Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.
Speaker 1: A half a trillion dollars showdown at the Supreme Court,
Speaker 1: as the Justice has weighed the fate of President Joe
Speaker 1: Biden's student loan forgiveness plan. The conservative justice has seemed
Speaker 1: highly skeptical that Biden had the authority to broadly cancel
Speaker 1: federal student loans of up to forty three million Americans.
Speaker 1: To many, the enormous price tag was a concern and
Speaker 1: an indication that it was a job for Congress, not
Speaker 1: the president. Here are Chief Justice John Roberts and Justice
Speaker 1: Samuel Alito. We're talking about half a trillion dollars and
Speaker 1: forty three million Americans. How does that fit under the
Speaker 1: normal understanding of modifying seems to presume that when it
Speaker 1: comes to the administration of benefits programs, trillion dollars here,
Speaker 1: tillion dollars there doesn't really make that much difference. To Congress.
Speaker 1: That doesn't seem very sensible. But there was support for
Speaker 1: the program from the liberal justices. Here are Justice is
Speaker 1: Elena Kagan and Sonya so To. Mayor. Congress used its
Speaker 1: voice in enacting this piece of legislation. Oh, this business
Speaker 1: about executive power. I mean, we worry about executive power
Speaker 1: when Congress hasn't authorized the use of executive power. Here,
Speaker 1: Congress has authorized the use of executive power in an
Speaker 1: emergency situation. Those are exceptions that clearly are permitted under
Speaker 1: the AHA to cancel a debt. So why would I
Speaker 1: have a view that Congress didn't understand that in an
Speaker 1: improper emergency debt cancelation would be right? My guest is
Speaker 1: Harold Grant, a professor at the Chicago Kent College of Law.
Speaker 1: So how does it appear as if the Court's conservative
Speaker 1: majority is, to put it mildly, that Biden has the
Speaker 1: power to implement this plan under the Hero's Act. To
Speaker 1: put it mildly, yes, the majority of the Court is
Speaker 1: very skeptical that the statute empowers to Biden administration with
Speaker 1: the power to cancel all of the student loans. And
Speaker 1: the reason is that the statute does give the administration
Speaker 1: power to waiver modify unique provision under the Act in
Speaker 1: an emergency. And so much of the argument turns on
Speaker 1: what's the expanse of waiver and modification and did Congress
Speaker 1: ever intend waiver and modification to include cancelation of up
Speaker 1: to four hundred billion dollars of that was such a
Speaker 1: tremendous impact upon the economy. And to put it again,
Speaker 1: as you stated, to put it mildly, Chief Justice Robberts
Speaker 1: was emphatically clear that he'd never thought that Congress would
Speaker 1: have given so much expansive authority to the administration to
Speaker 1: take that kind of action with such a broad impact
Speaker 1: on the economy. In other words, this emergency power, according
Speaker 1: to the seeming majority of justices, maybe postponing debt may
Speaker 1: be limiting interest payments, but certainly didn't entail such broad
Speaker 1: cancelation authority. Does it seem like the only hope really
Speaker 1: for the student loan forgiveness program is if the justices
Speaker 1: don't find standing. There's grave questions about whether the plaintiffs
Speaker 1: in both combined cases have what's called standing to proceed.
