Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: Hello and welcome to another episode of the All Thoughts podcast.
Speaker 2: I'm Tracy Alloway.
Speaker 3: And I'm Jill Wysenthal.
Speaker 2: Joe, it's been a big week for us. We were
Speaker 2: cited in an SEC filing for the interview he did
Speaker 2: with Brad Jacobs. I think it's the first time I've
Speaker 2: ever seen a full podcast transcript.
Speaker 4: It's nice because we used to write transcripts and I
Speaker 4: was getting to be so much work. And then it
Speaker 4: turned out so we recently were interviewed Brad Jacobs. His
Speaker 4: team did a full transcript and submitted it to the SEC.
Speaker 3: Yeah, it was very nice of.
Speaker 2: This doing our work for us. And then the other
Speaker 2: thing that happened is we were also cited in a lawsuit.
Speaker 2: All in one week.
Speaker 4: All in one week, that's right. You know, we've done
Speaker 4: some episodes. We were down in DC recently and we
Speaker 4: had the opportunity to interview the new chair of the
Speaker 4: FTC under President Trump, and a section of that interview
Speaker 4: actually got included in a news lawsuit. Actually, you could
Speaker 4: take a listen to it.
Speaker 5: There's also I think some benefits in certain circumstances to
Speaker 5: having multi member agencies with people from both parties. I mean, look,
Speaker 5: if you have an agency that is exceeding the law,
Speaker 5: abusing the companies that are proporced to regulate, it's helpful
Speaker 5: for markets, for courts, for litigants, for government transparency to
Speaker 5: have people in the other party pointing this out and
Speaker 5: saying it in dessense, like you know, I wrote four hundred
Speaker 5: plus pages of descents during my time as a minority commissioner.
Speaker 5: I think that that adds value.
Speaker 2: Right, So we spoke to Andrew Ferguson. He was talking
Speaker 2: about how much he loves having minority commissioners, and then
Speaker 2: the very next day there was news that Trump had
Speaker 2: fired the two Democratic commissioners, Alvarro Bedoya and Rebecca Kelly Slaughter.
Speaker 2: And so they have since filed this lawsuit in which
Speaker 2: we're cited, are arguing that they were illegally fired. Commissioners
Speaker 2: are supposed to be fired based on an actual reason.
Speaker 2: You have to have cause, and I don't think there
Speaker 2: was any really sighted in this. And the interesting thing
Speaker 2: here is, I know it seems like a very niche topic.
Speaker 2: Why are we discussing this FTC lawsuit other than the
Speaker 2: fact that we're mentioned in it, but it could have
Speaker 2: really broad implications.
Speaker 4: Yeah, no, this is the key thing, right, and so
Speaker 4: it's not just FTC. There have been some other instances
Speaker 4: already in this administration of President Trump removing people who
Speaker 4: are sort of part of various entities that exist within
Speaker 4: the federal government, which at least formally in recent administrations,
Speaker 4: have had some notion of independence. And there's this popular
Speaker 4: sort of conservative legal theory that all of these are
Speaker 4: kind of illegitimate, that there are three branches of government judicial, legislative,
Speaker 4: and executive. There's not really room for these other things
Speaker 4: that are literally outside the executive. And so what we've
Speaker 4: seen is this sort of assertion through these removals, firings
Speaker 4: of the FTC commissioners, plus others of this idea like, no,
Speaker 4: these entities are all under the president. Some of the
Speaker 4: implications could be pretty big.
Speaker 2: Right, Well, there is the Federal Reserve as an independent agency,
Speaker 2: and we know there is this populist feeling, let's put
Speaker 2: it that way against the Federal Reserve. You know, people
Speaker 2: think about it as this sort of ivory tower filled
Speaker 2: with unelected technocrats. Speaking of unelected technocrats, did you see
Speaker 2: Elon Musk's speech in Wisconsin over the weekend.
Speaker 3: I missed that he was.
