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It was NEVER raised as an issue, the Supremes were answering a question about the Seperation of Powers and the prevention of the Unitary Executive or POTUS to fire at will the head of a federal agency.
They said that the NWS was STATUTORILY PERMISSIBLE because unlike any other conservator, the FHFA could take into account, "the best interests of the FHFA and by extension the public it serves."
But the Collins decision did NOT answer the question of whether or not the Nationalization of the GSES was a political and economic question of national Importance to be decided exclusively by the peoples ELECTED REPRESENTATIVES IN CONGRESS and not Ed DeMarco, an Unelected Bureaucrat running a federal agency.
Fact is, not 1 of the 8,000 Fannie Mae shareholders have brought up the MQD issue in any of their Pleadings or Complaints have they?
Think about it Family Mang, what investment has EVER offered you Immortality?
If the current round of litigation ends up with goose eggs, you could be the lead Plaintiff in a potentially major MQD decision and the legal profession will utter, "In Family Mang, the Supreme Court said that under the MQD, Nationalization is a decision exclusively reserved for the US Congress!"
HeeeeHeeee !
"The framers were unanimous that Congress, as the representatives of the people, should be in control of public funds—not the President or executive branch agencies. This strongly-held belief was rooted in the framers’ experiences with England, where the king had wide latitude over spending once the money had been raised."
https://history.house.gov/institution/origins-development/power-of-the-purse/#:~:text=Congress%E2%80%94and%20in%20particular%2C%20the,money%20for%20the%20national%20government.
Clarence, thanks again for the great analysis! I thought that the 5th Circuit made an excellent point, to wit, if the CFPB funding structure is okay why not have all federal agencies delegated Congressional Appropriations Oversight Review?
Listening to the orals a couple times in Nebraska v Biden, it's refreshing to see an allegedly coequal Branch of Government thwarting the excessive power of the Executive Branch, especially when the Legislative Branch delegates its funding oversight review, which is designed to keep the sword and purse seperate from accumulation in one branch.
Do you think the CFPB case will be argued this Fall?
I've always been thankful to the ICBA to get us out of jail administratively, but the 'financial establishment' as TH calls them, calls for the US Congress to start handing out government guarantee charters to promote more competition in the MBS market (which is really why we had a financial crisis in 08 to begin with, PLMBS was rated AAA).
MC, SM, SLT, MW, and others keep selling the message US Congress is the Solution while they allegedly 'prepare the GSES for exit from the conservatorships'.
The National Association of Realtors or NAR (represents 1.7 million Realtors) hasn't changed their position either, they are looking for the US Congress to: " It is time for Congress and the administration to
work together to chart a durable course for the finalization of secondary market reform."
https://www.nar.realtor/fannie-mae-freddie-mac-gses/nars-vision-for-housing-finance-reform
The Mortgage Bankers Association maintains: "MBA supports comprehensive legislative reforms that would fix the structural flaws of the GSEs' pre-crisis business models while preserving what works in the market today."
https://www.mba.org/advocacy-and-policy/residential-policy-issues/fannie-mae-and-freddie-mac-policies-and-programs
I believe that these two giant lobbyists can outgun the ICBA any day of the week and would likely have more sway with the major decision makers in the federal government.
I'm sure that the current or future administration (s) could figure out something viable but the political optics may be a hard sell.
One side of the aisle in Congress will say it's "a giveaway to the 'evil hedge fund guys'", not sure what the other side would say.
Who knows. One of the shareholders FOIA requests was denied by a Judge some time ago and we have no idea who the other 8,000 Fannie Mae shareholders are.
You know, National Security and Conservator protection need to be maintained during the governmental heist !
I don't know. Let's see if the current administration gets away with the $400B student loan forgiveness via federal agency action and then $100B for US housing won't seem so bad !
The whole reason Freddie Mac was established by the US Congress in 1972 was to prevent Fannie Mae from having a monopoly.
SLT and every past FHFA Director that I can think of has said that the future of the GSES is up to the US Congress.