Speaker 1: There are lots of questions raised about whether the states
Speaker 1: can demonstrate their sufficient injury to continue the case. And
Speaker 1: with respect to the students were not benefited by the
Speaker 1: loan cancelation, whether they have standing as being frustrated because
Speaker 1: Biden didn't include them in the package of loans that
Speaker 1: were to be canceled, so they may not have any
Speaker 1: kind of recognized injury to pursue these claims anyway. And
Speaker 1: of course their claim is odd. Their claim is it's
Speaker 1: we should have been included it, and so you should
Speaker 1: knock down the Biden plan. That's a very strange kind
Speaker 1: of standing. And I do think it's fair to say
Speaker 1: that if the court takes this case decides it on
Speaker 1: the merits, which would not for sure but likely go
Speaker 1: against the Abiden administration, they will be broadening standing, which
Speaker 1: is unusual because this court in the past is most
Speaker 1: recently narrowed standing in lots of different ways. So that's
Speaker 1: why I think this is a tough case. You have
Speaker 1: a case on standing being able to get into court,
Speaker 1: which is challenging, but on the merits, based on the
Speaker 1: oral argument, at least a good number of the court,
Speaker 1: we're saying that Biden administration overstepped its bounds in deciding
Speaker 1: to cancel these student debts, which could be twenty five
Speaker 1: to forty million people at a cost over thirty years
Speaker 1: of four hundred billion dollars to the economy, which again,
Speaker 1: this is a huge undertaking by the Abiden administration. So
Speaker 1: let's look at standing first, Because it seemed as if
Speaker 1: the liberal justices were more concerned about standing, except for
Speaker 1: just does any Coney Barrett, Here's justice any Coney Barrett
Speaker 1: questioning Missouri's standing. Why didn't the state just make Mohila
Speaker 1: come then, if Mohilla is really an arm of the state,
Speaker 1: and all of this would be a lot easier than
Speaker 1: The Solicitor General conceded that if Mohila was here, Mohila
Speaker 1: would have standing. If Mohilla is an arm of the state,
Speaker 1: why didn't you just strong arm Mohilla and say you've
Speaker 1: got to pursue this suit. Yeah, So there's two theories
Speaker 1: of standing with respect of the states. All the states
Speaker 1: said that they will have injuring fact because their tax
Speaker 1: revenues may go down because of the cancelation by the
Speaker 1: Biden administration of the student loans. That argument, I think
Speaker 1: is very weak, because, if anything, their tax proceeds may
Speaker 1: go up because of the student debt forgiveness, because people
Speaker 1: will have more money to spend and more money to
Speaker 1: invest in, more confidence in the economy about the respect
Speaker 1: of state, So the states can't show a connection between
Speaker 1: cancelation of student debt and any kind of harm to
Speaker 1: their tax claffers. Both the size of both the Biden
Speaker 1: administration and the plaintiffs argued that a entity that processes loans,
Speaker 1: they might suffer because of the fact that there will
Speaker 1: be fewer people that turn to them for processing loans
Speaker 1: because their loans will be forgiven under the Biden plan,
Speaker 1: And that's true, that would be injury. In fact, most
Speaker 1: of those loan processors are private. There is one processor
Speaker 1: in Missouri which is a kind of state corporation that's
Speaker 1: separate from the state but yet is public, and so
Speaker 1: that's called Mahilla. And so it was a question as
Speaker 1: even though they haven't come in into this case, they
Speaker 1: have ensued whether Missouri as a state has enough overlap
Speaker 1: with Mohilla, so that day in essence can say that
Speaker 1: either they will be affected if Mohilla suffers, or where
Speaker 1: they can raise Mahillo's claims on behalf of Mahla because
Speaker 1: they're both part of the state of Missouri. So that
Speaker 1: was the nexus of the standing argument that was presented.
Speaker 1: And it's a very complicated question because under Missouri Lawhilla
Speaker 1: can sue and be sued in its own name, and
Speaker 1: its debts will not be subject to being paid by
Speaker 1: the state of Missouri. So there are a state created institution,
Speaker 1: but they're separate from the coffers of the state, and
Speaker 1: they chose not to sue in this case. So that's
Speaker 1: the question is whether that injury, which everybody recognizes sufficient
Speaker 1: for injury in fact, whether Missouri as a state can
Speaker 1: stand in the shoes of that injury and advocate it
Speaker 1: in order to get into court to challenge the student
Speaker 1: debt program. Let's talk about the merits. What do you
Speaker 1: think was the main concern of the justices? Was it
Speaker 1: a problem with separation of powers? Was it something else?
