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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.

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Speaker 2: Hello and welcome to another episode of the All Thoughts podcast.

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Speaker 2: I'm Tracy Alloway.

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Speaker 3: And I'm Jill Wysenthal.

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Speaker 2: Joe, it's been a big week for us. We were

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Speaker 2: cited in an SEC filing for the interview he did

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Speaker 2: with Brad Jacobs. I think it's the first time I've

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Speaker 2: ever seen a full podcast transcript.

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Speaker 4: It's nice because we used to write transcripts and I

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Speaker 4: was getting to be so much work. And then it

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Speaker 4: turned out so we recently were interviewed Brad Jacobs. His

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Speaker 4: team did a full transcript and submitted it to the SEC.

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Speaker 3: Yeah, it was very nice of.

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Speaker 2: This doing our work for us. And then the other

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Speaker 2: thing that happened is we were also cited in a lawsuit.

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Speaker 2: All in one week.

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Speaker 4: All in one week, that's right. You know, we've done

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Speaker 4: some episodes. We were down in DC recently and we

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Speaker 4: had the opportunity to interview the new chair of the

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Speaker 4: FTC under President Trump, and a section of that interview

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Speaker 4: actually got included in a news lawsuit. Actually, you could

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Speaker 4: take a listen to it.

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Speaker 5: There's also I think some benefits in certain circumstances to

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Speaker 5: having multi member agencies with people from both parties. I mean, look,

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Speaker 5: if you have an agency that is exceeding the law,

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Speaker 5: abusing the companies that are proporced to regulate, it's helpful

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Speaker 5: for markets, for courts, for litigants, for government transparency to

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Speaker 5: have people in the other party pointing this out and

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Speaker 5: saying it in dessense, like you know, I wrote four hundred

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Speaker 5: plus pages of descents during my time as a minority commissioner.

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Speaker 5: I think that that adds value.

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Speaker 2: Right, So we spoke to Andrew Ferguson. He was talking

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Speaker 2: about how much he loves having minority commissioners, and then

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Speaker 2: the very next day there was news that Trump had

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Speaker 2: fired the two Democratic commissioners, Alvarro Bedoya and Rebecca Kelly Slaughter.

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Speaker 2: And so they have since filed this lawsuit in which

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Speaker 2: we're cited, are arguing that they were illegally fired. Commissioners

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Speaker 2: are supposed to be fired based on an actual reason.

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Speaker 2: You have to have cause, and I don't think there

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Speaker 2: was any really sighted in this. And the interesting thing

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Speaker 2: here is, I know it seems like a very niche topic.

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Speaker 2: Why are we discussing this FTC lawsuit other than the

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Speaker 2: fact that we're mentioned in it, but it could have

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Speaker 2: really broad implications.

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Speaker 4: Yeah, no, this is the key thing, right, and so

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Speaker 4: it's not just FTC. There have been some other instances

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Speaker 4: already in this administration of President Trump removing people who

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Speaker 4: are sort of part of various entities that exist within

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Speaker 4: the federal government, which at least formally in recent administrations,

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Speaker 4: have had some notion of independence. And there's this popular

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Speaker 4: sort of conservative legal theory that all of these are

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Speaker 4: kind of illegitimate, that there are three branches of government judicial, legislative,

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Speaker 4: and executive. There's not really room for these other things

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Speaker 4: that are literally outside the executive. And so what we've

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Speaker 4: seen is this sort of assertion through these removals, firings

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Speaker 4: of the FTC commissioners, plus others of this idea like, no,

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Speaker 4: these entities are all under the president. Some of the

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Speaker 4: implications could be pretty big.

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Speaker 2: Right, Well, there is the Federal Reserve as an independent agency,

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Speaker 2: and we know there is this populist feeling, let's put

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Speaker 2: it that way against the Federal Reserve. You know, people

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Speaker 2: think about it as this sort of ivory tower filled

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Speaker 2: with unelected technocrats. Speaking of unelected technocrats, did you see

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Speaker 2: Elon Musk's speech in Wisconsin over the weekend.

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Speaker 3: I missed that he was.

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Speaker 2: Talking about the FED. Someone asked him, do you plan

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Speaker 2: to do something with the Fed? And he basically said, yeah,

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Speaker 2: and the Fed and then said in a competition between

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Speaker 2: a magic eight ball and the central Bank for interest rates,

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Speaker 2: I don't know exactly what that means, but he said

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Speaker 2: the magic eight ball would win.