They tried in 2012 to 2016, but they couldn't reach a consensus. Likely because there is no viable alternative to the GSES or the risk of messing up the US housing market and American Families biggest asset on their balance sheet is too great.
Here's a crazy idea, follow HERA and release the GSES administratively.
HeeeeHeeee! I hope both classes of shares do well! Amazing that 2 14+ year CONservatorships have taken place from 2 of the biggest financial intermediaries in the world and no one seems to think anything wrong has taken place!
Biggest theft by the federal government in history!
That's right, but even the skeptics continue to hold and as a holder myself for over 1/3rd of a century and having contributed my hard work and toil as 1 of 2,000 employees from 1988 to 1993, I am both vested and believe that one day the 14+ year CONservatorships will end.
How that ending occurs is all that we seem to speculate about here.
Specifically, how do you think it ends?
The Appointments Clause is just ONE way to challenge the government overreach here.
Some parallels can be drawn from the current administrations plan to utilize a federal agency (i.e., the Department of Education) to implement campaign promises that never would make it through Congress.
The NCLA is pointing out to the Department of Education through their comments to the proposed rule, that the Plan B of the student loan forgiveness drive by the Executive Branch may have yet more Constitutional Challenges:
NCLA Warns Dept. of Education that Proposed Student-Loan Plan Lacks Congressional Appropriation
Namely:
ANALYSIS
I. The Department Lacks Statutory Authority to Promulgate the Proposed Rule
II. The Department’s Interpretation of the 1993 HEA Amendments Would Violate the
Vesting Clause
III. The Proposed Rule Would Violate the Appropriations Clause
https://nclalegal.org/2023/02/ncla-warns-dept-of-education-that-proposed-student-loan-plan-lacks-congressional-appropriation/
It may be authorized somewhere in HERA that the ofheo head will be the first FHFA Director. But I'm not 100% sure.
Looks like he believes it's up to Congress to address the affordable housing issue.
He and the current administration may or may not believe that the Executive Branch through the UST and FHFA have that power by transferring $100B from the UST's 'investment' in the GSES that is currently pending litigation in the courts and seems unlikely to be fully resolved during this administration.
Would the US Congress have to decide whether or not the future of the GSES is as public utilities? Is that something that the FHFA could decide under the "in the best interests of the FHFA and by extension the public it serves" OR would that be a decision reserved for our elected representatives in Congress?
I know that most (if not all) states create enabling legislation and statutes that control and set rates for consumers (usually a board) of electricity.
Why not just follow HERA and exit the conservatorships without restructuring the US Secondary Mortgage Market in the vision of the Executive Branch via FHFA and UST?
Wasn't that the original idea in September 2008?
We've gotten the "it's up to Congress to decide the future of the GSES" line from SM and MC (although they said they would do exit the conservatorships administratively, unlike SLT and MW).
Since all the major stakeholders exclusive of the shareholders and the Community Banks trade association (I think they bought large chunks of the JPS pre 9/8/08) seem to be fine with the status quo and federal agency major decision makers may be hesitant to act now to exit until the judicial branch hammers out some of these constitutional issues, we may be in the status quo for some time.
FHFA seems to be incentivized by keeping the status quo, they have 100% control over their piggy bank and get to set their own annual operating budget.
"Although the Court has, for the last several decades, taken a very lenient approach towards executive-branch power, last year, in West Virginia v. Environmental Protection Agency, it signaled a return to an older, Originalist constitutional interpretation in ruling that, on “major questions” of public policy, the executive branch needs clear congressional approval before acting.
Trying to head off that line of reasoning, Solicitor General Prelogar suggested that the “major questions” doctrine should apply when the executive branch is acting in a way that affects people’s rights, but not when it’s just a matter of money. That argument, however, didn’t seem to sway the justices. Spending billions of dollars is a “major question,” since money spent on student-loan forgiveness cannot be spent on other things.