Speaker 1: The problem that the justices sought articulated over and over
Speaker 1: is this is a massive program. And did Congress when
Speaker 1: it enacted the Heroes Act and gave the administration the
Speaker 1: power and emergency to make modifications to the student loan programs,
Speaker 1: did they ever envision something on this scale, a scale
Speaker 1: that would encompass twenty five to forty million people in
Speaker 1: this country, a scale that could cause cancelation of debts
Speaker 1: to the amount of four hundred billion dollars over thirty years.
Speaker 1: And I think they just thought that this was such
Speaker 1: a massive scale that the Biden administration wasn't just sort
Speaker 1: of modifying the program in a national emergency, but by
Speaker 1: canceling debt, it was actually changing the nature of the
Speaker 1: student loan program. And the question is whether Congress really
Speaker 1: anticipated or envisioned an administration having that much power, even
Speaker 1: though they said that you should have extraordinary powers in
Speaker 1: the face of an emergency. So most of the argument
Speaker 1: with respect of the merits just delved into what degree
Speaker 1: of modification power the administration could use in an emergency.
Speaker 1: Everybody agreed that COVID would be a relevant emergency, but
Speaker 1: did that emergency justify a complete transformation of the student
Speaker 1: loan program? That was the nub of the merits argument.
Speaker 1: I mean, is this all about the major questions doctrine
Speaker 1: that the Court has used before to stop Biden administration
Speaker 1: initiatives during the pandemic, like the moratorium on randal evictions
Speaker 1: that was struck down. The Court did invoke the major
Speaker 1: questions doctrine as a way to suggest that if we're
Speaker 1: not sure about the scope of Congress's intended delegation, then
Speaker 1: we should put our finger on the scale of saying
Speaker 1: we don't allow an agency to take such kind of
Speaker 1: wide and expansive action unless we're very confident that the
Speaker 1: Congress wanted them to go that far. And the language
Speaker 1: under the Heroes Act, under which the Biden administration predicated
Speaker 1: this change, allows the sector of Education to make a
Speaker 1: waiver and a modification to the program. So clearly Congress said,
Speaker 1: we think you should take action in an emergency. And
Speaker 1: the question is, by using the language waiver and modification,
Speaker 1: does that include cancelation as well? And if you have
Speaker 1: the sort of priors, if you will or you have
Speaker 1: the expectation that agencies should not take expansive interpretations of
Speaker 1: authority granted by Congress, then you come down the side
Speaker 1: that a cancelation does not equal a waiver or a modification.
Speaker 1: But if, on the other hand, if you come down
Speaker 1: the side that Congress was acting in an extraordinary way
Speaker 1: saying you the administration should take extraordinary measures in the
Speaker 1: face of an emergency, then a waiver and a modification
Speaker 1: can include a cancelation. And then what the Biden administration
Speaker 1: would be upheld. Even Justice Kavanaugh said that you know,
Speaker 1: Congress acted here, thought about the problem, and it wanted
Speaker 1: to give the Education Department extraordinary powers to protect Americans
Speaker 1: in the face of any kind of emergency, whether it's
Speaker 1: like nine to eleven, which precipitated passage of the Hero's Act,
Speaker 1: or if it's like COVID. So there is a question,
Speaker 1: even with respect to the so called conservative justices, how
Speaker 1: they may come down if they reach the mirrors on
Speaker 1: this delegation issue. Justice Kavanaugh also said that some of
Speaker 1: the biggest mistakes in the Court's history were deferring to
Speaker 1: assertions of executive or emergency power. He did say that
Speaker 1: he was referring to the seizure of the mills in
Speaker 1: the Korean War by President Truman. Maybe he was referring
Speaker 1: to President Trump and the border wall from when he
Speaker 1: invoked the emergency for that, I don't know, but he
Speaker 1: was also probably talking about what we did after nine
Speaker 1: to eleven in terms of guantanamobey as well. The other
Speaker 1: justices didn't seem to pick up on this. I mean,
Speaker 1: I think that what Justice Kevin I said is very important.