Speaker 2: Talking about the FED. Someone asked him, do you plan
Speaker 2: to do something with the Fed? And he basically said, yeah,
Speaker 2: and the Fed and then said in a competition between
Speaker 2: a magic eight ball and the central Bank for interest rates,
Speaker 2: I don't know exactly what that means, but he said
Speaker 2: the magic eight ball would win.
Speaker 4: Well, look, I would just say this that premise of
Speaker 4: central bank independence is probably one of the most revered
Speaker 4: ideas and sort of modern or the ox economics, the
Speaker 4: premise that we have an independent and there are some
Speaker 4: critics of it, and there are some like sympathetic critics
Speaker 4: to it, but I think, for like Wall Street and
Speaker 4: how we do econ policy in this country, the premise
Speaker 4: that the FED exists independently of immediate direct political controls
Speaker 4: such that it can pursue its two goals full employment
Speaker 4: or maximum employment and price stability in a way that's
Speaker 4: outside the elections, outside of political control, is this sort
Speaker 4: of core thing that we many people take for granted,
Speaker 4: and there's this building question of whether that will remain so.
Speaker 2: All right, so a lot to talk about, and we do,
Speaker 2: in fact have the perfect guest. We're going to be
Speaker 2: speaking to a favorite of the show. It's levmnand Columbia
Speaker 2: Law School professor. He's also the author of The Fed Unbound,
Speaker 2: which is a fantastic and quite a short book all
Speaker 2: about the Central Bank. So if you know, like Elon Musk,
Speaker 2: can't figure out what the FED does and feel that
Speaker 2: it's absolutely impossible to find out, then you should check
Speaker 2: out this book and also many, many, many other books. Okay, Lev,
Speaker 2: it's so nice to have you back, so great to
Speaker 2: be here. Why are we talking to you. Let's just
Speaker 2: lay the scene other than you're one of our favorite guests.
Speaker 3: I think something big is happening in the federal government
Speaker 3: right now, where the president is asserting unprecedented powers over
Speaker 3: parts of the government that for in some cases over
Speaker 3: a century, have operated with a certain amount of separation
Speaker 3: from presidential day to day direction, and that threatens to
Speaker 3: upend government policy across a range of dimensions. But in
Speaker 3: one area in particular, the consequences could be felt immediately,
Speaker 3: and that is with respect to the Federal Reserve.
Speaker 4: So I think you know, certainly, the firing of the
Speaker 4: two minority commissioners at the FTC almost immediately after we
Speaker 4: recorded that episode we're news. I don't think people on
Speaker 4: Wall Street like really you know, yeah, okay, something about
Speaker 4: mergers that's not really like most people aren't taking, you know,
Speaker 4: that's not high on their radar. What is the connection
Speaker 4: between the FTC or the action and something that could
Speaker 4: happen with the Federal Reserve.
Speaker 3: Yeah, let me tell you why that FTC firing was
Speaker 3: a particularly big deal. There's a Supreme Court case on
Speaker 3: the question of whether the president can fire commissioners on
Speaker 3: the FTC without cause the way Trump asserted the power
Speaker 3: to do the other day, and that is the bedrock
Speaker 3: precedent that the case is a federal reserve. It's called
Speaker 3: Humphreys Executor. It was decided by the Court in nineteen
Speaker 3: thirty five, and it rained in and largely reversed our
Speaker 3: cabinet to its facts. A famous decision from nineteen twenty
Speaker 3: six called Myers versus the United States that Roosevelt President
Speaker 3: Roosevelt FDR had relied on to try to fire a
Speaker 3: member of the FTC, and the Supreme Court in nineteen
Speaker 3: thirty five said, Nope, you can't do that. That case
Speaker 3: isn't going to stand for that anymore. And we've built
Speaker 3: up a whole system of government around this understanding. And
Speaker 3: here Trump is inviting the Supreme Court to overrule this bedrock. President.
Speaker 2: So, since we already went back in time to nineteen
Speaker 2: thirty five and nineteen twenty six, can we go even
Speaker 2: further and talk about why we have independent agencies at all?