Chief Justice John Roberts responded to Prelogar’s idea by saying, “We take very seriously the idea of separation of powers and that power should be divided to prevent its abuse.” That sentence sounds like the basis for a majority opinion.
Similarly unimpressed with the argument for leaving student-loan cancellation in the hands of the executive branch was Justice Neil Gorsuch, who said, “I understand the Secretary of Education has considerable expertise when it comes to educational affairs, but in terms of macroeconomic policy, do we normally assume that a cabinet member has that kind of knowledge?” The answer, of course, is “no,” and that it is up to Congress to make laws that have macroeconomic implications."
https://www.jamesgmartin.center/2023/03/the-supreme-court-hears-arguments-in-the-challenge-to-bidens-student-loan-giveaway/
That retroactive remedy could be important as David Thompson amended the complaint in Collins to include the Appropriations Clause Violation.
What next, mortgage and car payment forgiveness?
BREAKING NEWS!: MAN ON MIAMI BEACH PICKS UP SHELL THAT REPEATS: "THERE IS NO DILUTION SOLUTION AND NO INSTANT RECAP"!
I was hoping you'd choose "D":
D. THE US GOVERNMENT CONTINUES USING THE US CONSTITUTION AS A DOORMAT.
Could end up being my most prescient post out of all the whole bunch!
Time will tell!
"But it was interesting that the court has not (yet?) granted the government’s request that briefing of the CFPB case be expedited for decision this term, and that the court rejected the lenders’ conditional cross-petition arguing that it should also consider “two antecedent questions that also are presented” by the decision under review."
Does that mean that the CFPB case could be heard THIS term?
https://www.scotusblog.com/2023/03/super-important-relists-so-you-should-definitely-read/
If they find standing, it's likely to shed more light on the MQD, todays NYT: "There was something close to a consensus that the debt forgiveness program qualified as major.
"We're talking about half a trillion dollars and 43 million Americans," Chief Justice Roberts said, referring to the number of affected borrowers. Justice Samuel A. Alito Jr. indicated that the ordinary colloquial meaning of "major questions" encompassed "what the government proposes to do with student loans."
Even Justice Sonia Sotomayor, a liberal, said the sums involved were legally significant. "That seems to favor the argument that this is a major question," she said."
------
NYT today on Standing: "The first question in both cases is whether the plaintiffs have suffered the sort of direct and concrete injury that gives them standing to sue.
The point of the standing doctrine, Justice Ketanji Brown Jackson said, is to "allow the political branches to hash this out without interference, you know, from a torrent of lawsuits brought by states and entities and individuals who don't have a real personal stake in the outcome."
Much of the argument focused on a nonprofit entity that services federal loans, the Missouri Higher Education Loan Authority, also known as MOHELA. The challengers argued that its potential losses from the loan forgiveness program were enough to confer standing because it is effectively an arm of the State of Missouri. They also argued that the authority might fail to make payments to Missouri if the program were allowed to proceed.
Justice Kagan said it was significant that the loan authority itself had not sued over the debt forgiveness program.
"Usually we don't allow one person to step into another's shoes and say, 'I think that that person suffered a harm,' even if the harm is very great," she said.
If Missouri really controlled the loan authority, Justice Amy Coney Barrett asked James A. Campbell, Nebraska's solicitor general, who represented the states, "why didn't the state just make MOHELA come then?"
Mr. Campbell said that it was "a question of state politics."
Ms. Prelogar conceded that the loan authority would have standing had it chosen to sue in its own name. But it did not, she said, and Missouri was not entitled to sue on its behalf.
Justice Jackson said that the authority was independent of the state.
"Its financial interests are totally disentangled from the state, it stands alone, it's incorporated separately, the state is not liable for anything that happens to MOHELA," she said. "I don't know how that could possibly be a reason to say that an injury to MOHELA should count as an injury to the state."
Given the inclination of the conservative justices to question the legality of the program, if the administration is to prevail it may have to do so on the standing question. But there was little evidence that the conservatives were particularly receptive to the administration's position on that issue in the first case, Biden v. Nebraska, No. 22-506.