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Speaker 4: Well, look, I would just say this that premise of

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Speaker 4: central bank independence is probably one of the most revered

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Speaker 4: ideas and sort of modern or the ox economics, the

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Speaker 4: premise that we have an independent and there are some

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Speaker 4: critics of it, and there are some like sympathetic critics

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Speaker 4: to it, but I think, for like Wall Street and

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Speaker 4: how we do econ policy in this country, the premise

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Speaker 4: that the FED exists independently of immediate direct political controls

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Speaker 4: such that it can pursue its two goals full employment

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Speaker 4: or maximum employment and price stability in a way that's

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Speaker 4: outside the elections, outside of political control, is this sort

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Speaker 4: of core thing that we many people take for granted,

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Speaker 4: and there's this building question of whether that will remain so.

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Speaker 2: All right, so a lot to talk about, and we do,

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Speaker 2: in fact have the perfect guest. We're going to be

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Speaker 2: speaking to a favorite of the show. It's levmnand Columbia

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Speaker 2: Law School professor. He's also the author of The Fed Unbound,

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Speaker 2: which is a fantastic and quite a short book all

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Speaker 2: about the Central Bank. So if you know, like Elon Musk,

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Speaker 2: can't figure out what the FED does and feel that

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Speaker 2: it's absolutely impossible to find out, then you should check

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Speaker 2: out this book and also many, many, many other books. Okay, Lev,

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Speaker 2: it's so nice to have you back, so great to

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Speaker 2: be here. Why are we talking to you. Let's just

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Speaker 2: lay the scene other than you're one of our favorite guests.

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Speaker 3: I think something big is happening in the federal government

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Speaker 3: right now, where the president is asserting unprecedented powers over

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Speaker 3: parts of the government that for in some cases over

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Speaker 3: a century, have operated with a certain amount of separation

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Speaker 3: from presidential day to day direction, and that threatens to

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Speaker 3: upend government policy across a range of dimensions. But in

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Speaker 3: one area in particular, the consequences could be felt immediately,

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Speaker 3: and that is with respect to the Federal Reserve.

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Speaker 4: So I think you know, certainly, the firing of the

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Speaker 4: two minority commissioners at the FTC almost immediately after we

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Speaker 4: recorded that episode we're news. I don't think people on

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Speaker 4: Wall Street like really you know, yeah, okay, something about

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Speaker 4: mergers that's not really like most people aren't taking, you know,

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Speaker 4: that's not high on their radar. What is the connection

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Speaker 4: between the FTC or the action and something that could

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Speaker 4: happen with the Federal Reserve.

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Speaker 3: Yeah, let me tell you why that FTC firing was

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Speaker 3: a particularly big deal. There's a Supreme Court case on

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Speaker 3: the question of whether the president can fire commissioners on

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Speaker 3: the FTC without cause the way Trump asserted the power

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Speaker 3: to do the other day, and that is the bedrock

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Speaker 3: precedent that the case is a federal reserve. It's called

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Speaker 3: Humphreys Executor. It was decided by the Court in nineteen

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Speaker 3: thirty five, and it rained in and largely reversed our

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Speaker 3: cabinet to its facts. A famous decision from nineteen twenty

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Speaker 3: six called Myers versus the United States that Roosevelt President

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Speaker 3: Roosevelt FDR had relied on to try to fire a

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Speaker 3: member of the FTC, and the Supreme Court in nineteen

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Speaker 3: thirty five said, Nope, you can't do that. That case

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Speaker 3: isn't going to stand for that anymore. And we've built

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Speaker 3: up a whole system of government around this understanding. And

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Speaker 3: here Trump is inviting the Supreme Court to overrule this bedrock. President.

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Speaker 2: So, since we already went back in time to nineteen

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Speaker 2: thirty five and nineteen twenty six, can we go even

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Speaker 2: further and talk about why we have independent agencies at all?

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Speaker 2: And you know, I guess the clue is in the

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Speaker 2: name independent agencies. But they have some oversight clearly, So

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Speaker 2: who is actually watching over these independent agencies and why

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Speaker 2: do they exist?

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Speaker 3: All the constitutional actors oversee the independent agencies. Independent agency

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Speaker 3: is a technical term of art in law to refer

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Speaker 3: to an agency whose heads cannot be removed by the

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Speaker 3: president at pleasure. And so they include any officer of

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Speaker 3: the government who is not a legislative officer, a member

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Speaker 3: of Congress elected, or a judicial officer, an appointed Article

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Speaker 3: three judge. All of those officers, some of them can

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Speaker 3: be put into a category of they're part of an

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Speaker 3: executive agency the head of that agency can be removed

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Speaker 3: by the president president at pleasure, or an independent agency.

