things and talk again. Thanks as always. That's Robert Howckett, Professor,

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Speaker 1: Cornell University Law School. Is the world's most popular weed killer. Toxic.

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Speaker 1: More than seven hundred farmers, landscapers, and gardeners are suing Monsanto,

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Speaker 1: claiming that exposure to the glypha sate in round Up

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Speaker 1: gave them cancer. In a pre trial hearing, the San

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Speaker 1: Francisco judge overseeing all three hundred of the federal cases

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Speaker 1: against Monsanto said that the opinions of the experts testifying

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Speaker 1: against Monsanto are quote shaky, potentially devastating development for the

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Speaker 1: cases getting to trial. Joining me is Jane Eggan, a

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Speaker 1: professor at Widener University Delaware Law School. Gene first explained

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Speaker 1: the basis of the lawsuits against Montsanto. What are they about, Well,

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Speaker 1: essentially their toxic tort lawsuits. They're brought by various farmers, landscapers,

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Speaker 1: gardeners against the company claiming that they developed cancer as

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Speaker 1: a result of being exposed to round up. During relatively

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Speaker 1: long period of time, Federal Judge Vince Chabria heard about

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Speaker 1: from about a dozen witnesses, including epidemiologist, toxicologist, statisticians, and

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Speaker 1: an oncologist to decide who should be allowed to testify

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Speaker 1: as experts before a jury. What was he looking for

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Speaker 1: to make this determination, Well, essentially, this kind of hearing

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Speaker 1: is twofold UM. The first part that has to be

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Speaker 1: decided first is whether the expert evidence of causation of

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Speaker 1: one or both parties is admissible at trial under the

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Speaker 1: rules of evidence, And because the plaintiffs have the burden

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Speaker 1: of proof, their evidence is going to be the most

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Speaker 1: key in the UH this initial stage. UH. Second, after

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Speaker 1: determining that, the court will look at what the judge

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Speaker 1: has seemed to be admissible evidence and determine whether there's

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Speaker 1: a genuine issue of material fact that needs to go

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Speaker 1: to the fact finder. Uh. If, on the other hand,

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Speaker 1: no reasonable jury could find for the plaint if, then

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Speaker 1: the action will be dismissed. So the key to admissibility

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Speaker 1: is essentially a two part test, which is that the

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Speaker 1: scientific evidence that it forms the basis for the expert's

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Speaker 1: testimony must be both reliable and relevant. Reliability essentially means

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Speaker 1: that it's scientifically sound based on a reliable technique such

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Speaker 1: as epidemiology, which this is. But there can be other

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Speaker 1: problems that are associated with reliability, such as what the

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Speaker 1: Supreme Court has caused called an analytical gap between what

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Speaker 1: the studies actually show and what the expert testifying for

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Speaker 1: the party is concluding about it. And this seems to

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Speaker 1: be one of the things that the judge is particularly

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Speaker 1: concerned about with regard to the plaintiff's evidence. In fact,

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Speaker 1: as you suggested, he's telegraphed through his comments that he's

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Speaker 1: skeptical of the plaintiff's expert evidence, but I think he's

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Speaker 1: stopped short of saying that it is not admissible at

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Speaker 1: least at this juncture, without knowing or looking into the

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Speaker 1: evidence a little bit more closely. UM, because he has

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Speaker 1: suggested that uh, he has correctly I correctly stated that

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Speaker 1: it is not up to him to weigh this evidence

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Speaker 1: to decide whether roundup can cause cancer. It is rather

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Speaker 1: up to him to decide what is reliable enough to

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Speaker 1: get to the jury. So the toxicity of this herbicide

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Speaker 1: has been debated by scientists worldwide for more than thirty years.

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Speaker 1: What came out during this hearing to lead the judge

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Speaker 1: to say that the evidence that glypha sate is currently

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Speaker 1: causing non Hodgkins lymphoma in human beings is pretty sparse. Well,

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Speaker 1: I think the first thing is that the defendants are

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Speaker 1: that Monfanto is relying on a relatively newly published study,

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Speaker 1: very newly published study about agricultural workers that looked at

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Speaker 1: fifty four thousand agricultural workers and uh stated or concluded

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Speaker 1: that round up does not where glyphosate does not cause cancer.