The second case, Department of Education v. Brown, No. 22-535, was brought by the two borrowers, Myra Brown and Alexander Taylor, and it also raised questions about standing. Ms. Brown is ineligible for relief under the plan because her loans are held by commercial entities rather than the government, while Mr. Taylor is eligible for $10,000 rather than $20,000 because he did not receive a Pell grant.
A trial court ruled that they had standing to sue because they had been deprived of the opportunity to urge the administration to expand the plan to provide greater debt relief.
Justices across the ideological spectrum seemed unpersuaded by the borrowers' position.
"Talk about ways in which courts can interfere with the processes of government through two individuals in one state who don't like the program," Justice Neil M. Gorsuch said, and "can seek and obtain a universal relief barring it for anybody anywhere."
If the Supreme Court rules that at least one plaintiff in one of the cases has standing, it will address whether the debt forgiveness plan is lawful."
"No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth!"
Ronald Reagan
We won't get anymore clarity on the MQD if the Supremes buy the Gubmint's Standing arguments. Yesterday, Elena was almost frantic selling that notion to the other 8 Justices, Amy and Britt asked some tough questions on Standing as well!
If MOHELA has standing (they seem to have a fairly concrete injury, since 40% of the nations student loans will disappear and MOHELA brings in Revenues from loan servicing) then Justice Kagan was asking towards the end of orals yesterday, how can the state of Nebraska file the suit? MOHELA is apparently a private corporation with a state Charter that (voluntarily?) provides Nebraskan students with scholarships.
Is that enough of a nexus?
One commentator said yesterday (on the PBS News Hour (aka leftist news media !) that she thought the conservative majority would stretch to find standing to protect the Seperation of Powers Doctrine.
The Federal Reserve Banks do whatever the Federal Reserve Board (a federal agency) tells them to do. Kinda like the FHFA tells Fannie Mae and Freddie Mac what to do.
If the Budget for the Federal Reserve Board (i.e., a federal agency) is funded solely by the Federal Reserve Banks how does that square with the latest CFPB decision in the 5th?
https://www.stlouisfed.org/in-plain-english/who-owns-the-federal-reserve-banks#:~:text=The%20Federal%20Reserve%20Banks%20are,is%20to%20serve%20the%20public.
"The Federal Reserve Banks are not a part of the federal government, but they exist because of an act of Congress. Their purpose is to serve the public. So is the Fed private or public?
The answer is both. While the Board of Governors is an independent government agency, the Federal Reserve Banks are set up like private corporations. Member banks hold stock in the Federal Reserve Banks and earn dividends. Holding this stock does not carry with it the control and financial interest given to holders of common stock in for-profit organizations. The stock may not be sold or pledged as collateral for loans. Member banks also elect six of the nine members of each Bank's board of directors."
"On Dec. 23, 1913, President Woodrow Wilson signed the Federal Reserve Act. Over the next year, a selection committee made up of Secretary of the Treasury William McAdoo, Secretary of Agriculture David Houston, and Comptroller of the Currency John Williams decided which U.S. cities would be a place of residence for one of 12 Federal Reserve District Banks."
God Bless Edith Jones and the rest of the good judges in the 5th Circuit. It seems pretty clear that she is courageous and believes in the separation of powers.
HeeeeHeeee! Probably correct, but not having received a penny in dividends on my stock since 3Q08, I'm squeezing everything I can out of the abundant intellectual dividends that this hilarious bizarre drama has on bestowed upon us!
If I told you over 14 years ago that this is the way the situation will be, you'd rightly say I was nuts!
So how does this unique drama in US Corporate History end?