Speaker 2: And you know, I guess the clue is in the
Speaker 2: name independent agencies. But they have some oversight clearly, So
Speaker 2: who is actually watching over these independent agencies and why
Speaker 2: do they exist?
Speaker 3: All the constitutional actors oversee the independent agencies. Independent agency
Speaker 3: is a technical term of art in law to refer
Speaker 3: to an agency whose heads cannot be removed by the
Speaker 3: president at pleasure. And so they include any officer of
Speaker 3: the government who is not a legislative officer, a member
Speaker 3: of Congress elected, or a judicial officer, an appointed Article
Speaker 3: three judge. All of those officers, some of them can
Speaker 3: be put into a category of they're part of an
Speaker 3: executive agency the head of that agency can be removed
Speaker 3: by the president president at pleasure, or an independent agency.
Speaker 3: The head of the agency cannot be removed by the
Speaker 3: president at pleasure. Now, in that second category independent agencies,
Speaker 3: they're accountable to the president to the courts to the
Speaker 3: Congress in all sorts of different ways. And so the
Speaker 3: President appoints the heads of independent agencies with the advice
Speaker 3: and consent of the Senate. The President can remove the
Speaker 3: heads of independent agencies, but generally only for cause. Sometimes
Speaker 3: those causes are specified like neglective duty or malfeasance in office.
Speaker 3: We could talk about that in the Federal Reserve Act.
Speaker 3: The statute just says cause, and a four cause removal
Speaker 3: involves notice and a hearing, and so it's not the
Speaker 3: same thing as an at pleasure removal, and it precludes
Speaker 3: the president from removing somebody for a policy disagreement. The
Speaker 3: independent agencies are accountable to Congress in that there are
Speaker 3: hearing that are held. Their officers have to go down
Speaker 3: just like J. Powell goes down and testify. They're subject
Speaker 3: to Congress's subpoena power for records. They're imprecated in all
Speaker 3: the workings of the government, and their actions, like the
Speaker 3: FTC's actions, are subject judicial review by Article three judges.
Speaker 3: So they're not independent in this sort of sense that
Speaker 3: sometimes asserted that they're like a fourth branch of government
Speaker 3: or they're outside of the government. No, they're just a
Speaker 3: type of government body that has a different relationship to
Speaker 3: the president from the Secretary of Defense or a White
Speaker 3: House Chief of Staff, which are positions where the President
Speaker 3: can fire or direct the actions of that officer. Now,
Speaker 3: these sorts of positions have been around going all the
Speaker 3: way back to the founding, and with respect to monetary policy,
Speaker 3: it was a question for the first Congress and the
Speaker 3: first Secretary of the Treasury how much direction monetary policy
Speaker 3: should be subject to day to day oversight or direction
Speaker 3: by the president. And so this sort of issue isn't
Speaker 3: a new issue for the United States. It's there right
Speaker 3: at the beginning.
Speaker 4: Is there any difference legally between the FTC and the
Speaker 4: Are they different? Let's say the court says, you know what,
Speaker 4: reversing Humphrey's executor, you can fire them. Is there any
Speaker 4: reason to think that that exact logic wouldn't apply to
Speaker 4: the makeup of the Fomacy Board.
Speaker 3: There's a great question. I think we should take it
Speaker 3: into cards. First. We should just start by understanding the similarities. OK. So,
Speaker 3: the Federal Reserve Board is a board of control for
Speaker 3: the banking sector, and it was established in nineteen thirteen
Speaker 3: on the model of something called the Interstate Commerce Commission,
Speaker 3: which was established by Congress in eighteen eighty seven and
Speaker 3: primarily oversaw the railroad sector. The Interstate Commerce Commission is
Speaker 3: a multi member body within the executive branch of the government,
Speaker 3: broadly construed, but its heads were not removable by the
Speaker 3: President at pleasure. They had to be removed only for cause.