Speaker 1: That you have to be very careful about allowing an
Speaker 1: emergency declaration to paper over the kind of legal issues
Speaker 1: that may arise, and that certainly was manifested in Youngstown
Speaker 1: steal as well as in some other cases. But most
Speaker 1: of the rest of the Court seemed focused on whether
Speaker 1: this was an excessive delegation. In other words, whether the
Speaker 1: Education Department went outside the borders of what Congress would
Speaker 1: have anticipated, as opposed to debating whether this is a
Speaker 1: proper invocation of an emergency or not. I mean, the
Speaker 1: difficulty is clearly many Americans felt the sting of COVID
Speaker 1: and the fact of having to bear these student loans
Speaker 1: during a time of economic privation was extremely tough. But
Speaker 1: does that say just forbearance and wait three years before
Speaker 1: you pay off the loan, or does that say you
Speaker 1: could actually cancel the student loans themselves. And that's a
Speaker 1: big difference. And I think the Court was troubled by
Speaker 1: the fact that Congress had an explicitly given the power
Speaker 1: to the Education Department to cancel loans as opposed to
Speaker 1: just issue forbearance. I think they all would agree that
Speaker 1: the Education Secretary had the power to say, Okay, let's
Speaker 1: wait three years before we collect your loans. We won't
Speaker 1: charge you interest. Let's wait five years. That would have
Speaker 1: been okay, But the question of cancelation, maybe that was
Speaker 1: too far in the minds of at least a number
Speaker 1: of the justices. Several of the conservative justices, including the
Speaker 1: Chief talking about what he called the fairness argument, which
Speaker 1: echoes a common criticism from opponents of the student loan program,
Speaker 1: who argues it punishes Americans who couldn't afford college or
Speaker 1: worked hard to pay off their loans. Here's Justice Neil
Speaker 1: Gorsage on that point. What I think they argue that
Speaker 1: is missing is cost to other persons in terms of fairness,
Speaker 1: for example, people who've paid their loans, people who don't
Speaker 1: have planned their lives around not seeking loans, and people
Speaker 1: who are not eligible for loans in the first place.
Speaker 1: And that half a trillion dollars is being diverted to
Speaker 1: one group of favored persons over others. So this is
Speaker 1: a conservative trope to use that language, but it does
Speaker 1: factor here in a particular way. If the Court were
Speaker 1: to take up the merits of the Biden administration decision
Speaker 1: and decide that the Biden administration had the power to cancel,
Speaker 1: then the question would be whether it's decision to cancel
Speaker 1: the debt was, in the words of the Administry of
Speaker 1: Procedure act arbitrary and capricious. And what the Justice is
Speaker 1: noted was that in these declarations of policy announcing the
Speaker 1: cancelation of the debts, there was no recognition or acknowledgement
Speaker 1: of the potential unfairness to those who had gone to
Speaker 1: a less costly school because of the face of the debt,
Speaker 1: or those who had struggled to pay off the debt,
Speaker 1: and that there was at least no recognition of those
Speaker 1: interests in the calculus that was used by the least
Speaker 1: articulated by the Education Department announcing the cancelation. So that
Speaker 1: issue would arise only if the court decided that the
Speaker 1: Education Department had the power to issue a cancelation, and
Speaker 1: then they would just decide whether that was fair. And
Speaker 1: they might say that because the Biden administration didn't articulate
Speaker 1: the concerns that could be raised by people who weren't benefited,
Speaker 1: such as the two plaintiffs in the second companion case,
Speaker 1: that the whole cancelation should be dismissed for being arbitrary
Speaker 1: and capricious. If they do that, that would leave open
Speaker 1: the path for the Education Department go back and announce
Speaker 1: again anew the cancelation, only this time addressing the concerns
Speaker 1: of those who weren't benefited, and just to find the
Speaker 1: line drawing that the Education Department had to do in
Speaker 1: deciding who should get their loans canceled and who like
Speaker 1: me who paid off their loans years and years ago,
Speaker 1: would not get any kind of reimbursement. Hours and hours
Speaker 1: of oral arguments becoming even harder to tell what's going
Speaker 1: on with these cases. But do you see even the
Speaker 1: possibility of five justices forget the standing issue, who would
Speaker 1: vote to uphold the student loan forgiveness program. I think
Speaker 1: that the court might be fractured. It's possible that there
Speaker 1: would be some justices saying this is an excessive delegation
Speaker 1: or the major question SOCTA and would apply, and therefore
Speaker 1: the bide administration policy must be rescinded. There's some who'd say, well,
Speaker 1: there was a targeted emergency type of delegation to the
Speaker 1: Education Department. We should allow the Education Department to proceed,
Speaker 1: but it has to do so in a measured, thoughtful way.