I've given you some snarky answers to choose from:
A. IT NEVER DOES!
B. YOU'LL BE 6 FEET UNDER SO DON'T WORRY!
C. IT DOESN'T!
D. THE US GOVERNMENT CONTINUES USING THE US CONSTITUTION AS A DOORMAT.
E. BERNIE SANDERS 2028.
F. ALL OF THE ABOVE.
The decision in the 5th Circuit also points to a pretty seemingly sound argument, and that is, if the CFPB can be funded without Congressional Appropriations Oversight Review and approval, then WHY couldn't ALL federal agencies be funded that way?
One of the government arguments would likely be that somehow financial regulators are different.
The Takings Cases almost made it to the Supremes but the Appellate court ruling stood which relied on an earlier federal circuit court ruling that said since financial intermediaries can't ban the government from their property, they have no exclusivity right or expectations and therefore no Taking took place.
Will the SCOTUS decide that financial regulator agencies are somehow different and the Appropriations Clause protections don't apply to them?
If no, then how can the Federal Reserve Board avoid review of Congressional Appropriations Oversight? That'd be a disaster, Congress threatening to withhold funding unless Jerome Powell lowers interest rates and artificially juices the US Economy before the next election cycle.
What do you think?
It will be interesting to see how the SCOTUS resolves the problem of the Federal Reserve's funding if they agree with the 5th Circuit Appealate Court in CFPB.
TH brings to light the problem: "There are many federal agencies, including the Federal Reserve and the FDIC, whose operations are not subject to annual appropriations. Will SCOTUS really say these entities are illegally funded (the Fed gets its funding from Treasury, and the FDIC from banks), and if so what will the remedy be? SCOTUS will need to be very careful in how it deals with this Pandora’s Box.
I therefore find it hard, at this point, to speculate about the implications for Fannie and Freddie, and the net worth sweep, of SCOTUS granting cert in the CFPB case. It has too many complications, and conflicts of political agendas."
What do you think?
Kagan asked the Nebraska Solicitor General that question, basically asking, "How is Missouri involved here, what is the STATES interest, MOHELA is a private corporation?"
His response was by law the state corporation funds scholarships for the states students and when MOHELA takes 40% revenue cut from the forgone revenue of servicing those forgiveness loans, the state will be harmed.
They have the power to use the GSES assets to payoff their mortgagors student loans --- After all, it's permissible under HERA as being "in the BEST INTERESTS OF THE FHFA AND BY EXTENSION THE PUBLIC IT SERVES"!
Caught about 2-3 hours today towards end and Elena was almost frantic about pressing the Standing Issue, knowing that if it passes Standing, the student loan forgiveness will likely be invalidated under MQD.
Great stuff, I might listen to the whole thing here in a little bit!
GO CONSTITUTION! I wonder what the founders would have thought about the powers Congress has delegated to the federal agencies and the Chevron Defence by the courts?
They are coequal branches of the government, typically battling each other for POWER.
Critics of MQD say it is being used by the judicial branch to decide questions that the US Congress has delegated to the federal agencies.
Proponents of MQD say it reigns in the Executive Branch and makes sure that the proper branch, the US Congress, decides questions of Major Questions of Economic and Political Importance in our American Republic.
I hope that you fully understand that a federal agency action may be statutorily permissible (e.g., the NWS) but can be invalidated because it was an Unconstitutional Agency Action.
In practice, it has been shown REPEATEDLY that all the previous 4 or 5 Presidents and current administration have simply instructed their federal agency heads to find a vague Statute and do the federal action THAT I OTHERWISE WOULD BE UNABLE TO GET PASSED IN CONGRESS.
Isn't it better to live in a world where that power rests with our elected representatives in the US Congress and NOT a single unitary head of the Executive Branch, the POTUS?
That's the beauty of MQD, it reigns in the federal agencies (i.e., the Executive Branch) bypassing Chevron Defence and going straight to the issue of whether or not it is a Major Question of Economic and Political Importance that needs to be EXCLUSIVELY decided by the peoples representatives in Congress and NOT UNELECTED BURAUCRATS LIKE DEMARCO!