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Speaker 3: The head of the agency cannot be removed by the

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Speaker 3: president at pleasure. Now, in that second category independent agencies,

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Speaker 3: they're accountable to the president to the courts to the

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Speaker 3: Congress in all sorts of different ways. And so the

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Speaker 3: President appoints the heads of independent agencies with the advice

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Speaker 3: and consent of the Senate. The President can remove the

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Speaker 3: heads of independent agencies, but generally only for cause. Sometimes

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Speaker 3: those causes are specified like neglective duty or malfeasance in office.

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Speaker 3: We could talk about that in the Federal Reserve Act.

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Speaker 3: The statute just says cause, and a four cause removal

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Speaker 3: involves notice and a hearing, and so it's not the

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Speaker 3: same thing as an at pleasure removal, and it precludes

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Speaker 3: the president from removing somebody for a policy disagreement. The

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Speaker 3: independent agencies are accountable to Congress in that there are

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Speaker 3: hearing that are held. Their officers have to go down

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Speaker 3: just like J. Powell goes down and testify. They're subject

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Speaker 3: to Congress's subpoena power for records. They're imprecated in all

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Speaker 3: the workings of the government, and their actions, like the

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Speaker 3: FTC's actions, are subject judicial review by Article three judges.

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Speaker 3: So they're not independent in this sort of sense that

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Speaker 3: sometimes asserted that they're like a fourth branch of government

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Speaker 3: or they're outside of the government. No, they're just a

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Speaker 3: type of government body that has a different relationship to

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Speaker 3: the president from the Secretary of Defense or a White

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Speaker 3: House Chief of Staff, which are positions where the President

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Speaker 3: can fire or direct the actions of that officer. Now,

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Speaker 3: these sorts of positions have been around going all the

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Speaker 3: way back to the founding, and with respect to monetary policy,

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Speaker 3: it was a question for the first Congress and the

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Speaker 3: first Secretary of the Treasury how much direction monetary policy

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Speaker 3: should be subject to day to day oversight or direction

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Speaker 3: by the president. And so this sort of issue isn't

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Speaker 3: a new issue for the United States. It's there right

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Speaker 3: at the beginning.

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Speaker 4: Is there any difference legally between the FTC and the

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Speaker 4: Are they different? Let's say the court says, you know what,

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Speaker 4: reversing Humphrey's executor, you can fire them. Is there any

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Speaker 4: reason to think that that exact logic wouldn't apply to

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Speaker 4: the makeup of the Fomacy Board.

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Speaker 3: There's a great question. I think we should take it

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Speaker 3: into cards. First. We should just start by understanding the similarities. OK. So,

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Speaker 3: the Federal Reserve Board is a board of control for

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Speaker 3: the banking sector, and it was established in nineteen thirteen

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Speaker 3: on the model of something called the Interstate Commerce Commission,

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Speaker 3: which was established by Congress in eighteen eighty seven and

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Speaker 3: primarily oversaw the railroad sector. The Interstate Commerce Commission is

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Speaker 3: a multi member body within the executive branch of the government,

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Speaker 3: broadly construed, but its heads were not removable by the

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Speaker 3: President at pleasure. They had to be removed only for cause.

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Speaker 3: They were appointed by the President but could be removed

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Speaker 3: only for cause. Congress created something similar in nineteen thirteen

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Speaker 3: for money in banking. The next year, in nineteen fourteen,

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Speaker 3: they created a Federal Trade Commission for antitrust enforcement, and

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Speaker 3: multiple additional agencies that you guys might be familiar with followed,

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Speaker 3: like the Securities in Exchange Commission in nineteen thirty three.

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Speaker 3: Most notably so, the Fed has the same basic legal

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Speaker 3: architecture as these other multi member commissions. It has seven governors,

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Speaker 3: so it's a board of seven members, and those members

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Speaker 3: are all tenured for a term of years. They have

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Speaker 3: office security. The Secretary of the Treasury has no term

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Speaker 3: of office. They are appointed for no particular term and

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Speaker 3: can be removed at any time. The board members all

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Speaker 3: have particular terms and can be removed only for costs.

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Speaker 3: So these are the things that are in common. There

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Speaker 3: is an effort underway, in particular and conservative legal circles

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Speaker 3: and in part in the judicial branch, by those who

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Speaker 3: are interested in overturning Humphrey's Executor to divine, discover, construct

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Speaker 3: some type of FED exception, some way to distinguish the

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Speaker 3: FED constitutionally from these other multi member commissions, such that

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Speaker 3: were the Court to say Humphrey's Executor is overruled, it

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Speaker 3: would not necessarily mean the President could fire j. Palell

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Speaker 3: at pleasure. These efforts are pretty incohete, they're pretty intellectually unsatisfying,

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Speaker 3: but it's worth sort of trying to tease them out

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Speaker 3: because there is a real desire for the Court to

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Speaker 3: to protect the FED independence. And in trying to understand

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Speaker 3: what's going to happen next, we have to sort of

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Speaker 3: evaluate how plausible it is that the Court would be

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Speaker 3: able to embrace some type of rationale for why the

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Speaker 3: FED is, do you know, the one independent agency that

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Speaker 3: the president doesn't have the constitutional power to control?