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Speaker 1: So I think there's the weight of that, But again,

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Speaker 1: the court is not supposed to look at the weight

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Speaker 1: of it. Um he the judge, I think, was particularly

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Speaker 1: concerned with the failure of the plaintiff's attorney to are

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Speaker 1: the plaintiffs expert to actually account for confounding factors and

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Speaker 1: the studies that the plaintiffs were relying on and these

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Speaker 1: confounding factors were things like multiple pesticide exposures among the

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Speaker 1: people who were tested. So I think that this this

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Speaker 1: is really the first, very close and comprehensive look at

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Speaker 1: what we know about glycis sate. And I have to

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Speaker 1: say it's really startling to me that after thirty years,

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Speaker 1: we really know relatively little. And even the judge said,

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Speaker 1: we don't know whether it causes cancer. Well, let me

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Speaker 1: let me just ask you this because our reporter who

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Speaker 1: has been covering the trial said the judge gave a

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Speaker 1: strong indication that beat Rits, a public health professor at

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Speaker 1: U c l A, maybe the only witness he allows

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Speaker 1: to testify for the plaintiffs, and that even she's at

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Speaker 1: risk of being eliminated. Wouldn't that basically destroy the plaintiffs

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Speaker 1: cases if they didn't have expert witnesses. Absolutely yes, and

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Speaker 1: it probably would destroy the case. On a summary judgment

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Speaker 1: motion to dismiss before trial, Uh, if if your evidence

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Speaker 1: can't get in, if your plaintif your evidence can't get in,

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Speaker 1: then mon Santo wins dismissal, which would have an enormous

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Speaker 1: impact on this litigation. This is a multi district litigation,

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Speaker 1: which um is which means that all such cases in

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Speaker 1: the federal courts against Montfanto for exposure to glife of

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Speaker 1: faith have been transferred to this particular judge in the

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Speaker 1: Northern District of California's So uh, if the judge determines

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Speaker 1: the plaintiff's evidence can get in uh, the result would

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Speaker 1: apply to all cases. And there's upwards of three seventy

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Speaker 1: cases here. Let's talk about the judges influence not only

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Speaker 1: on these multi district cases, but thousands of other state

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Speaker 1: court cases against Montsanto across the country. He was joined

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Speaker 1: by a judge from Oakland who's handling hundreds of state claims,

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Speaker 1: and he invited other judges across the US handling thousands

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Speaker 1: more state court cases to make these proceedings part of

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Speaker 1: their record. So that's a lot of influence for one judge. Well, yes,

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Speaker 1: and UH that's a good point, um that he is

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Speaker 1: trying to make his hearing part of the record for

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Speaker 1: all of those state proceedings around the country. But I

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Speaker 1: think there's some procedural problems that are associated with that. Uh.

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Speaker 1: You know, in each of those uh jurisdictions, the parties

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Speaker 1: have a right to bring in their own experts, and

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Speaker 1: a right to bring in their own evidence and may

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Speaker 1: their own arguments. And also, um, the rules of admissibility

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Speaker 1: in some states are slightly different from the rules of

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Speaker 1: admissibility of evidence in the federal courts. So I think

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Speaker 1: there may be some problems with this, But I would

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Speaker 1: applaud the judge, on the other hand, for trying to

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Speaker 1: uh trying to uh make known what the issues are

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Speaker 1: in the case. I'm not sure that it will have

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Speaker 1: any direct influence on these other cases. However, as you

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Speaker 1: pointed out, it is likely to have an important indirect influence. UM. Also,

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Speaker 1: do we have about a minute here, but can you

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Speaker 1: explain how these often these product liability cases get settled

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Speaker 1: before trial based on a few cases? Okay? Well, often

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Speaker 1: they have these bell weather cases that go to trial,

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Speaker 1: and they tend to be cases that are each representative

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Speaker 1: of sort of a different category of of UH plaintiffs

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Speaker 1: in the case, and it gives the parties an opportunity

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Speaker 1: to change what will happen. We're running out of town.

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Speaker 1: I didn't give you enough time for that. That was

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Speaker 1: that's a really long long question, Thank you so much.

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Speaker 1: Though we learned a lot that's Gene Egg and professor

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Speaker 1: at Widener University Delaware Law School. Thanks for listening to

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Speaker 1: the Bloomberg Law Podcast. You can subscribe and listen to

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Speaker 1: the show on Apple podcast, SoundCloud, and on Bloomberg dot

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Speaker 1: com slash podcast. I'm June Brosso. This is Bloomberg