Speaker 3: They were appointed by the President but could be removed
Speaker 3: only for cause. Congress created something similar in nineteen thirteen
Speaker 3: for money in banking. The next year, in nineteen fourteen,
Speaker 3: they created a Federal Trade Commission for antitrust enforcement, and
Speaker 3: multiple additional agencies that you guys might be familiar with followed,
Speaker 3: like the Securities in Exchange Commission in nineteen thirty three.
Speaker 3: Most notably so, the Fed has the same basic legal
Speaker 3: architecture as these other multi member commissions. It has seven governors,
Speaker 3: so it's a board of seven members, and those members
Speaker 3: are all tenured for a term of years. They have
Speaker 3: office security. The Secretary of the Treasury has no term
Speaker 3: of office. They are appointed for no particular term and
Speaker 3: can be removed at any time. The board members all
Speaker 3: have particular terms and can be removed only for costs.
Speaker 3: So these are the things that are in common. There
Speaker 3: is an effort underway, in particular and conservative legal circles
Speaker 3: and in part in the judicial branch, by those who
Speaker 3: are interested in overturning Humphrey's Executor to divine, discover, construct
Speaker 3: some type of FED exception, some way to distinguish the
Speaker 3: FED constitutionally from these other multi member commissions, such that
Speaker 3: were the Court to say Humphrey's Executor is overruled, it
Speaker 3: would not necessarily mean the President could fire j. Palell
Speaker 3: at pleasure. These efforts are pretty incohete, they're pretty intellectually unsatisfying,
Speaker 3: but it's worth sort of trying to tease them out
Speaker 3: because there is a real desire for the Court to
Speaker 3: to protect the FED independence. And in trying to understand
Speaker 3: what's going to happen next, we have to sort of
Speaker 3: evaluate how plausible it is that the Court would be
Speaker 3: able to embrace some type of rationale for why the
Speaker 3: FED is, do you know, the one independent agency that
Speaker 3: the president doesn't have the constitutional power to control?
Speaker 2: Okay, so what are those arguments? Because I remember, for instance,
Speaker 2: the CFPP, I think, when there was like wrangling over
Speaker 2: its independence and someone mentioned that the CFPP is led
Speaker 2: by a single leader instead of a commission like the FTC.
Speaker 2: Would something like that come into play when you're arguing
Speaker 2: that the FED should be a special case.
Speaker 3: Yeah, so great question. This is a slight detour, but
Speaker 3: I think it's important. The demise of Humphrey's executor has
Speaker 3: been prognosticated for fifteen years now. It dates back to
Speaker 3: a Roberts Court decision in twenty ten with respect to
Speaker 3: an organization called the PCAOB, which oversees accountants and is
Speaker 3: part of the sec and that was struck down and
Speaker 3: the Court said the Humphrey's Executor exception to the President's
Speaker 3: power to oversee the executive branch, we will not extend
Speaker 3: it to this sort of novel organization that is two
Speaker 3: layers removed from the president because the PCAOB is under
Speaker 3: the Securities in Exchange Commission. And there's a lot of
Speaker 3: language in that opinion that made people think, WHOA, these
Speaker 3: justices don't really agree with Humphrey's Executor. They have a
Speaker 3: different view of the president. What's going to be next?
Speaker 3: And in twenty twenty you have the CFPB case that
Speaker 3: you're referencing sala law, in which the Court says Yep,
Speaker 3: the CFPB, which is a five year term, tenured, single
Speaker 3: headed agency. We're not going to extend Humphrey's executor to
Speaker 3: that either. And Justice Roberts wrote the opinion, and he said,
Speaker 3: this part has way too much power. The Humphreys executor
Speaker 3: sort of exception to presidential oversight, as he characterized, it
Speaker 3: doesn't cover the CFPV. This thing is new. Congress just
Speaker 3: created it and it's not rooted in history. And people thought, okay,
Speaker 3: so certain single headed agencies might not be allowed anymore.
