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Speaker 1: This is Bloomberg Law.

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Speaker 2: Are plaintiff's leries involved in a kind of competition in Congress?

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Speaker 2: Force a judicial code on the justices?

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Speaker 3: Interviews with prominent attorneys in Bloomberg Legal Experts.

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Speaker 2: My guest is former federal prosecutor Robert Mint Joining me

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Speaker 2: is Bloomberg Law reporter Kyle Janner, and.

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Speaker 3: Analysis of important legal issues, cases and headlines.

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Speaker 2: Is it unusual a grand jury like this to suspect

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Speaker 2: people aren't telling the truth? One of the first times

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Speaker 2: the Justice Department has called for the breakup of a

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Speaker 2: major company.

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Speaker 1: Bloomberg Law with June Grasso from Bloomberg Radio.

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Speaker 3: Welcome to Bloomberg Law. I Bloomberg Radio. I'm Madison Mills

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Speaker 3: in for June Grasso. This week, We've gone from Miami

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Speaker 3: to Jersey to Washington this week covering former President Trump's

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Speaker 3: indictment and how Washington is responding. Today, we're going to

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Speaker 3: stick in Washington, focusing on the Supreme Court nearing a

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Speaker 3: decision on President Biden's student debt forgiveness program. Plus remember

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Speaker 3: Sam BigMan than fed. We'll break down the latest legal

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Speaker 3: troubles ahead for him, and we'll unpack the latest wrinkle

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Speaker 3: and the PGA Live deal. But first, let's start with

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Speaker 3: the Supreme Court busy deciding a litany of cases, from

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Speaker 3: those involving the irs to one that's closely watched by

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Speaker 3: thousands of students, President Biden's loan forgiveness plan. Here to

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Speaker 3: discuss the latest is our Scotus reporter at large, Greg Store. Greg.

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Speaker 3: Always great to get your thoughts on all things happening

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Speaker 3: with the Supreme Court. Can you just give us the

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Speaker 3: context here, remind us the details of the student debt

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Speaker 3: plan and what the challenge is that's getting discussed in court.

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Speaker 4: Sure, Madison, happy to be on. So, Yeah, this is

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Speaker 4: a President Joe Biden's plan to slash the student out

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Speaker 4: of about forty million or more than forty million people.

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Speaker 4: There are estimates that it could cost as much as

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Speaker 4: four hundred billion dollars, and the legal question is whether

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Speaker 4: the administration had the authority to do that, specifically the

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Speaker 4: Education Department. There's a statute known as the Hero Act,

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Speaker 4: and a group of states and borrowers have sued saying

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Speaker 4: that law does not give the Education Department the authority

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Speaker 4: to just eliminate this a sweeping amount of student loans.

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Speaker 3: But some students have already received a little bit of

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Speaker 3: student loan forgiveness.

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Speaker 4: Correct, the program did start, but it really didn't get

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Speaker 4: very far before lower court injunctions got in the way.

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Speaker 4: And so right now it is on hold and won't

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Speaker 4: resume unless the court sides with the Biden administration in

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Speaker 4: this case.

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Speaker 3: So talk me through that. What is the likelihood of

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Speaker 3: that happening?

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Speaker 4: Well, the arguments sure made it seem like that the

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Speaker 4: court's conservative justices didn't think the Education Department had the

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Speaker 4: authority to do this. There was a lot of questioning

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Speaker 4: about the statutory language of this Hero's Act. The law

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Speaker 4: says the Secretary of Education can waive or modify provisions

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Speaker 4: in the law so that betters are not placed in

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Speaker 4: a worse position financially because of a national emergency, and

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Speaker 4: so there were some real questions about whether that language

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Speaker 4: covered this this action. If the Biden administration is going

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Speaker 4: to win this case, it is probably going to be

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Speaker 4: on the question of standing. That is, do these states

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Speaker 4: and borrowers even have the legal right to go into

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Speaker 4: court to challenge this program. We didn't hear as much

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Speaker 4: about that during the arguments, so that may be an

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Speaker 4: open question.

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Speaker 3: So it's an open question. But given what we know

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Speaker 3: about where each judge kind of sits politically, do we

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Speaker 3: have any sort of insight or tell us to what

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Speaker 3: the decision might end up being.