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Speaker 2: Okay, so what are those arguments? Because I remember, for instance,

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Speaker 2: the CFPP, I think, when there was like wrangling over

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Speaker 2: its independence and someone mentioned that the CFPP is led

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Speaker 2: by a single leader instead of a commission like the FTC.

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Speaker 2: Would something like that come into play when you're arguing

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Speaker 2: that the FED should be a special case.

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Speaker 3: Yeah, so great question. This is a slight detour, but

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Speaker 3: I think it's important. The demise of Humphrey's executor has

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Speaker 3: been prognosticated for fifteen years now. It dates back to

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Speaker 3: a Roberts Court decision in twenty ten with respect to

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Speaker 3: an organization called the PCAOB, which oversees accountants and is

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Speaker 3: part of the sec and that was struck down and

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Speaker 3: the Court said the Humphrey's Executor exception to the President's

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Speaker 3: power to oversee the executive branch, we will not extend

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Speaker 3: it to this sort of novel organization that is two

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Speaker 3: layers removed from the president because the PCAOB is under

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Speaker 3: the Securities in Exchange Commission. And there's a lot of

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Speaker 3: language in that opinion that made people think, WHOA, these

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Speaker 3: justices don't really agree with Humphrey's Executor. They have a

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Speaker 3: different view of the president. What's going to be next?

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Speaker 3: And in twenty twenty you have the CFPB case that

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Speaker 3: you're referencing sala law, in which the Court says Yep,

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Speaker 3: the CFPB, which is a five year term, tenured, single

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Speaker 3: headed agency. We're not going to extend Humphrey's executor to

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Speaker 3: that either. And Justice Roberts wrote the opinion, and he said,

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Speaker 3: this part has way too much power. The Humphreys executor

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Speaker 3: sort of exception to presidential oversight, as he characterized, it

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Speaker 3: doesn't cover the CFPV. This thing is new. Congress just

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Speaker 3: created it and it's not rooted in history. And people thought, okay,

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Speaker 3: so certain single headed agencies might not be allowed anymore.

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Speaker 3: What's going to happen next Next year? Twenty twenty one,

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Speaker 3: the Supreme Court, with Justice Alito writing for the court,

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Speaker 3: decided a case called Collins versus Yellen, and struck down

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Speaker 3: the independence of the Federal Housing Finance Administration FAHFA. And

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Speaker 3: there the Court just said, oh, all single headed agencies,

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Speaker 3: no matter what, no matter how much power they have,

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Speaker 3: are unconstitutional. And this covers things like the Social Security Administration,

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Speaker 3: which since its inception has been headed by an individual

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Speaker 3: tenured for a six year term. And the idea is

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Speaker 3: SSA administration is nonpartisan and every president shouldn't come in

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Speaker 3: and just put in their own person. But after Collins

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Speaker 3: versus yelling. President Biden fired the Social Security Administrator, and

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Speaker 3: you got to a point where people were wondering, what

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Speaker 3: about the multi member commissions themselves that Humphrey's executor was about.

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Speaker 3: Will it no longer be sustained for them either? So

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Speaker 3: what are the possible exceptions that would allow the logic

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Speaker 3: of Humphrey's executors to maybe applied to the FED even

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Speaker 3: if it no longer applies to the FTC. The one

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Speaker 3: that the Trump administration is running with so far is

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Speaker 3: that monetary policy is somehow not sovereign executive power and

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Speaker 3: can be distinguished from the other stuff the FED does,

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Speaker 3: and that stuff is regulation of financial institutions. So Trump

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Speaker 3: put out an executive order last month, Executive Order fourteen

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Speaker 3: two fifteen, which asserted executive power over all the independent

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Speaker 3: agencies and included specific carve out language for the FED

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Speaker 3: that said, this order doesn't apply to the FED with

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Speaker 3: respect to its monetary policy, only with respect to its

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Speaker 3: regulation and supervision of financial institutions. Okay, so this is

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Speaker 3: sort of the Trump theory. There's some other options we

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Speaker 3: can get to, but I think let's maybe sit through

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Speaker 3: Trump theory. Does this make any sense? There? Are some

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Speaker 3: huge problems with this theory. It just sort of suggests

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Speaker 3: that they haven't spent a lot of time thinking about

