Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every
Speaker 1: day we bring you insight and analysis into the most
Speaker 1: important legal news of the day. You can find more
Speaker 1: episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud,
Speaker 1: and on Bloomberg dot com slash podcasts. Yesterday, the US
Speaker 1: Senate took the most concrete steps so far to rollback
Speaker 1: rules adopted in the wake of the two thousand eight
Speaker 1: financial crisis by passing a bill amending the Dodd Frank
Speaker 1: Act and providing considerable regulatory relief to smaller lenders such
Speaker 1: as regional and community banks the name's sake of the
Speaker 1: Dodd Frank Bill. Former Congressman Barney Frank spoke with Bloomberg
Speaker 1: about the proposed Senate changes last Tuesday. Um, I I
Speaker 1: think some of the critics in the Laptop being too our.
Speaker 1: It has one good thing. If this bill passes, that's
Speaker 1: the end of the debate over the over the financial
Speaker 1: reform bill. In other words, yes, this film makes changes
Speaker 1: the cup but which I don't like. But by the
Speaker 1: very fact that it doesn't change almost everything else, it's
Speaker 1: going to confirm them. Joining us is Robert Hockett, a
Speaker 1: professor at Cornell University Law School. Bob, what's your reaction
Speaker 1: to what Barney Frank said about this bill being the
Speaker 1: end of the debate over the financial of over financial reform.
Speaker 1: H Well, thanks so much for having me on. So
Speaker 1: I'm gonna surprise you, uh, in one sense, I think
Speaker 1: and say that I actually kind of agree with Barney
Speaker 1: Frank on this one. That being said, I do nevertheless
Speaker 1: think it's a good idea for the Senators, and I'm
Speaker 1: sorry the Dems in the Senate who object to the
Speaker 1: change to kind of keep sounding the alarm, because this
Speaker 1: is not the end of it, right. We now have
Speaker 1: Representative Henzerling's bill over in the House to be reconciled
Speaker 1: with this one, and that one is far more radical.
Speaker 1: And so I think by kind of maintaining, you kind
Speaker 1: of holding the line as they are in the Senate,
Speaker 1: the progressive Dems there are i think, signaling that we
Speaker 1: won't go any fur. They're by way of retreat from God. Frank. Bob,
Speaker 1: what are the core changes in the Senate bill? Frank? Yeah, so,
Speaker 1: on the surface, um, you might say the optics are
Speaker 1: especially bad. On the surface, they look pretty extensive, But
Speaker 1: then when you look sort of underneath, they're not nearly
Speaker 1: as bad as one might thought or expected. Again getting
Speaker 1: given to sort of control right in the in the house.
Speaker 1: So first of all, the old Siffy threshold of fifty
Speaker 1: billion has been raised to two hundred fifty. Now at
Speaker 1: first that sounds quite remarkable, right. It essentially releases about
Speaker 1: two thirds of the large banks from sort of fifty designation. Uh.
Speaker 1: And in that sense, you know, optically, that looks terrible.
Speaker 1: They would have been a much better way to do
Speaker 1: this if you wanted to sort of differentiate between the
Speaker 1: mega banks and they're not so megabanks, you might have
Speaker 1: raised it to a hundred or hundred fifty or something.
Speaker 1: On the other hand, again, under the surface, things aren't
Speaker 1: quite as bad as they might look. Because the thing is,
Speaker 1: the Fed retains the discretion to regulate the banks that
Speaker 1: are under that new cify side size but still above
Speaker 1: tend above a two billion in the same way that
Speaker 1: it has. It's just that it's not required by legislation
Speaker 1: to do so. So things might very well stay the
Speaker 1: same if the said makes prudent decisions about how best
Speaker 1: to regulate those sub dollar banks that are still over
Speaker 1: fifty billion dollar branks now shared Brown. Other senators, Progressive
Speaker 1: senators like Elizabeth Warren, have warned that these changes would
Speaker 1: harm consumers and increase risk in the financial system. Do
Speaker 1: you see that from this particular bill, Well, they certainly
Speaker 1: opened the door to that possibility. Um. At the same time, however,
Speaker 1: possibility itself is probably a little bit remote at this point.