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Speaker 4: Well, you know, based on the merits question, whether you

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Speaker 4: know the two thousand and three law allows this. You know,

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Speaker 4: what we've seen from this court is that they are

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Speaker 4: pretty skeptical of broad executive branch assertions of power. We've

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Speaker 4: seen them, you know, strike down the eviction moratorium during

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Speaker 4: the pandemic. We've seen them block that vaccine or testing

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Speaker 4: rule from OSHA during the pandemic. We seen them limit

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Speaker 4: the power of the EPA. That standing question, though, is

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Speaker 4: a little trickier because that can go a lot of

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Speaker 4: different ways. We had a big case that was resolved

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Speaker 4: today involving the Indian Child Welfare Act case where the

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Speaker 4: Court tossed out part of a challenge to this law

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Speaker 4: which gives Indian tribes and families preferences in terms of

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Speaker 4: fostering and adopting children in Native American children. And the

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Speaker 4: Court tossed out part of that challenge on standing grounds,

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Speaker 4: and that was a pretty broad ruling. Seven justices were

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Speaker 4: on it. So standing can be unpredictable and that's kind

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Speaker 4: of the reason, just based on the argument. You know,

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Speaker 4: I can't sit here and tell you I'm really confident

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Speaker 4: that this program is going down.

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Speaker 3: Well, it sounds like President Biden has a little bit

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Speaker 3: of the same gut feeling. Here's what he had to

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Speaker 3: say about his options if the Court does not side

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Speaker 3: with him on this.

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Speaker 5: Some of the same members of Congress I want to

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Speaker 5: cut student aid p actually received loans to keep their

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Speaker 5: small business flow during the pandemic. Some of the same

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Speaker 5: members of Congress who supported this bill voted through huge

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Speaker 5: tax cuts for corporations and the wealthy as well. But

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Speaker 5: when it comes to hard working Americans trying to get

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Speaker 5: ahead dealing with the student debt relief, that's where they

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Speaker 5: drew the line.

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Speaker 3: So Biden, they're talking a little bit about the political

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Speaker 3: response that he's getting from Congress in particular. But Greg,

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Speaker 3: I know you cover the Supreme Court for us, But

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Speaker 3: if you had to put on your White House Washington

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Speaker 3: hat for me here, do you think Biden has any

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Speaker 3: other options to get this through in any other way

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Speaker 3: if the Supreme Court does not side where he hopes

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Speaker 3: they will.

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Speaker 4: Well, there are certainly things he could try. There are

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Speaker 4: some options that folks like Elizabeth Warren had been pressing

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Speaker 4: the White House to try, so may be a backup plan.

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Speaker 4: Obviously the administration would like it Plan AID to succeed

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Speaker 4: and doesn't want to talk too much about Plan B,

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Speaker 4: you know, from a political standpoint, and this isn't you

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Speaker 4: know the area I cover, but it's I think it's

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Speaker 4: interesting to think about. You know, if the Supreme Court

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Speaker 4: blocks this, does it that helped Joe Biden politically or

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Speaker 4: hurt him? Is he able to say, look, I tried,

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Speaker 4: the Supreme Court got in the way. Or does it

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Speaker 4: make it look like he's not effected at putting his

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Speaker 4: priorities into practice?

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Speaker 3: And definitely a big question for him as that twenty

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Speaker 3: twenty four election gets closer and closer by the second.

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Speaker 3: Greg Store, thank you so much for joining us. Greg

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Speaker 3: is our Supreme Court expert voice and reporter down in Washington.

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Speaker 3: I want to bring in Claire Valentine from Bloomberg News.

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Speaker 3: Claire always does a fantastic job of covering the personal

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Speaker 3: stories behind these big issues that we talk about, So Claire,

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Speaker 3: thank you so much for coming in. You've done this

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Speaker 3: great piece on the anxiety that this delay and student

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Speaker 3: debt forgiveness is causing for students. Talk to me about

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Speaker 3: what you learned in your reporting.

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Speaker 1: Yeah, so this has been a three year saga for

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Speaker 1: a lot of people. Loans have been on pause, and

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Speaker 1: then there's been dates where government officials say loans are

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Speaker 1: going to resume, and then they get extended again. So

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Speaker 1: right now we're pretty certain that loans are going to

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Speaker 1: come back on August thirtieth. So that means that people

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Speaker 1: will be required to make monthly payments again. And from

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Speaker 1: looking at prior statistics, we see that most people have

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Speaker 1: an average of about four hundred dollars a month in

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Speaker 1: student loan payments. That's a big chunk of cash and

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Speaker 1: people are going to have to add that onto already

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Speaker 1: tight budgets. So in addition to that monetary hit, you're

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Speaker 1: also seeing people stressed and just really confused about what's

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Speaker 1: going on with forgiveness and payments restarting.