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Speaker 3: how the FED conducts monetary policy and what the relationship

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Speaker 3: is between monetary policy and the regulation of banks, because

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Speaker 3: it's really all one and the same thing. So the

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Speaker 3: court would be hard pressed to say, for example, just

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Speaker 3: as an initial matter, you know, j Powell can't be

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Speaker 3: removed by the President with respect to what he's doing

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Speaker 3: on monetary policy, but with respect to what he's doing

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Speaker 3: on bank regulation, the President could fire him for a

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Speaker 3: policy disagreement. That would just sort of fall apart pretty easily. Right,

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Speaker 3: what type of independence has really left? The President could

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Speaker 3: just say I fired him because I don't like what

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Speaker 3: he was doing on bank regulation, And the real reason

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Speaker 3: could be that he didn't like what Jay Powell was

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Speaker 3: doing on interest rates. But how would we know because

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Speaker 3: he doesn't need to give a reason except to say

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Speaker 3: that it's bank regulation. So there's like already a problem.

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Speaker 3: But the deeper problem is Moynetree policy implementation is bank regulation.

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Speaker 3: Like in January when the FED met, in the aftermath

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Speaker 3: of that meeting, the Board of Governors amended Regulation D

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Speaker 3: through a rule making published in the Federal Register lowering

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Speaker 3: the interests paid on reserve balances to banks with reserve

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Speaker 3: accounts at the Federal Reserve Banks. It is a straight

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Speaker 3: exercise of regulatory power, just like when the SEC writes

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Speaker 3: a rule for what type of disclosure a company has

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Speaker 3: to do if it's a publicly traded company. And they

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Speaker 3: just don't seem to realize this. They think that it's

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Speaker 3: like FOMC just meets and they talk and then they

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Speaker 3: announce a decision, and that's monetary policy. It's not regulatory,

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Speaker 3: it's not a judicatory But actually no monetary policy implementation

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Speaker 3: is all exercise of government power over the banking system.

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Speaker 4: You know what I do find interesting, Like I think

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Speaker 4: of this concept of the importance of an independent FED

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Speaker 4: that can pursue both its mandates as this sort of

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Speaker 4: fairly modern idea in economics. But it is interesting that

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Speaker 4: apparently the Congress is actually like way ahead of like

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Speaker 4: eCOM theory in this setup. In this way, it's kind

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Speaker 4: of fascinating that they sort of intuited this. What I

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Speaker 4: want to go to is if there is this Trump

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Speaker 4: world or conservative world desire to find a way in

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Speaker 4: which Humphrey's executor can be overturned, but yet somehow not

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Speaker 4: implicate the structure of the FED. Why should anytone care

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Speaker 4: Because in the end, all laws are just enforced by humans.

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Speaker 4: And if the general thinking is we're going to read

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Speaker 4: something into this law that, even though we can't logically

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Speaker 4: defend it on paper, we all want it to have

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Speaker 4: this outcome where all of these independent agencies are formerly

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Speaker 4: just part of the executive branch except this one. If

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Speaker 4: that's the outcome everyone wants, then isn't that the outcome

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Speaker 4: we'll get.

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Speaker 3: That's a great question. The narrow sort of answer, you know,

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Speaker 3: just a law professor's concern is that creating illogical exceptions

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Speaker 3: to doctrine is bad for law. Law as a social

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Speaker 3: coordinating mechanism. It tears at the fabric of law. Every

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Speaker 3: time someone violates our understanding of what the law is,

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Speaker 3: it's tearing at the fabric of law. So these removals

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Speaker 3: that Trump has engaged in because there's precedent on point

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Speaker 3: saying you can't do them, this is tearing at law.

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Speaker 3: This is reducing the effectiveness of law as a coordinating mechanism,

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Speaker 3: which is something we should value because it helps us

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Speaker 3: organize our lives in an effective way with minimal social conflict.

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Speaker 3: So there's sort of just like a narrow concern with

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Speaker 3: contorting Distorting doctrine and law reduces respect for law and

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Speaker 3: its effectiveness. The more persuasive I think, answer to market participants,

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Speaker 3: you know, we're not like invested in this in sort

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Speaker 3: of you know what's going to happen to the stock market?

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Speaker 1: Right.

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Speaker 3: I think that every time the court seeds more authority

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Speaker 3: to the President, they call into question their ability and

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Speaker 3: willingness in the future to draw the line. And so

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Speaker 3: if they write an opinion in the FTC case over

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Speaker 3: ruling Humphrey's Executor that says the FED is an exception

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Speaker 3: and this ruling doesn't apply to the FED, that will,

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Speaker 3: of course, in this moment, on its face, protect FED independence.