Speaker 3: What's going to happen next Next year? Twenty twenty one,
Speaker 3: the Supreme Court, with Justice Alito writing for the court,
Speaker 3: decided a case called Collins versus Yellen, and struck down
Speaker 3: the independence of the Federal Housing Finance Administration FAHFA. And
Speaker 3: there the Court just said, oh, all single headed agencies,
Speaker 3: no matter what, no matter how much power they have,
Speaker 3: are unconstitutional. And this covers things like the Social Security Administration,
Speaker 3: which since its inception has been headed by an individual
Speaker 3: tenured for a six year term. And the idea is
Speaker 3: SSA administration is nonpartisan and every president shouldn't come in
Speaker 3: and just put in their own person. But after Collins
Speaker 3: versus yelling. President Biden fired the Social Security Administrator, and
Speaker 3: you got to a point where people were wondering, what
Speaker 3: about the multi member commissions themselves that Humphrey's executor was about.
Speaker 3: Will it no longer be sustained for them either? So
Speaker 3: what are the possible exceptions that would allow the logic
Speaker 3: of Humphrey's executors to maybe applied to the FED even
Speaker 3: if it no longer applies to the FTC. The one
Speaker 3: that the Trump administration is running with so far is
Speaker 3: that monetary policy is somehow not sovereign executive power and
Speaker 3: can be distinguished from the other stuff the FED does,
Speaker 3: and that stuff is regulation of financial institutions. So Trump
Speaker 3: put out an executive order last month, Executive Order fourteen
Speaker 3: two fifteen, which asserted executive power over all the independent
Speaker 3: agencies and included specific carve out language for the FED
Speaker 3: that said, this order doesn't apply to the FED with
Speaker 3: respect to its monetary policy, only with respect to its
Speaker 3: regulation and supervision of financial institutions. Okay, so this is
Speaker 3: sort of the Trump theory. There's some other options we
Speaker 3: can get to, but I think let's maybe sit through
Speaker 3: Trump theory. Does this make any sense? There? Are some
Speaker 3: huge problems with this theory. It just sort of suggests
Speaker 3: that they haven't spent a lot of time thinking about
Speaker 3: how the FED conducts monetary policy and what the relationship
Speaker 3: is between monetary policy and the regulation of banks, because
Speaker 3: it's really all one and the same thing. So the
Speaker 3: court would be hard pressed to say, for example, just
Speaker 3: as an initial matter, you know, j Powell can't be
Speaker 3: removed by the President with respect to what he's doing
Speaker 3: on monetary policy, but with respect to what he's doing
Speaker 3: on bank regulation, the President could fire him for a
Speaker 3: policy disagreement. That would just sort of fall apart pretty easily. Right,
Speaker 3: what type of independence has really left? The President could
Speaker 3: just say I fired him because I don't like what
Speaker 3: he was doing on bank regulation, And the real reason
Speaker 3: could be that he didn't like what Jay Powell was
Speaker 3: doing on interest rates. But how would we know because
Speaker 3: he doesn't need to give a reason except to say
Speaker 3: that it's bank regulation. So there's like already a problem.
Speaker 3: But the deeper problem is Moynetree policy implementation is bank regulation.
Speaker 3: Like in January when the FED met, in the aftermath
Speaker 3: of that meeting, the Board of Governors amended Regulation D
Speaker 3: through a rule making published in the Federal Register lowering
Speaker 3: the interests paid on reserve balances to banks with reserve
Speaker 3: accounts at the Federal Reserve Banks. It is a straight
Speaker 3: exercise of regulatory power, just like when the SEC writes
Speaker 3: a rule for what type of disclosure a company has
Speaker 3: to do if it's a publicly traded company. And they
Speaker 3: just don't seem to realize this. They think that it's
Speaker 3: like FOMC just meets and they talk and then they
Speaker 3: announce a decision, and that's monetary policy. It's not regulatory,
Speaker 3: it's not a judicatory But actually no monetary policy implementation
Speaker 3: is all exercise of government power over the banking system.