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Speaker 3: And I know some of your sources talked about how

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Speaker 3: there's this misconception that this is just extra stimulus money

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Speaker 3: for people who already have enough. Talk to me about

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Speaker 3: what you learned about that piece.

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Speaker 1: Yeah, so this money really is designed for people who

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Speaker 1: are not making a ton of money. This is not

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Speaker 1: for people who are you know, got law degrees and

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Speaker 1: suddenly are making six figures. This is all designed for

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Speaker 1: people who maybe got a degree and are working hard,

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Speaker 1: but their income is just not matching up with their

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Speaker 1: expenses and not allowing them to make those loan payments

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Speaker 1: without sacrificing other areas of their life. And even if

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Speaker 1: Biden's free offness program does go through, no more than

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Speaker 1: forty five percent of borrowers will have their loans wiped

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Speaker 1: out completely. So you've still got a ton of people with,

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Speaker 1: you know, in some cases six figures worth of student

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Speaker 1: loan debt that they're paying on.

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Speaker 3: Yeah, I'm just looking at your story here. You start

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Speaker 3: off with Ali Rooker, who is a thirty year old

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Speaker 3: in Detroit with eighty thousand dollars in federal loans.

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Speaker 1: Yeah, and that really just impacts your whole life. I mean,

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Speaker 1: you know, Ali is trying to buy a home right now,

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Speaker 1: and even with just this limbo that we're in with

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Speaker 1: the Supreme Court, she doesn't know how much of a

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Speaker 1: home she can afford. I mean, ten thousand dollars is

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Speaker 1: a big chunk in terms of looking at your whole

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Speaker 1: financial picture, So even beyond just the monthly budgets, people

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Speaker 1: are having to put big life decisions on hold as

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Speaker 1: we wait to see what happens with Biden's forgiveness plan.

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Speaker 3: And because it's Bloomberg, I'm going to end with a

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Speaker 3: question for you on just kind of the economic impact

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Speaker 3: of that, Right, what do we anticipate happening as we

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Speaker 3: are anticipating that this is not going to end up

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Speaker 3: going through, Right, So, once these student loan payments have

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Speaker 3: to restart, how big is the economic.

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Speaker 4: Impact of that?

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Speaker 1: Yeah, so pre pandemic, about fifteen percent of borrowers were

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Speaker 1: behind on payments. That's expected to return and maybe even

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Speaker 1: surpass that. We've seen some reports. There was one from

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Speaker 1: financial firm Jeffreys that was comparing the potential impact of

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Speaker 1: student loans returning to the twenty thirteen physical cliff. So

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Speaker 1: it really is expected to hurt the consumer, to decrease

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Speaker 1: the amount of disposable income people have for eating out,

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Speaker 1: for spending on goods and services. And you know, just

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Speaker 1: like we saw inflation hit people hard, this is expected

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Speaker 1: to also hit people hard and make them have less

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Speaker 1: money to spend on everyday items.

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Speaker 3: Did you mainly speak with sources. Who are those individual

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Speaker 3: people or did you talk with any investors or economists

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Speaker 3: about their outlook for it as well?

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Speaker 1: Are we focused on Yeah, so there's mostly what I've

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Speaker 1: spent my time focusing on with reporting is is student

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Speaker 1: loan is issue or student loan holders? But they're definitely

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Speaker 1: it's something that economists are starting to look at. And

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Speaker 1: I think for so long, you know, financial experts and

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Speaker 1: economists didn't know what was going to happen with this.

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Speaker 1: The restart date got extended so many times. But now

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Speaker 1: you know, especially when we're looking at what the Fed's

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Speaker 1: doing and trying to decide on rate hikes, this is

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Speaker 1: going to play a big picture role.

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Speaker 3: Yeah. Absolutely, Claire, Well, thank you so much for bringing

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Speaker 3: us the people behind the story. As always really appreciated.

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Speaker 3: That was Claire Balentine with Bloomberg News. If you're listening

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Speaker 3: to Bloomberg Law, I'm Madison Mills in for June Brasso.