Speaker 1: So take two examples, UM, some of the underwriting, some
Speaker 1: of the mortgage underwriting standards for banks under ten billion,
Speaker 1: the so called community banks have been sort of rendered
Speaker 1: a bit less stringent than they were made after that
Speaker 1: of course, sounds terrible on the surface and a end
Speaker 1: it's potentially dangerous, But there's a condition attached, um that
Speaker 1: actually some extats a significant extent and mitigates the risk.
Speaker 1: And that is that that particular relief is only afforded
Speaker 1: the smaller banks if they're not selling on selling their
Speaker 1: mortgages off to securitizers or to g S e s. Right.
Speaker 1: In other words, UM, they enjoy that particular relief only
Speaker 1: if they are not in effect communicating their possibly risk
Speaker 1: your mortgages to the wider financial system. Now, of course
Speaker 1: it could still imperil those banks, but because they're smaller.
Speaker 1: When they're under ten billion, things look a little bit
Speaker 1: less dangerous than you might initially have thought. So that's
Speaker 1: not to say that I endorsed the change. I'm just
Speaker 1: just I'm just saying that it's not quite as awful
Speaker 1: as one might have fraught or expected. Sort Of similarly
Speaker 1: with the Bulker rule. Right that the under ten billion,
Speaker 1: the so called community banks are getting relief from the
Speaker 1: so called Broker rule, and on the surface set doesn't
Speaker 1: look very good either. Right. On the other hand of
Speaker 1: the backstory here is that the smaller community banks don't
Speaker 1: tend to do a lot of trading securities anyway, so
Speaker 1: it's not altogether clear that the Folker rule would have
Speaker 1: been making that much difference, Whereas the so called compliance
Speaker 1: costs to sort of documenting what you're doings to show
Speaker 1: that you're in compliance with Polker has been have been
Speaker 1: perhaps a bit higher for the lower I mean for
Speaker 1: the smaller banks at least as a proportion of their
Speaker 1: total expenditures than they have to the larger banks. You
Speaker 1: mentioned House Financial Services Committee Chairman Jeb Hensling, who has
Speaker 1: said he wanted to include bigger revisions. Yeah, then we're
Speaker 1: passed by the Senate. What is he referring to? What
Speaker 1: has he had? What does he have in mind? Um,
Speaker 1: he thinks have quite a few things in mind, and
Speaker 1: in my view, almost all of them are are quite
Speaker 1: irresponsible and indeed reckless. I mean, one case in point is, uh,
Speaker 1: he actually wants to give um a a sort of
Speaker 1: a regulatory pass to a number of very large private
Speaker 1: equity firms that sort of build themselves as so called
Speaker 1: business development companies. UM. So what they're essentially, what these
Speaker 1: firms do is they're basically private private equity firms that
Speaker 1: pretend to be doing and maybe sometimes actually far doing, um,
Speaker 1: sort of venture capital type raising for small businesses. And
Speaker 1: then they say, oh, you know, we're being up the
Speaker 1: job creators and so forth. Um. But it's it's very
Speaker 1: easy to sort of say that you're doing that and
Speaker 1: nevertheless engage in very risky lending practice or risky investment practices.
Speaker 1: And so it makes sense that firms like this would
Speaker 1: be overseen by the regulators, and the idea of just
Speaker 1: sort of letting them free, you know, sort of putting
Speaker 1: them loose of all regulations, simply onto the pretext that
Speaker 1: they are so called job creator business development companies. I
Speaker 1: think it's just again highly highly risky, I mean highly reckless.
Speaker 1: UM a lot of other things that ten really wants
Speaker 1: to do as well. I think, at last last I checked,
Speaker 1: he wants to remove even the FED discretion to regulate
Speaker 1: the under two billion but above fifty billion dollar banks
Speaker 1: as cities. UM wants to sort of cut back, in
Speaker 1: other words, on the regulator's capacity to apply enhance potential
Speaker 1: regulations to banks when they aren't really freshly. We'll have
Speaker 1: to stop there and wait until he actually proposes these
Speaker 1: things and talk again. Thanks as always. That's Robert Howckett, Professor,
Speaker 1: Cornell University Law School. Is the world's most popular weed killer. Toxic.