SCOTUS
no clear legislative language --- we say so
MQD is the top doctrine --- we say so
The Nebraska Solicitor General argued that if the Department of Education student loan forgiveness is invalidated they will have at least an opportunity to comment on a new possible program considered by the Department of Education, that requires a Notice and Replacement requirement as most new federal agency actions require (e.g., ERC Rule for the GSES). The Plaintiffs procedural rights were violated according to them and if they prevail the invalidation of the agency action will allow them the possibility of convincing the Department of Education to forgive more of their clients student loans.
If the Supremes rule this Summer that the Plaintiffs do not have standing the case likely ends.
Clearly the SCOTUS decides on whether or not a federal agency action is Constitutional or not. It is not up to the Executive Branch or legislative branch to decide.
No question that the federal government will fight vigorously against the reigning in of federal agency actions.
Do you think the NWS was a Nationalization of our companies or simply a valid exercise of power by the federal agencies?
So is Kagan saying that the MQD is being used even when the TEXT is pretty clear --- to in essence override legislative instruction --- with a bend to the politics of the conservative majority
Mr. Hilgers, Nebraska's Attorney General in todays WSJ: "Last year the Supreme Court reaffirmed that when the executive branch addresses a "major question," which surely includes this vast debt cancellation, it needs "clear" authority from Congress. Far from the clear language necessary to justify this major action, the Heroes Act can't be squared with the president's plan.
The scope of the power the president has claimed is breathtaking. Americans of all political stripes should be alarmed. If Mr. Biden's actions are found lawful, you can bet that future Republican and Democratic administrations will scour old and obscure laws to find dubious legal hooks to achieve their major policy preferences."
Should be a good one tomorrow morning, students are already camped out on the steps of the SCOTUS and it's cold and rainy.
"APPLICABILITY OF THE MAJOR QUESTIONS DOCTRINE
The Department of Education claims that the major questions doctrine, which holds that courts should not defer to an agency’s statutory interpretation on questions involving great economic, policy, or political significance, does not apply in this case. The Department of Education explains that this Court typically applies the usual rules of statutory interpretation rather than the major questions doctrine to review economically and politically important executive actions. According to the Department of Education, the major questions doctrine only applies in extraordinary circumstances where an agency claims expansive authority based on “modest words” or “vague terms,” which is not the case here. Rather, the Department of Education points out that the HEROES Act grants the Secretary direct and concrete authority to provide student loan relief in national emergencies. Furthermore, the Department of Education explains that every case where the Court applied the major questions doctrine involved regulatory power, but this case only involves a government-benefit program. The Department of Education further posits that the cost of a government program alone does not mean that plain statutory meaning can be ignored.
The Department of Education further highlights that the Secretary’s authority only applies to limited circumstances, for a limited class, and for limited objectives with specific measures. The Department of Education further maintains that even if the Court applies the major questions doctrine, the Plan is constitutional. The Department of Education argues that the HEROES Act unambiguously authorizes the Secretary to “waive or modify any statutory or regulatory provision,” which complies with the doctrine’s requirement. The Department of Education asserts that the Secretary has the authority to determine the scope of borrowers and the relief of the amount that is necessary to achieve the purpose of the HEROES Act, which are not fundamental questions that the major questions doctrine safeguards.
Brown counters that the major questions doctrine applies in this case. Brown argues that because the Plan proposes to cancel debts of 40 million borrowers amounting to $400 billion, it has significant economic and political impact and thus satisfies one of the requirements of the major questions doctrine. Brown also points out that, while loan forgiveness is highly controversial, the HEROES Act was never controversial because Congress intended to limit the scope of the Act to active-duty military. In addition, Brown asserts that Congress did not give the Secretary authority to approve the Plan because Congress never explicitly authorized it. Brown points out that the scale and the impact of the action are unprecedented. In opposition to the Department of Education’s argument that the Secretary has the authority to determine the scope of borrowers and the amount of the forgivable debt, Brown argues that this authority is too broad. Brown also argues that neither the HEROES Act’s text nor its legislative history authorizes the Secretary to cancel student-loan debts."