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Speaker 3: But now that we've moved the line twenty ten, twenty

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Speaker 3: twenty twenty one, and then again more and more towards

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Speaker 3: the president, we invite the President to test this new exception.

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Speaker 3: And there's a number of ways the President might do it.

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Speaker 3: And in a year from now or two years from now,

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Speaker 3: the only organization left is the FED and the Fed's

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Speaker 3: ability to stand on its own may be limited, and

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Speaker 3: as people become aware of that and see the pressure

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Speaker 3: that the President will exert on the FED as the

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Speaker 3: only remain in an exception, the independence will dissipate and

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Speaker 3: markets will react, and the Fed's ability to make credible

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Speaker 3: commitments to maintain price stability over time could be impaired.

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Speaker 4: Right now, by the way, Tracy, I just want to

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Speaker 4: give a quick shout out to Matt Stoller, who wrote

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Speaker 4: a great blog post a couple of weeks ago about

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Speaker 4: this sort of thing, and he cited a footnote from

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Speaker 4: Alito in a dissent on the CFPB in which Alito

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Speaker 4: himself said the FED quote should be regarded as a

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Speaker 4: special arrangement sanctioned by history. Yes, a unique institution with

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Speaker 4: a unique historical background, to which Stohler said, this is

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Speaker 4: the legal logic of a souvenir T shirt that says

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Speaker 4: I'm the mommy.

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Speaker 3: That's why. Yes.

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Speaker 4: So I just want to give a shout out to Matt,

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Speaker 4: because this is what really this piece was actually sort

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Speaker 4: of what put a bunch of this sort of in

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Speaker 4: my head.

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Speaker 2: Amazing, amazing. So I have a question how well defined

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Speaker 2: or codified is the at cause portion of this because

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Speaker 2: I'm thinking like, Okay, we could do all this, we

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Speaker 2: go through the Supreme Court, but could Trump just come

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Speaker 2: up with a new reason that counts as at cause

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Speaker 2: and that might be an easier way to exert.

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Speaker 3: Inflation was too high? Yeah. Yes, So that's one of

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Speaker 3: the concerns that I have. If you preserve this exception

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Speaker 3: just for the FED, you're inviting a challenge. Now, the

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Speaker 3: FED is the only four cause protected agency, and the

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Speaker 3: President has almost never removed anyone for cause. The last

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Speaker 3: time was over one hundred years ago. You and so

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Speaker 3: there's very little doctrine on that. You invite the President

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Speaker 3: to assert a cause and challenge the court to say

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Speaker 3: that it doesn't qualify. And because the jurisprudence is so thin,

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Speaker 3: it will be hard and people won't know how the

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Speaker 3: Court will come out on that, and the harm will

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Speaker 3: already be done right j poweill have been removed. It

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Speaker 3: will be chaos. We will be litigating over this question

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Speaker 3: all the way up to the Supreme Court. The beauty

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Speaker 3: of maintaining the line in Humphreys Executor is we never

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Speaker 3: have the fight on the terrain of the Federal Reserve.

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Speaker 3: The fight is somewhere else. Once you move the line

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Speaker 3: all the way up to the Federal Reserve, the war

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Speaker 3: will be on the train of the FED, and in

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Speaker 3: some ways that's a loss already.

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Speaker 4: So you say, Okay, there's this conservative jurisprudence that they

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Speaker 4: want to come up with ways to justify all of

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Speaker 4: these agencies are somewhat illegitimate with the accepted FED. Do

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Speaker 4: you actually believe that that is the end goal, that

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Speaker 4: all of these agencies are subsumed to the President except

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Speaker 4: the FED, or do you think this is an intermediate.

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Speaker 3: Step to then get to the Fed.

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Speaker 4: But they this point, they can't argue the full thing

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Speaker 4: because that would freak people out too much.

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Speaker 3: There's a split amongst conservative legal movement, and I think

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Speaker 3: there are some people who want the full thing and

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Speaker 3: there are some who want to protect the FED. And

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Speaker 3: I think there's a good reason to put Justice Alito,

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Speaker 3: for example, in the camp of the endgame being we

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Speaker 3: exempt the FED. And Justice Alito in that dissent in

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Speaker 3: the Community Financial Services case which came out last spring.

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Speaker 3: In footnote sixteen which you reference, Justice Alito is speaking

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Speaker 3: to his colleagues. He is telling them we should overturn

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Speaker 3: Humphrey's executor I've figured out a way to do it

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Speaker 3: without hurting the FED. We're just going to claim that

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Speaker 3: it's a unique institution sanctioned by history. Of course, all

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00:26:10,560 --> 00:26:14,600
Speaker 3: of these independent agencies are unique institutions, and Congress crafted

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00:26:14,640 --> 00:26:19,280
Speaker 3: these particular governance arrangements because of the particular dynamics in

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00:26:19,400 --> 00:26:24,600
Speaker 3: each area, and so there's a fundamental illogic to Alito's effort.