Speaker 1: More than seven hundred farmers, landscapers, and gardeners are suing Monsanto,
Speaker 1: claiming that exposure to the glypha sate in round Up
Speaker 1: gave them cancer. In a pre trial hearing, the San
Speaker 1: Francisco judge overseeing all three hundred of the federal cases
Speaker 1: against Monsanto said that the opinions of the experts testifying
Speaker 1: against Monsanto are quote shaky, potentially devastating development for the
Speaker 1: cases getting to trial. Joining me is Jane Eggan, a
Speaker 1: professor at Widener University Delaware Law School. Gene first explained
Speaker 1: the basis of the lawsuits against Montsanto. What are they about, Well,
Speaker 1: essentially their toxic tort lawsuits. They're brought by various farmers, landscapers,
Speaker 1: gardeners against the company claiming that they developed cancer as
Speaker 1: a result of being exposed to round up. During relatively
Speaker 1: long period of time, Federal Judge Vince Chabria heard about
Speaker 1: from about a dozen witnesses, including epidemiologist, toxicologist, statisticians, and
Speaker 1: an oncologist to decide who should be allowed to testify
Speaker 1: as experts before a jury. What was he looking for
Speaker 1: to make this determination, Well, essentially, this kind of hearing
Speaker 1: is twofold UM. The first part that has to be
Speaker 1: decided first is whether the expert evidence of causation of
Speaker 1: one or both parties is admissible at trial under the
Speaker 1: rules of evidence, And because the plaintiffs have the burden
Speaker 1: of proof, their evidence is going to be the most
Speaker 1: key in the UH this initial stage. UH. Second, after
Speaker 1: determining that, the court will look at what the judge
Speaker 1: has seemed to be admissible evidence and determine whether there's
Speaker 1: a genuine issue of material fact that needs to go
Speaker 1: to the fact finder. Uh. If, on the other hand,
Speaker 1: no reasonable jury could find for the plaint if, then
Speaker 1: the action will be dismissed. So the key to admissibility
Speaker 1: is essentially a two part test, which is that the
Speaker 1: scientific evidence that it forms the basis for the expert's
Speaker 1: testimony must be both reliable and relevant. Reliability essentially means
Speaker 1: that it's scientifically sound based on a reliable technique such
Speaker 1: as epidemiology, which this is. But there can be other
Speaker 1: problems that are associated with reliability, such as what the
Speaker 1: Supreme Court has caused called an analytical gap between what
Speaker 1: the studies actually show and what the expert testifying for
Speaker 1: the party is concluding about it. And this seems to
Speaker 1: be one of the things that the judge is particularly
Speaker 1: concerned about with regard to the plaintiff's evidence. In fact,
Speaker 1: as you suggested, he's telegraphed through his comments that he's
Speaker 1: skeptical of the plaintiff's expert evidence, but I think he's
Speaker 1: stopped short of saying that it is not admissible at
Speaker 1: least at this juncture, without knowing or looking into the
Speaker 1: evidence a little bit more closely. UM, because he has
Speaker 1: suggested that uh, he has correctly I correctly stated that
Speaker 1: it is not up to him to weigh this evidence
Speaker 1: to decide whether roundup can cause cancer. It is rather
Speaker 1: up to him to decide what is reliable enough to
Speaker 1: get to the jury. So the toxicity of this herbicide
Speaker 1: has been debated by scientists worldwide for more than thirty years.
Speaker 1: What came out during this hearing to lead the judge
Speaker 1: to say that the evidence that glypha sate is currently
Speaker 1: causing non Hodgkins lymphoma in human beings is pretty sparse. Well,
Speaker 1: I think the first thing is that the defendants are
Speaker 1: that Monfanto is relying on a relatively newly published study,
Speaker 1: very newly published study about agricultural workers that looked at
Speaker 1: fifty four thousand agricultural workers and uh stated or concluded
Speaker 1: that round up does not where glyphosate does not cause cancer.