https://www.law.cornell.edu/supct/cert/22-535
"One tactic utilized by the Supreme Court in the past is known as the "Major Questions Doctrine" and concerns federal courts striking attempts by government agencies to enact major policies without the involvement of Congress. The doctrine can apply to policies, decisions, and regulations that have a significant impact on the economy, or which have a general political significance. Last summer, for example, the Supreme Court struck down an attempt by the Environmental Protection Agency (EPA) to regulate power plant emissions."
https://www.newsweek.com/student-loan-update-one-doctrine-could-unravel-bidens-relief-plan-1784099
https://www.bloomberg.com/news/articles/2023-02-27/student-loan-relief-plan-has-a-date-with-the-supreme-court?leadSource=uverify%20wall
https://law.stanford.edu/2023/02/24/qa-senior-fellows-john-f-cogan-and-michael-mcconnell-on-their-new-amicus-brief-opposing-the-student-loan-forgiveness-program/
"When the president presumes the authority to decide such major questions, it must be pursuant only to a clear authorization from Congress to make the policy."
https://www.heritage.org/the-constitution/commentary/can-biden-cancel-student-loan-debt-heres-why-its-major-question
Presidents do this by finding the authority they want in some existing law that already grants power to the president—teaching an old law new tricks.
In 1998, Paul Begala, a political aide to President Bill Clinton, notoriously summarized the process: “Stroke of a pen. Law of the Land. Kind of Cool.”
President Barack Obama upgraded to a “pen and a phone” to work around Congress when necessary, inspiring “Saturday Night Live” to air a skit updating “Schoolhouse Rock!”
The COVID-19 pandemic, which President Donald Trump declared a “national emergency” that is still in effect, only intensified this process. It was an emergency power that the Biden administration used to justify the Occupational Safety and Health Administration’s vaccine mandate when Congress failed to enact one into law.
Congress Avoids Issues
Immigration, student loans, vaccine mandates … contentious issues such as these used to be addressed by our elected representatives in Congress. These lawmakers represented the diversity of views in an extensive republic and were forced to bargain and compromise to reach consensus on such controversial matters.
But Congress does not have the capacity, nor do its members have the inclination, to address these issues head-on. So now such issues are settled through a single, winner-take-all election every four years.
Usually when a president uses the pen or phone to make sweeping policy changes, that settles the matter. However, in the last few years the federal courts increasingly have enforced limits on executive power by interpreting the laws that delegate power to the president narrowly.
When a president claims to find authority to make sweeping changes in an existing law, rather than waiting for Congress to grant him the authority he seeks, courts have struck down these assertions of power. The eviction moratorium imposed by the Centers for Disease Control and Prevention, the vaccine mandate imposed by the Occupational Safety and Health Administration, and other major actions have been blocked in this manner.
It is a basic principle of our constitutional system that the laws should be made by representatives elected by the people. Article I of our Constitution opens by affirming this principle: “All legislative powers herein granted shall be vested in a Congress.” The president’s job is to execute the law, not to make it.
NYT today: "Supreme Court to Take Up Case on Fate of Consumer Watchdog
"Supreme Court building in Washington, Jan. 20, 2022. The Supreme Court agreed on Monday, Feb. 27, 2023, to hear a case that could hobble the Consumer Financial Protection Bureau and advance a key project of the conservative legal movement: to limit the power of independent agencies. (Shuran Huang/The New York Times)
WASHINGTON — The Supreme Court agreed on Monday to hear a case that could hobble the Consumer Financial Protection Bureau and advance a key project of the conservative legal movement: to limit the power of independent agencies.
A ruling against the bureau, created as part of the 2010 Dodd-Frank Act after the financial crisis, could cast doubt on every regulation and enforcement action it took in the dozen years of its existence.
The central question in the case, Consumer Financial Protection Bureau v. Community Financial Services Association of America, No. 22-448, is whether the way Congress chose to fund the agency violated the Appropriations Clause of the Constitution, which says that “no money shall be drawn from the Treasury, but in consequence of appropriations made by law.”