Speaker 4: You know what I do find interesting, Like I think
Speaker 4: of this concept of the importance of an independent FED
Speaker 4: that can pursue both its mandates as this sort of
Speaker 4: fairly modern idea in economics. But it is interesting that
Speaker 4: apparently the Congress is actually like way ahead of like
Speaker 4: eCOM theory in this setup. In this way, it's kind
Speaker 4: of fascinating that they sort of intuited this. What I
Speaker 4: want to go to is if there is this Trump
Speaker 4: world or conservative world desire to find a way in
Speaker 4: which Humphrey's executor can be overturned, but yet somehow not
Speaker 4: implicate the structure of the FED. Why should anytone care
Speaker 4: Because in the end, all laws are just enforced by humans.
Speaker 4: And if the general thinking is we're going to read
Speaker 4: something into this law that, even though we can't logically
Speaker 4: defend it on paper, we all want it to have
Speaker 4: this outcome where all of these independent agencies are formerly
Speaker 4: just part of the executive branch except this one. If
Speaker 4: that's the outcome everyone wants, then isn't that the outcome
Speaker 4: we'll get.
Speaker 3: That's a great question. The narrow sort of answer, you know,
Speaker 3: just a law professor's concern is that creating illogical exceptions
Speaker 3: to doctrine is bad for law. Law as a social
Speaker 3: coordinating mechanism. It tears at the fabric of law. Every
Speaker 3: time someone violates our understanding of what the law is,
Speaker 3: it's tearing at the fabric of law. So these removals
Speaker 3: that Trump has engaged in because there's precedent on point
Speaker 3: saying you can't do them, this is tearing at law.
Speaker 3: This is reducing the effectiveness of law as a coordinating mechanism,
Speaker 3: which is something we should value because it helps us
Speaker 3: organize our lives in an effective way with minimal social conflict.
Speaker 3: So there's sort of just like a narrow concern with
Speaker 3: contorting Distorting doctrine and law reduces respect for law and
Speaker 3: its effectiveness. The more persuasive I think, answer to market participants,
Speaker 3: you know, we're not like invested in this in sort
Speaker 3: of you know what's going to happen to the stock market?
Speaker 1: Right.
Speaker 3: I think that every time the court seeds more authority
Speaker 3: to the President, they call into question their ability and
Speaker 3: willingness in the future to draw the line. And so
Speaker 3: if they write an opinion in the FTC case over
Speaker 3: ruling Humphrey's Executor that says the FED is an exception
Speaker 3: and this ruling doesn't apply to the FED, that will,
Speaker 3: of course, in this moment, on its face, protect FED independence.
Speaker 3: But now that we've moved the line twenty ten, twenty
Speaker 3: twenty twenty one, and then again more and more towards
Speaker 3: the president, we invite the President to test this new exception.
Speaker 3: And there's a number of ways the President might do it.
Speaker 3: And in a year from now or two years from now,
Speaker 3: the only organization left is the FED and the Fed's
Speaker 3: ability to stand on its own may be limited, and
Speaker 3: as people become aware of that and see the pressure
Speaker 3: that the President will exert on the FED as the
Speaker 3: only remain in an exception, the independence will dissipate and
Speaker 3: markets will react, and the Fed's ability to make credible
Speaker 3: commitments to maintain price stability over time could be impaired.
Speaker 4: Right now, by the way, Tracy, I just want to
Speaker 4: give a quick shout out to Matt Stoller, who wrote
Speaker 4: a great blog post a couple of weeks ago about
Speaker 4: this sort of thing, and he cited a footnote from
Speaker 4: Alito in a dissent on the CFPB in which Alito
Speaker 4: himself said the FED quote should be regarded as a
Speaker 4: special arrangement sanctioned by history. Yes, a unique institution with
Speaker 4: a unique historical background, to which Stohler said, this is
Speaker 4: the legal logic of a souvenir T shirt that says
Speaker 4: I'm the mommy.
Speaker 3: That's why. Yes.
Speaker 4: So I just want to give a shout out to Matt,
Speaker 4: because this is what really this piece was actually sort
Speaker 4: of what put a bunch of this sort of in
Speaker 4: my head.