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00:26:24,920 --> 00:26:27,400
Speaker 3: At the same time, he's just trying to say, if

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00:26:27,400 --> 00:26:30,040
Speaker 3: we just say it's a special situation and it's unique,

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00:26:30,040 --> 00:26:32,439
Speaker 3: we can get this outcome that we want, which is

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00:26:33,400 --> 00:26:38,400
Speaker 3: no independent agencies, where these agencies are engaged in policy

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00:26:38,440 --> 00:26:43,720
Speaker 3: making that is sort of constraining market activity. And yes,

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00:26:43,880 --> 00:26:48,120
Speaker 3: independent agency for the Federal Reserve where we're particularly worried

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00:26:48,480 --> 00:26:52,920
Speaker 3: about excessive money creation, which is a pro debtor, you know,

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00:26:53,440 --> 00:26:56,439
Speaker 3: credit or unfriendly policy. And so it's just sort of

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00:26:56,480 --> 00:27:01,040
Speaker 3: you're importing your policy preferences into some attempt to reconstruct

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00:27:01,040 --> 00:27:04,760
Speaker 3: the administrative state to sort of protect your interests and

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00:27:04,880 --> 00:27:08,159
Speaker 3: get the policy you want across the board. I think

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00:27:08,240 --> 00:27:12,040
Speaker 3: it's an untenable sort of outcome in some ways, but

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00:27:12,440 --> 00:27:15,879
Speaker 3: it's very much what a lot of people who subscribe

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00:27:15,920 --> 00:27:18,480
Speaker 3: to the unitary executive theory are trying to achieve.

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Speaker 2: So this has been a fantastic overview of what's at stake.

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00:27:23,440 --> 00:27:27,160
Speaker 2: What should we be watching going forward? What are you watching?

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00:27:28,000 --> 00:27:30,600
Speaker 3: So there are a bunch of cases right now making

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00:27:30,640 --> 00:27:36,080
Speaker 3: their way through the federal courts that began with Trump

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00:27:36,240 --> 00:27:43,560
Speaker 3: illegally firing independent agency heads. So right on January twenty seventh,

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00:27:44,000 --> 00:27:49,399
Speaker 3: shortly after taking office, Trump purported to remove the head

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00:27:49,520 --> 00:27:52,280
Speaker 3: of the National Labor Relations Board, and that led to

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00:27:52,320 --> 00:27:57,760
Speaker 3: a lawsuit where will Cox is seeking reinstatement and a

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00:27:57,880 --> 00:28:01,600
Speaker 3: judicial judgment that she can cannot be removed except for cause.

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00:28:02,840 --> 00:28:05,679
Speaker 3: That case is making its way through. And then another

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00:28:05,720 --> 00:28:08,440
Speaker 3: case involving the Merit System's Protection Board is making its

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00:28:08,440 --> 00:28:11,440
Speaker 3: way through, and now the FTC case is making its

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00:28:11,480 --> 00:28:16,439
Speaker 3: way through. And those first two cases. On Friday, so

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00:28:16,800 --> 00:28:19,600
Speaker 3: just a few days ago, an important thing happened, which

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00:28:19,680 --> 00:28:21,960
Speaker 3: is a panel of the d C Circuit Court of Appeals,

468
00:28:21,960 --> 00:28:24,080
Speaker 3: which is like the second highest court in the land.

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00:28:24,640 --> 00:28:26,600
Speaker 3: A panel of the d C Circuit Court of Appeals

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00:28:26,680 --> 00:28:32,160
Speaker 3: embraced Trump's legal theory and overruled a district judge who

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00:28:32,240 --> 00:28:36,440
Speaker 3: had ruled on those cases earlier in favor of Willcox.

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00:28:36,760 --> 00:28:42,239
Speaker 3: And Harris. Now, the parties in that case are going

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00:28:42,280 --> 00:28:46,760
Speaker 3: to ask the full DC Circuit to reconsider the panel's decision,

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00:28:47,240 --> 00:28:51,560
Speaker 3: and shortly thereafter, inevitably, no matter what happens with that,

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00:28:51,600 --> 00:28:54,280
Speaker 3: the parties will seek review by the Supreme Court, an

476
00:28:54,280 --> 00:28:56,840
Speaker 3: emergency review, And so the Supreme Court is going to

477
00:28:56,840 --> 00:29:00,320
Speaker 3: potentially be drawn into this in the coming days. And