Speaker 1: And because they didn't give concern to the people who
Speaker 1: would feel frustrated and left out of this cancelation program,
Speaker 1: that the administration has to go back and do it again.
Speaker 1: That kind of fracture we saw in the Docker case
Speaker 1: a couple of terms ago. The Docker case, what the
Speaker 1: court said was Okay, you have the power to do this,
Speaker 1: but you didn't really have a complete enough explanation about
Speaker 1: all the factors. And so the Chief Justice was invoking
Speaker 1: that case in that approach to say, Okay, if you
Speaker 1: had the power, the least you had to consider the
Speaker 1: fairness and the impact on thitter parties, and they would
Speaker 1: send it back. And so there may be that kind
Speaker 1: of alliance, and I do think there'll be a couple
Speaker 1: of justices and maybe even as you mentioned Justice Barrett,
Speaker 1: who decides there's certainly no standing in this case. If
Speaker 1: the Justice's rule against the student loan program, well, that
Speaker 1: amplify frustrations that many Americans have with the Supreme Court
Speaker 1: that continues to interfere in these major political decisions and
Speaker 1: seems to be out of step with the majority of Americans.
Speaker 1: I think there'll be a continued wave of frustration, perhaps
Speaker 1: anger at the Supreme Court for its willingness to curtail
Speaker 1: the operations of the executive branch. And indeed there may
Speaker 1: be some political fallout, and this may give President Biden
Speaker 1: more of another kind of argument to use in his
Speaker 1: reelection campaign, showing people that, hey, what administration does is
Speaker 1: really important people's lives, and so therefore you should give
Speaker 1: me another four years. That may happen as well. Let's
Speaker 1: talk for a moment again about the Major Questions doctrine.
Speaker 1: It was the Roberts Court that established that doctrine. The
Speaker 1: Roberts Court established it. There was reference to earlier cases
Speaker 1: in which the Roberts Courts had articulated the Major Questions doctrine.
Speaker 1: Justice Scalia was one of the first two articulated and
Speaker 1: a sort of a single point. And then since that
Speaker 1: time more courses systematically referenced it, and now it's known
Speaker 1: and basically you can look at the Major Questions in
Speaker 1: a variety of ways. At its most appealing, which many
Speaker 1: people don't agree with it, but at its most appealing,
Speaker 1: the major question. Doctor and says, Look, if we're not
Speaker 1: sure that Congress gave the agency this authority and the
Speaker 1: agency's action would chart a whole new path in terms
Speaker 1: of social and economic policy, we should read the delegation narrowly.
Speaker 1: But I think, as the so called liberal justices noted
Speaker 1: in this case, we know what the Congress did. Congress
Speaker 1: wanted to give the head of the Department of Education
Speaker 1: the authority to deal with an emergency, and so it's
Speaker 1: not like charting a new path. It's not like being
Speaker 1: an activist. They're just trying to interpret the powers that
Speaker 1: Congress gave him, and in this case, to cancel at
Speaker 1: least part of the student loan debt that twenty five
Speaker 1: or forty million people in the United States has. There's
Speaker 1: an interesting argument under the Major Questions doctrine. During the discussion,
Speaker 1: the point was raised about whether it is less risky
Speaker 1: for Congress to give a great deal of power to
Speaker 1: administrative agencies in administering benefits programs as opposed to in
Speaker 1: regulating The thought underlying that discussion was, if you're just
Speaker 1: talking about merits, you're not giving the ability administration to
Speaker 1: regulate new areas, to compromise new kinds of economies at all.