Speaker 2: Amazing, amazing. So I have a question how well defined
Speaker 2: or codified is the at cause portion of this because
Speaker 2: I'm thinking like, Okay, we could do all this, we
Speaker 2: go through the Supreme Court, but could Trump just come
Speaker 2: up with a new reason that counts as at cause
Speaker 2: and that might be an easier way to exert.
Speaker 3: Inflation was too high? Yeah. Yes, So that's one of
Speaker 3: the concerns that I have. If you preserve this exception
Speaker 3: just for the FED, you're inviting a challenge. Now, the
Speaker 3: FED is the only four cause protected agency, and the
Speaker 3: President has almost never removed anyone for cause. The last
Speaker 3: time was over one hundred years ago. You and so
Speaker 3: there's very little doctrine on that. You invite the President
Speaker 3: to assert a cause and challenge the court to say
Speaker 3: that it doesn't qualify. And because the jurisprudence is so thin,
Speaker 3: it will be hard and people won't know how the
Speaker 3: Court will come out on that, and the harm will
Speaker 3: already be done right j poweill have been removed. It
Speaker 3: will be chaos. We will be litigating over this question
Speaker 3: all the way up to the Supreme Court. The beauty
Speaker 3: of maintaining the line in Humphreys Executor is we never
Speaker 3: have the fight on the terrain of the Federal Reserve.
Speaker 3: The fight is somewhere else. Once you move the line
Speaker 3: all the way up to the Federal Reserve, the war
Speaker 3: will be on the train of the FED, and in
Speaker 3: some ways that's a loss already.
Speaker 4: So you say, Okay, there's this conservative jurisprudence that they
Speaker 4: want to come up with ways to justify all of
Speaker 4: these agencies are somewhat illegitimate with the accepted FED. Do
Speaker 4: you actually believe that that is the end goal, that
Speaker 4: all of these agencies are subsumed to the President except
Speaker 4: the FED, or do you think this is an intermediate.
Speaker 3: Step to then get to the Fed.
Speaker 4: But they this point, they can't argue the full thing
Speaker 4: because that would freak people out too much.
Speaker 3: There's a split amongst conservative legal movement, and I think
Speaker 3: there are some people who want the full thing and
Speaker 3: there are some who want to protect the FED. And
Speaker 3: I think there's a good reason to put Justice Alito,
Speaker 3: for example, in the camp of the endgame being we
Speaker 3: exempt the FED. And Justice Alito in that dissent in
Speaker 3: the Community Financial Services case which came out last spring.
Speaker 3: In footnote sixteen which you reference, Justice Alito is speaking
Speaker 3: to his colleagues. He is telling them we should overturn
Speaker 3: Humphrey's executor I've figured out a way to do it
Speaker 3: without hurting the FED. We're just going to claim that
Speaker 3: it's a unique institution sanctioned by history. Of course, all
Speaker 3: of these independent agencies are unique institutions, and Congress crafted
Speaker 3: these particular governance arrangements because of the particular dynamics in
Speaker 3: each area, and so there's a fundamental illogic to Alito's effort.
Speaker 3: At the same time, he's just trying to say, if
Speaker 3: we just say it's a special situation and it's unique,
Speaker 3: we can get this outcome that we want, which is
Speaker 3: no independent agencies, where these agencies are engaged in policy
Speaker 3: making that is sort of constraining market activity. And yes,
Speaker 3: independent agency for the Federal Reserve where we're particularly worried
Speaker 3: about excessive money creation, which is a pro debtor, you know,
Speaker 3: credit or unfriendly policy. And so it's just sort of
Speaker 3: you're importing your policy preferences into some attempt to reconstruct
Speaker 3: the administrative state to sort of protect your interests and
Speaker 3: get the policy you want across the board. I think
Speaker 3: it's an untenable sort of outcome in some ways, but
Speaker 3: it's very much what a lot of people who subscribe
Speaker 3: to the unitary executive theory are trying to achieve.