Speaker 1: So I think there's the weight of that, But again,
Speaker 1: the court is not supposed to look at the weight
Speaker 1: of it. Um he the judge, I think, was particularly
Speaker 1: concerned with the failure of the plaintiff's attorney to are
Speaker 1: the plaintiffs expert to actually account for confounding factors and
Speaker 1: the studies that the plaintiffs were relying on and these
Speaker 1: confounding factors were things like multiple pesticide exposures among the
Speaker 1: people who were tested. So I think that this this
Speaker 1: is really the first, very close and comprehensive look at
Speaker 1: what we know about glycis sate. And I have to
Speaker 1: say it's really startling to me that after thirty years,
Speaker 1: we really know relatively little. And even the judge said,
Speaker 1: we don't know whether it causes cancer. Well, let me
Speaker 1: let me just ask you this because our reporter who
Speaker 1: has been covering the trial said the judge gave a
Speaker 1: strong indication that beat Rits, a public health professor at
Speaker 1: U c l A, maybe the only witness he allows
Speaker 1: to testify for the plaintiffs, and that even she's at
Speaker 1: risk of being eliminated. Wouldn't that basically destroy the plaintiffs
Speaker 1: cases if they didn't have expert witnesses. Absolutely yes, and
Speaker 1: it probably would destroy the case. On a summary judgment
Speaker 1: motion to dismiss before trial, Uh, if if your evidence
Speaker 1: can't get in, if your plaintif your evidence can't get in,
Speaker 1: then mon Santo wins dismissal, which would have an enormous
Speaker 1: impact on this litigation. This is a multi district litigation,
Speaker 1: which um is which means that all such cases in
Speaker 1: the federal courts against Montfanto for exposure to glife of
Speaker 1: faith have been transferred to this particular judge in the
Speaker 1: Northern District of California's So uh, if the judge determines
Speaker 1: the plaintiff's evidence can get in uh, the result would
Speaker 1: apply to all cases. And there's upwards of three seventy
Speaker 1: cases here. Let's talk about the judges influence not only
Speaker 1: on these multi district cases, but thousands of other state
Speaker 1: court cases against Montsanto across the country. He was joined
Speaker 1: by a judge from Oakland who's handling hundreds of state claims,
Speaker 1: and he invited other judges across the US handling thousands
Speaker 1: more state court cases to make these proceedings part of
Speaker 1: their record. So that's a lot of influence for one judge. Well, yes,
Speaker 1: and UH that's a good point, um that he is
Speaker 1: trying to make his hearing part of the record for
Speaker 1: all of those state proceedings around the country. But I
Speaker 1: think there's some procedural problems that are associated with that. Uh.
Speaker 1: You know, in each of those uh jurisdictions, the parties
Speaker 1: have a right to bring in their own experts, and
Speaker 1: a right to bring in their own evidence and may
Speaker 1: their own arguments. And also, um, the rules of admissibility
Speaker 1: in some states are slightly different from the rules of
Speaker 1: admissibility of evidence in the federal courts. So I think
Speaker 1: there may be some problems with this, But I would
Speaker 1: applaud the judge, on the other hand, for trying to
Speaker 1: uh trying to uh make known what the issues are
Speaker 1: in the case. I'm not sure that it will have
Speaker 1: any direct influence on these other cases. However, as you
Speaker 1: pointed out, it is likely to have an important indirect influence. UM. Also,
Speaker 1: do we have about a minute here, but can you
Speaker 1: explain how these often these product liability cases get settled
Speaker 1: before trial based on a few cases? Okay? Well, often
Speaker 1: they have these bell weather cases that go to trial,
Speaker 1: and they tend to be cases that are each representative
Speaker 1: of sort of a different category of of UH plaintiffs
Speaker 1: in the case, and it gives the parties an opportunity
Speaker 1: to change what will happen. We're running out of town.
Speaker 1: I didn't give you enough time for that. That was
Speaker 1: that's a really long long question, Thank you so much.
Speaker 1: Though we learned a lot that's Gene Egg and professor
Speaker 1: at Widener University Delaware Law School. Thanks for listening to
Speaker 1: the Bloomberg Law Podcast. You can subscribe and listen to
Speaker 1: the show on Apple podcast, SoundCloud, and on Bloomberg dot
Speaker 1: com slash podcast. I'm June Brosso. This is Bloomberg