Speaker 1: All you're suggesting is whether to tinker with a program
Speaker 1: that Congress clearly established, and even if it's canceled, then
Speaker 1: you're not necessarily again changing the economies of industries. And
Speaker 1: so from that perspective, a number of justices echoed that thought,
Speaker 1: as did this listener general that a delegation of the
Speaker 1: power to limit a marriage program. It could be Social Security,
Speaker 1: or it could be here education loan is a lot
Speaker 1: less dangerous, and therefore the major questions doctor should not
Speaker 1: apply as fully as opposed to when we're talking about
Speaker 1: regulating new authorities such as carbon emissions. Well, we'll have
Speaker 1: to keep guessing about what happens until perhaps as late
Speaker 1: as June when they come down with their final decisions
Speaker 1: of the term. Thanks so much, Hal, that's professor Harold
Speaker 1: Krent of the Chicago Kent College of Law. The Supreme
Speaker 1: Court will once again weigh the Consumer Financial Protection Bureau's fate,
Speaker 1: focusing on whether the agency's independent funding violates the Constitution.
Speaker 1: This week, the High Court elected to hear the Biden
Speaker 1: administration's appeal of an October decision from the US Court
Speaker 1: of Appeals for the Fifth Circuit that found the agency's
Speaker 1: independent funding through the Federal Reserve was unconstitutional. A ruling
Speaker 1: upholding the Fifth Circuits finding would wreak havoc on the
Speaker 1: agency's operations. At the very least, the CFPB would find
Speaker 1: paying bills difficult, and its prior rules, enforcement actions, and
Speaker 1: settlements could become potentially invalid. Joining me is Alan Denson
Speaker 1: a partner. It's struck and struck in Levan. The Fifth
Speaker 1: Circuit Court of Appeals throughout never enforced pay day lending
Speaker 1: rule explain why it did that, what its reasoning was.
Speaker 1: Put it into one sentence. It has to do with
Speaker 1: the unification of the purse and the sword, and that
Speaker 1: actually comes from directly from the opinion itself. And what
Speaker 1: that phrase covers is this idea that Congress, through appropriations
Speaker 1: and the executive should not be under one hell, so
Speaker 1: an executive agency should not be able to fund itself,
Speaker 1: and that is what the FSA was able to successfully
Speaker 1: argue and convents. The fifth circuit of is that it's
Speaker 1: improper for an agency to be able to set its
Speaker 1: budget and determine what it's funding. Is that power belongs
Speaker 1: to the Congress under Article one of the Constitution, and
Speaker 1: that violates separation of powers principle. That's the reasoning and
Speaker 1: rationale of that. That's circum in a nutshell. Is that
Speaker 1: a novel legal argument. It is no court has ever
Speaker 1: reached that position before, and it's the bureaus structure is
Speaker 1: also not necessarily novel in comparison to other agencies. In fact,
Speaker 1: there are other financial regulators who are similarly structured like
Speaker 1: the bureau who are not funded through appropriation who have
Speaker 1: a single director. Great example of that would be the
Speaker 1: occ for example, which is a sister regulator of the
Speaker 1: CSPB on the FEC countful. The Bureau is certainly not
Speaker 1: unique in that it is dependently funded and has the
Speaker 1: sole director structure, which is a big thing that Circuit
Speaker 1: seems to take issue with. I think what does make
Speaker 1: them unique is that they're able to request a budget
Speaker 1: of an up to amount. That's unique, But that not
Speaker 1: the reason why the Fifth Circuit says it reached a decision.