478
00:29:00,400 --> 00:29:03,560
Speaker 3: whatever the Supreme Court does in the coming days, it

479
00:29:03,680 --> 00:29:07,600
Speaker 3: is possible that one or more justices will dissent from

480
00:29:07,680 --> 00:29:10,720
Speaker 3: the Supreme Court's decision with the respect of the emergency

481
00:29:10,720 --> 00:29:13,760
Speaker 3: application and say something about what they think the future

482
00:29:13,800 --> 00:29:16,920
Speaker 3: of Humphrey's executor is going to be. And so we

483
00:29:17,000 --> 00:29:21,320
Speaker 3: could get real tea leaves very soon in some of

484
00:29:21,360 --> 00:29:23,120
Speaker 3: the cases that are already preceding.

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00:29:23,800 --> 00:29:29,600
Speaker 2: I'm really glad we talked to you today, Love, Thank

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00:29:29,600 --> 00:29:31,600
Speaker 2: you so much for coming back on a laws.

487
00:29:31,880 --> 00:29:46,200
Speaker 3: Thank you for having me, Joe.

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00:29:46,200 --> 00:29:48,320
Speaker 2: That was such a good overview, it really was, And

489
00:29:48,400 --> 00:29:51,520
Speaker 2: I didn't realize that stuff was going to happen potentially

490
00:29:51,520 --> 00:29:55,400
Speaker 2: on this so quickly, So really good timing on our part,

491
00:29:55,160 --> 00:30:01,040
Speaker 2: pat ourselves. By the way, Lev left us some homework,

492
00:30:01,320 --> 00:30:04,480
Speaker 2: some assigned reading. He says, we should look up Hamilton's

493
00:30:04,520 --> 00:30:05,880
Speaker 2: report on a National Bank.

494
00:30:06,400 --> 00:30:09,520
Speaker 4: Yes, apparently that is some good reading for background on

495
00:30:09,760 --> 00:30:13,840
Speaker 4: why Congress intuited to have an independent federal reserve, even

496
00:30:13,880 --> 00:30:18,040
Speaker 4: before the academic economics profession sort of understood, you know,

497
00:30:18,080 --> 00:30:19,960
Speaker 4: central bank independence is a key thing.

498
00:30:19,960 --> 00:30:20,920
Speaker 3: You know. I was listening.

499
00:30:21,080 --> 00:30:23,520
Speaker 4: I don't know if it's like the trial lawyer equivalent

500
00:30:24,000 --> 00:30:27,200
Speaker 4: of constitutional law, you know, because it's like most conversations

501
00:30:27,200 --> 00:30:30,440
Speaker 4: about constitutional law do not sound like, you know, a

502
00:30:30,520 --> 00:30:33,080
Speaker 4: lawyer giving an opening statement. But I feel like Lev

503
00:30:33,120 --> 00:30:34,240
Speaker 4: can like really blend the two.

504
00:30:34,360 --> 00:30:37,480
Speaker 2: Oh absolutely. By the way, for people who well everyone

505
00:30:37,520 --> 00:30:40,480
Speaker 2: who wasn't in the studio, you kind of missed Lev's

506
00:30:40,880 --> 00:30:45,360
Speaker 2: gesticulations to wild gesticulations, but they are very very effective.

507
00:30:45,400 --> 00:30:46,480
Speaker 4: I think you could kind of hear them.

508
00:30:46,680 --> 00:30:49,080
Speaker 2: Yeah, you can hear it in his voice. All right,

509
00:30:49,120 --> 00:30:49,840
Speaker 2: shall we leave it there.

510
00:30:49,920 --> 00:30:50,640
Speaker 3: Let's leave it there.

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00:30:50,760 --> 00:30:53,360
Speaker 2: This has been another episode of the All Thoughts Podcast.

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00:30:53,440 --> 00:30:56,680
Speaker 2: I'm Tracy Alloway. You can follow me at Tracy Alloway and.

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00:30:56,600 --> 00:31:00,120
Speaker 4: I'm Joe Wisenthal. You can follow me at the Stalwart. Hello,

514
00:31:00,200 --> 00:31:04,200
Speaker 4: Levmanond at Levmanon. Follow Our producers Carmen Rodriguez at Kerman

515
00:31:04,360 --> 00:31:07,920
Speaker 4: armand dash Ol Bennett at dashbod and Kilbrooks at Kalebrooks.

516
00:31:08,040 --> 00:31:10,920
Speaker 4: For more odd lootscontent, go to Bloomberg dot com slash

517
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Speaker 4: odd Lots, where we have all of our episodes in

518
00:31:13,120 --> 00:31:15,480
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520
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Speaker 3: In