A unanimous three-judge panel of the 5th U.S. Circuit Court of Appeals, in New Orleans, ruled in October that the bureau’s funding mechanism ran afoul of that clause.
“Wherever the line between a constitutionally and unconstitutionally funded agency may be, this unprecedented arrangement crosses it,” Judge Cory T. Wilson wrote in an opinion joined by Judges Don R. Willett and Kurt D. Engelhardt in the ruling. Former President Donald Trump appointed all three judges on the panel.
The bureau is funded by the Federal Reserve System, in an amount determined by the bureau so long as it does not exceed 12% of the system’s operating expenses. In the 2022 fiscal year, the agency requested and received $641.5 million of the $734 million available. The 2010 law said the bureau’s funding requests “shall not be subject to review by” the House and Senate Appropriations Committees.
The 5th Circuit’s decision was at odds with ones from other courts. In 2018, for instance, the District of Columbia Circuit said there was nothing unusual about the funding mechanism.
In urging the Supreme Court to hear the Biden administration’s appeal, Solicitor General Elizabeth B. Prelogar said the ruling “threatens to inflict immense legal and practical harms on the CFPB, consumers and the nation’s financial sector.”
In 2020, the Supreme Court ruled that a different part of the law creating the consumer bureau was unconstitutional, saying that Congress could not insulate the bureau’s director from presidential oversight given the scope of the job’s authority.
“The director has the sole responsibility to administer 19 separate consumer-protection statutes that cover everything from credit cards and car payments to mortgages and student loans,” Chief Justice John Roberts wrote for the majority.
He mentioned the bureau’s funding in passing, noting that its budget had exceeded half a billion dollars in recent years.
“Unlike most other agencies,” the chief justice wrote, “the CFPB does not rely on the annual appropriations process for funding. Instead, the CFPB receives funding directly from the Federal Reserve, which is itself funded outside the appropriations process through bank assessments.”
Roberts made the same point when the case was argued. “They don’t even have to go to Congress to get their money,” he said.
In the administration’s petition seeking review, Prelogar wrote that “the CFPB’s funding mechanism is entirely consistent with the text of the Appropriations Clause, with long-standing practice and with this court’s precedent.”
She added that barring congressional committees from reviewing the funding “simply allocates authority among different congressional bodies” and that “the Appropriations Clause is not concerned with such matters of internal congressional housekeeping.”
The case was brought by two trade groups representing payday lenders. They challenged a regulation limiting the number of times lenders can try to withdraw funds from borrowers’ bank accounts. The 5th Circuit struck down the regulation, saying it was “wholly drawn through the agency’s unconstitutional funding scheme.”
Some cautioned that the Supreme Court’s decision to hear the case next term would complicate the agency’s operations as other challenges mount. More than a dozen companies have cited the 5th Circuit ruling in seeking to have lawsuits or penalties the bureau has filed against them thrown out.
“A delay in hearing this case only hurts consumers, as this is an urgent issue that has horrifying implications for consumers and our entire financial system,” Sen. Sherrod Brown, D-Ohio, chair of the Senate Banking Committee, said in a statement.
Others warned that a decision against the consumer bureau could imperil other agencies.
“If the Supreme Court accepts this deeply flawed argument against CFPB funding, it would set a dangerous precedent that would be used to challenge agencies with legally indistinguishable funding, including the Federal Reserve, FDIC, Medicare and Social Security,” said Nadine Chabrier, a senior policy and litigation counsel at the nonpartisan research group Center for Responsible Lending.
But opponents of the bureau, including Republican lawmakers, countered that the agency was uniquely problematic and hoped the case would resolve a recurring question.
House Republicans have previously introduced legislation that would bring the CFPB into the traditional appropriations process and remain committed to passing such a bill, Rep. Patrick T. McHenry, R-N.C., chair of the Financial Services Committee, said in a statement. This article originally appeared in The New York Times.
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