Speaker 1: It really has to do with this fundamental structure that
Speaker 1: the Circuit beliefs, or the panel beliefs that an agency
Speaker 1: should not be independent outside of congressional appropriation. So the
Speaker 1: Fifth Circuit thinks that the funding scheme for the CFPB
Speaker 1: is unconstitutional. That's right. Are there any other circuit courts
Speaker 1: who've ruled on this and come to different conclusions? Yeah,
Speaker 1: the DC Circuit early in the Bureau's history, ruled on it,
Speaker 1: and the Ninth Circuit I believe, has also ruled on
Speaker 1: that argument. So there is a flood. What does it
Speaker 1: tell you that the Supreme Court declined to put this
Speaker 1: case on an expedited schedule, as the administration asked, I
Speaker 1: think that it means this THESPB is going to face
Speaker 1: continued uncertainty. I think that that's a bad sign for
Speaker 1: the agency, and I do think that they're going to
Speaker 1: give this ruling a really close look. I mean, the
Speaker 1: Court in its current form has done taking a hard
Speaker 1: look at the administrative enforcement regime on multiple front in
Speaker 1: recent terms, whether it be the Federal Trade Commission, whether
Speaker 1: it be the EPA. Through this Major Questions doctrine that
Speaker 1: was decided last year, they're really a fresh look being
Speaker 1: taken at some of the things that those of us
Speaker 1: in government enforcement work have taken for granted for decades.
Speaker 1: The Solicitor General said the ruling has affected more than
Speaker 1: half the bureau's twenty two enforcement cases, giving defendants an
Speaker 1: argument for dismissal, and threatens the validity of virtually all
Speaker 1: past CFPB actions. Can you explain what she means there? Well,
Speaker 1: if the bureau is unconstitutional and its funding, it means
Speaker 1: that every action it is taking as a result of
Speaker 1: that funding is problematic and as an ultra virea's act,
Speaker 1: So that would mean current rulemakings are invalid because those
Speaker 1: are prepared by CFPB staff members who are funded outside
Speaker 1: of the congressional appropriations process. It would mean that past
Speaker 1: settlements that companies entered into were shepherded along, were forced
Speaker 1: along by by employees who are funded outside of congressional
Speaker 1: appropriation and and it means that current investigations are funded
Speaker 1: illegally in the fifth circuits to view and so there
Speaker 1: really is not anything that the Bureau can do that
Speaker 1: doesn't require the expenditure of funds. Did the Solicitor General
Speaker 1: ask for this decision to be held in abeyance until
Speaker 1: the Supreme Court decides? Or are defendants going to start,
Speaker 1: you know, arguing that this ruling allows dismissal of their cases.
Speaker 1: Virtually every defendant who is in litigation right now with
Speaker 1: the CSPB and plenty of others who are in investigations
Speaker 1: are already making that argument, whether they're in the Fifth
Speaker 1: Circuit or not. And so it really does affect everything
Speaker 1: the Bureau is doing from an enforcement posture, because if
Speaker 1: you're a defendant in one of these investigations or or litigation,
Speaker 1: people people want to bring every defend to their side
Speaker 1: that they can and and this is certainly one that
Speaker 1: is that is live and is currently problematic for the bureau.
Speaker 1: Will that be part of the Supreme Court's consideration the
Speaker 1: number of cases that could be affected by this, I'm
Speaker 1: not sure. I mean, they could either take of a
Speaker 1: real politic approach that would that would be looking for
Speaker 1: a practical result. You know, we've already got rules in
Speaker 1: place and settlements that have happened and employees that have
Speaker 1: been paid. Um, you know, we can't really unwine that.
Speaker 1: So what find the middle ground? Or the Court could also,
Speaker 1: um say, we have a really important philosophical point that
Speaker 1: we want to express here, and we're bound by the
Speaker 1: Constitution and we're interpreting the Constitution, and so we're not
Speaker 1: going to change our ruling based on what the consequences
Speaker 1: would be. And so they're I think there's kind of
Speaker 1: two approaches there. It's unclear what the what the Court
Speaker 1: would do. So the Court could say the Fifth Circuit
Speaker 1: is correct, and that would mean the end of the CFPB.