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Speaker 3: This is Bloomberg. This is Bloomberg Law with June Grasso

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Speaker 3: from Bloomberg Radio. This is Bloomberg Law. I'm Madison mills

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Speaker 3: in for June Grasso. This week US prosecutors in that

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Speaker 3: case again, Sam Bankman Freed asked the judge to set

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Speaker 3: aside five counts the FTX co founder is contesting why

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Speaker 3: to avoid trial delays. This comes after bankman Freed won

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Speaker 3: a Bahamian court ruling earlier in the week on those

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Speaker 3: five counts. Here to discuss what it all means and

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Speaker 3: the impact is Ava Benny Morrison, Bloomberg News Legal reporter, Ava,

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Speaker 3: thank you so much for being here with us. Before

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Speaker 3: we get into the specific updates here, I kind of

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Speaker 3: feel like the FTX situation is on the back burner

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Speaker 3: for me and my coverage as I've moved on to

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Speaker 3: coinbase and finance. Can you give us a little recap

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Speaker 3: legally where SBF is at here?

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Speaker 4: Sure?

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Speaker 6: Yes, it certainly does say in a long time ago

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Speaker 6: that he was arrested in the Bahamas. He's about four

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Speaker 6: months out from his scheduled trial in federal court in Manhattan.

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Speaker 6: He's pleaded not guilty to thirteen different criminal charges. We're

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Speaker 6: in the stage at the moment where the lawyers are

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Speaker 6: arguing over discovery. What different material thereafter and in this case,

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Speaker 6: specifically as we heard today, are the validity of some

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Speaker 6: of those charges?

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Speaker 3: And talk me through that argument. What is the case

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Speaker 3: for why some of those charges would be invalid.

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Speaker 6: So Sam Bagminfried was extradited back from the Bahamas to

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Speaker 6: the US in December after he was arrested, and he

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Speaker 6: consented to extradition. At that point, the US prosecutors had

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Speaker 6: presented an ad count indictment mainly dealing with the alleged

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Speaker 6: fraud at FTX, and he agreed to come back to

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Speaker 6: the US to face those charges. In the months after

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Speaker 6: he returned, filed five additional charges against him. So he

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Speaker 6: is essentially challenging that, saying that wasn't part of my agreement,

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Speaker 6: and under extradition law, you can't file those charges. You

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Speaker 6: need consent from the Bahamas, and you haven't got that yet.

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Speaker 3: So is the key piece there? Would you say, does

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Speaker 3: it hinge on the extradition?

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Speaker 6: It hinges on the Bahamas? We heard today prosecutors said

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Speaker 6: that they had been in communication with the government down

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Speaker 6: there and were of the view that they were going

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Speaker 6: to provide that consent well before the trial. But that

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Speaker 6: hasn't happened yet. Behind the scenes, Sam Beakman Free's legal

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Speaker 6: team has gone directly to the Bahamas and said, before

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Speaker 6: you provide that consent, we want to be heard on

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Speaker 6: why we don't think these charges are valid. So there's

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Speaker 6: been a They're fighting his battle on a number of

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Speaker 6: fronts at the moment, and.

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Speaker 3: Those are going to be very critical to monitor as

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Speaker 3: we continue to cover this trial. Can you walk me

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Speaker 3: through more broadly what his defense might look like as

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Speaker 3: we get closer to the trial day, even if it

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Speaker 3: does face some delays.

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Speaker 6: Here, sure, once we get over this legal hurdle and

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Speaker 6: the judge makes a decision on whether the post and

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Speaker 6: tradition charges can be separated. He has given a little

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Speaker 6: bit of a hint as to what his defense might be.

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Speaker 6: Part of that hinges on the advice he said he

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Speaker 6: got from council, is trying to subpoenas some information from

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Speaker 6: a law firm that provided a lot of advice and

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Speaker 6: guidance to FTX and Alameda, and he's essentially suggesting that

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Speaker 6: he acted on the advice of counsel in doing a

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Speaker 6: lot of the things that pop up in the indictment

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Speaker 6: as well. We've also got a little bit of the

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Speaker 6: insight into some of the arguments he might make at

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Speaker 6: the trial based on his rebuttal in the weeks after

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Speaker 6: that he was charged. He's essentially in a few difference

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Speaker 6: blog posts has put down the multi billion dollar hole

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Speaker 6: at FTX to FTX being a victim of the successive

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Speaker 6: market collapses and it all being sort of a problem

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Speaker 6: with accounting as opposed to criminality, and.

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Speaker 3: From your legal standpoint, talk to me about those defenses, right,

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Speaker 3: is that something that you've seen hold up in court previously.