Speaker 2: So this has been a fantastic overview of what's at stake.
Speaker 2: What should we be watching going forward? What are you watching?
Speaker 3: So there are a bunch of cases right now making
Speaker 3: their way through the federal courts that began with Trump
Speaker 3: illegally firing independent agency heads. So right on January twenty seventh,
Speaker 3: shortly after taking office, Trump purported to remove the head
Speaker 3: of the National Labor Relations Board, and that led to
Speaker 3: a lawsuit where will Cox is seeking reinstatement and a
Speaker 3: judicial judgment that she can cannot be removed except for cause.
Speaker 3: That case is making its way through. And then another
Speaker 3: case involving the Merit System's Protection Board is making its
Speaker 3: way through, and now the FTC case is making its
Speaker 3: way through. And those first two cases. On Friday, so
Speaker 3: just a few days ago, an important thing happened, which
Speaker 3: is a panel of the d C Circuit Court of Appeals,
Speaker 3: which is like the second highest court in the land.
Speaker 3: A panel of the d C Circuit Court of Appeals
Speaker 3: embraced Trump's legal theory and overruled a district judge who
Speaker 3: had ruled on those cases earlier in favor of Willcox.
Speaker 3: And Harris. Now, the parties in that case are going
Speaker 3: to ask the full DC Circuit to reconsider the panel's decision,
Speaker 3: and shortly thereafter, inevitably, no matter what happens with that,
Speaker 3: the parties will seek review by the Supreme Court, an
Speaker 3: emergency review, And so the Supreme Court is going to
Speaker 3: potentially be drawn into this in the coming days. And
Speaker 3: whatever the Supreme Court does in the coming days, it
Speaker 3: is possible that one or more justices will dissent from
Speaker 3: the Supreme Court's decision with the respect of the emergency
Speaker 3: application and say something about what they think the future
Speaker 3: of Humphrey's executor is going to be. And so we
Speaker 3: could get real tea leaves very soon in some of
Speaker 3: the cases that are already preceding.
Speaker 2: I'm really glad we talked to you today, Love, Thank
Speaker 2: you so much for coming back on a laws.
Speaker 3: Thank you for having me, Joe.
Speaker 2: That was such a good overview, it really was, And
Speaker 2: I didn't realize that stuff was going to happen potentially
Speaker 2: on this so quickly, So really good timing on our part,
Speaker 2: pat ourselves. By the way, Lev left us some homework,
Speaker 2: some assigned reading. He says, we should look up Hamilton's
Speaker 2: report on a National Bank.
Speaker 4: Yes, apparently that is some good reading for background on
Speaker 4: why Congress intuited to have an independent federal reserve, even
Speaker 4: before the academic economics profession sort of understood, you know,
Speaker 4: central bank independence is a key thing.
Speaker 3: You know. I was listening.
Speaker 4: I don't know if it's like the trial lawyer equivalent
Speaker 4: of constitutional law, you know, because it's like most conversations
Speaker 4: about constitutional law do not sound like, you know, a
Speaker 4: lawyer giving an opening statement. But I feel like Lev
Speaker 4: can like really blend the two.
Speaker 2: Oh absolutely. By the way, for people who well everyone
Speaker 2: who wasn't in the studio, you kind of missed Lev's
Speaker 2: gesticulations to wild gesticulations, but they are very very effective.
Speaker 4: I think you could kind of hear them.
Speaker 2: Yeah, you can hear it in his voice. All right,
Speaker 2: shall we leave it there.
Speaker 3: Let's leave it there.
Speaker 2: This has been another episode of the All Thoughts Podcast.
Speaker 2: I'm Tracy Alloway. You can follow me at Tracy Alloway and.
Speaker 4: I'm Joe Wisenthal. You can follow me at the Stalwart. Hello,
Speaker 4: Levmanond at Levmanon. Follow Our producers Carmen Rodriguez at Kerman
Speaker 4: armand dash Ol Bennett at dashbod and Kilbrooks at Kalebrooks.
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Speaker 3: In