Speaker 1: Not necessarily. They could say the Fifth Circuit is correct,
Speaker 1: and we're going to rewrite the statute. We're going to
Speaker 1: strike the portion of the Dot Frank Act that how
Speaker 1: the CFCB is funded, and and then that would make
Speaker 1: them subject to congressional appropriation. They I mean they could,
Speaker 1: they could effectively rewrite the statute and that's certainly within
Speaker 1: their authority or strike the offending portion. And there's a
Speaker 1: severability clause and the DoD Frank Act which which would
Speaker 1: allow that. So the Supreme Court already dealt one major
Speaker 1: blow to the CFPB's independent in twenty twenty. Remind us
Speaker 1: about that. So it's it's the sail law case, and
Speaker 1: it had to do with the removability of the director
Speaker 1: of the CSCB, which, as I mentioned before, the single director.
Speaker 1: There's not a commission, and that's the sole political appointee
Speaker 1: in the office. And the Court in that case ruled
Speaker 1: that a provision in the dot Frank Act that allowed
Speaker 1: the CSCB director to be removed only for cause. They
Speaker 1: said that that portion was offensive to the Constitution, again
Speaker 1: violating separation of powers doctrine, and struck that from the
Speaker 1: statute and that now the CSTB Director here forward will
Speaker 1: be removable at will, and and it became immediately effective.
Speaker 1: You referred to this before, But could this case have
Speaker 1: implicated nations for the Federal Reserve Board, the FDIC, and
Speaker 1: the Controller of the Currency. It could I mean if
Speaker 1: the Court UM right a very broad opinion UM and
Speaker 1: similar language to the Fifth Circuit, that could be used
Speaker 1: to argue against the the OCC, FED, FDIC, who have
Speaker 1: similar funding structures. UM. The one thing that differentiates the
Speaker 1: FED and the FDIC is that they are they have
Speaker 1: governing bodies, either a board or commissions and UM. And
Speaker 1: that's different from the OCC and CFCB, who have single
Speaker 1: director structures. But UM. But that that is one way
Speaker 1: that the Court could rule. And the Court could also
Speaker 1: just make a very narrow decision that would go against
Speaker 1: the CFPB specifically, would find something unique about the bureau
Speaker 1: and in limit it's ruling to that, or it could say,
Speaker 1: you know, we we think this was wrongly decided, and
Speaker 1: we're not going to say anything about the other agencies,
Speaker 1: but we know that this case against the CFPB was
Speaker 1: wrongly decided. Finally, will this case be a test of
Speaker 1: how far the justices are willing to go to constrain
Speaker 1: the so called administrative state? I do think so, but
Speaker 1: I don't think it's the furthest that the Court has
Speaker 1: been asked to go. I mean the West Virginia versus
Speaker 1: EPA case, and this this major questions doctrine that was
Speaker 1: developed in the last term was a was a pretty
Speaker 1: far it was a pretty far out there opinion in decision.
Speaker 1: And I don't think that any of us in the
Speaker 1: consumer financial services bar that follows this kind of thing.
Speaker 1: It's all that happening. And I think that there's a
Speaker 1: lot of application of that case to CFPB and financial
Speaker 1: regulator type positions, and I think you'll see more of
Speaker 1: those challenges coming. So I think that West Virginia versus EPA,
Speaker 1: perhaps it's a bigger opinion than whatever comes out of
Speaker 1: this SA case and we'll have longer reaching implications. Thanks
Speaker 1: for being on the Bloomberg Law Show. Alan, that's Alan
Speaker 1: Denson a partner, It's Struck and Struck in Levan and
Speaker 1: that's it for this edition of the Bloomberg Law Show.
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