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Speaker 3: How likely is he to be successful with that type

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Speaker 3: of legal argument.

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Speaker 6: It's hard to tell. I think the defense of acting

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Speaker 6: on the advice of your counsel is an interesting one

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Speaker 6: that hasn't come up too frequently. But unfortunately for him,

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Speaker 6: the crux of the criminal allegations here is that he

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Speaker 6: misused billions of dollars in customer funds and spent that

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Speaker 6: on personal expenses, property investments through element of research. The

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Speaker 6: legal advice doesn't address that from what we've seen, so

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Speaker 6: he still needs an argument against the core of those

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Speaker 6: criminal allegations as well as opposed to putting it down

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Speaker 6: to you know, issues with accounting and being just a

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Speaker 6: victim of the market downfall. I think, you know, you

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Speaker 6: could see someone making that argument before a jury, and

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Speaker 6: you're dealing with his complicated matters when we're talking about

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Speaker 6: cryptocurrency and you know hedge funds, crypto hedge funds and

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Speaker 6: different investments and whatnot. So I think the prosecution will

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Speaker 6: really make an effort to sort of simplify the jury

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Speaker 6: so they understand what the core issues are.

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Speaker 3: So what's next then for this case, what's the next

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Speaker 3: step that we can expect to have you back on

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Speaker 3: to cover.

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Speaker 6: So next up will be the judge making a decision

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Speaker 6: on whether he is going to split the case, so

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Speaker 6: Sam Bankminfrid will go to trial on those eight original charges,

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Speaker 6: which include the fraud charges, the core allegations of the case,

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Speaker 6: and then the remaining five will be essentially kicked down

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Speaker 6: the road till next year and potentially go to trial then.

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Speaker 6: So we're really keeping an eye app for that decision.

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Speaker 3: And forgive me if this is totally not a smart question,

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Speaker 3: but I just cut off the week covering a lot

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Speaker 3: about former President Trump and his indictment and how there

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Speaker 3: are several trials surrounding the former president right now. I'm

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Speaker 3: curious if there is going to be any read through

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Speaker 3: of that for SBF. Could we expect to see further indictments,

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Speaker 3: further charges either federally or in other states?

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Speaker 6: Against Sam Bakman Free. Yes, I don't think so, because

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Speaker 6: we're seeing this tension over the superseding indictments that have

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Speaker 6: already been filed against Sam bankman Fred specifically in New York.

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Speaker 6: It seems like he is going really hard to challenge

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Speaker 6: the validity of those, So I can't imagine that federal

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Speaker 6: prosecutors in Manhattan are sort of gearing up to file

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Speaker 6: even more charges on top of him while they're still

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Speaker 6: trying to navigate this conflict. But that said, there's still

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Speaker 6: a question mark around some other people who were central

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Speaker 6: to FTX that haven't signed cooperation agreements like some of

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Speaker 6: the executives have. So we'll be watching to see if

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Speaker 6: I guess there will be any other criminal charges brought

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Speaker 6: against other people who are tied to FTX.

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Speaker 3: Right, that's a great point in our final minute with you.

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Speaker 3: The one thing that we haven't talked about is this

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Speaker 3: accusation of Sam BigMan Freed bribing officials to free that

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Speaker 3: forty million dollars frozen on the crypto exchange. What do

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Speaker 3: we need to know about that charge?

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Speaker 6: But this was the latest charge that was filed. Prosecutors

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Speaker 6: filed that in any superseding indictment in March accusing Sam

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Speaker 6: Bankman Freed of directing the bribe of Chinese government officials,

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Speaker 6: organizing to pay them forty million dollars to help free

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Speaker 6: unfreeze crypto assets that were on a crypto exchange over

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Speaker 6: in that country. So he was charged under with foreign bribery,

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Speaker 6: but the penalty for that is a lot lower than

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Speaker 6: the penalties he is facing in the fraud charges. And

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Speaker 6: I will make the note that that foreign bribery charge

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Speaker 6: is one of the offenses that he is challenging and

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Speaker 6: arguing is invalid.

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Speaker 3: All right, well, thank you so much Eva for joining

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Speaker 3: us to run through all of the details there. That

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Speaker 3: was Ava. Benny Morrison, Bloomberg News Legal reporter, breaking down

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Speaker 3: everything you need to know about the latest with Sam

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Speaker 3: Bankman Fried and the FTX case. I'm Madison Mills in

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Speaker 3: for June Brasso, coming up moron Crypto