March 18, 2020

Are We on the Cusp of Crippling the CFPB?

On Tuesday morning, the U.S. Supreme Court heard arguments in Seila Law v. Consumer Financial Protection Bureau, the culmination of Wall Street’s sustained assault on the Consumer Financial Protection Bureau (CFPB). Killing off the CFPB would be a blow to the countless Americans this agency protects. But the powerful forces attacking the CFPB have even greater aspirations. They desire to cripple Congress’ ability to establish independent agencies to safeguard Americans’ health, safety and economic welfare.

The CFPB has been a success, winning back over $12 billion for defrauded consumers since 2011. Other independent agencies—the Federal Trade Commission, the Securities and Exchange Commission, the Federal Reserve—are similarly ingrained in our democratic system. Americans expect them to regulate the marketplace impartially, expertly, and based on evidence and facts. Their constitutional legitimacy has long been beyond question. That is, until now.

After failing to make the political case against agencies like the CFPB, powerful corporate forces have turned their losing political case into a rigged constitutional one. They’ve moved fringe legal theories into mainstream conservative legal thought, and they’ve deployed an army of attorneys, academics and judges to apply those theories to their advantage. This was no small effort. As Vox’s Ian Millhiser writes, “Seila Law could be the culmination of a conservative crusade that began more than three decades ago.”

As my colleagues and I document in our amicus brief to the Supreme Court, this crusade has been led by the Federalist Society for Law and Public Policy Studies. The Federalist Society is funded by tens of millions of billionaire and corporate dollars, from donors like the Kochs and Mercers who would like nothing better than to hobble their regulators. We’d know more, but the Federalist Society keeps its donors secret. The group also has a key role in selecting agreeable federal judges. (Sidebar: Secretly funded private organizations helping to select judges—what could possibly go wrong?)

Former White House Counsel Don McGahn said in a moment of candor that “there is a coherent plan here where actually the judicial selection and the deregulatory effort are really the flip side of the same coin.” Translation: we’ll nix regulations our big donors hate by installing judges hand-picked to kill regulations. So it’s no surprise that fully 85% of Trump’s nominees to the powerful, policy-making appellate courts have claimed Federalist Society membership. And, Majority Leader Mitch McConnell has turned the Senate into a confirmation conveyor belt to stack federal courts with often unqualified, pro-corporate judges.

It starts at the top. Obsessive hostility to government regulations was a feature of the candidacies of Supreme Court nominees Neil Gorsuch and Brett Kavanaugh. During Gorsuch’s confirmation process, Federalist Society boosters championed his nomination as “of profound importance given the all-encompassing reach of today’s administrative state,” and heralded his denunciation of long-standing precedent counseling judges to defer to reasonable agency interpretations of ambiguous statutes. Likewise, the Trump administration touted Kavanaugh as a judge who “protects American businesses from illegal job-killing regulation,” boasting that he “has overruled federal agency action 75 times.” In a 2017 case in the U.S. Court of Appeals for the D.C. Circuit, Kavanaugh even auditioned his belief that the CFPB’s independent structure is unconstitutional.

The Federalist Society’s dark money network is hard at work lobbying the Supreme Court through amicus briefs. According to the Center for Media and Democracy, the Federalist Society received at least $33 million from 16 right-wing foundations since 2014. Those same 16 foundations donated nearly $69 million to a network of 11 nominally different groups, all of which filed amicus briefs in Seila Law urging the high court to kill the CFPB. None of this funding was disclosed to the court, to the parties, or to the public.

The dark-money web now entangling the court first helps select justices through the Federalist Society; then helps confirm the justices through the Judicial Crisis Network; then helps present cases to the justices through groups like the Pacific Legal Foundation; and then provides the justices a chorus of approval through this network of amici. Again, what could possibly go wrong?

Now, the donors may be on the cusp of winning their decades-long crusade.

Americans could lose the protection provided by independent, expert agencies like the CFPB. The agency has helped tens of millions of American consumers, serving as a bulwark against rapacious banks, payday lenders, and student loan servicers.

Americans would be shocked to know that the very safeguards Congress erected to protect the CFPB from forces of influence are being used by those same forces of influence as arguments to eliminate the agency. They would be shocked to learn that millions of dollars of corporate interest money have gone into shaping the judiciary to achieve this result. Yet here we are. Our Supreme Court is poised to do for industry what industry could not do through the political process—based on legal theories grown in the industry-funded Federalist Society hothouse.

Chief Justice John Roberts recently warned that “justice is not inevitable,” and reflected on “our duty to judge without fear or favor, deciding each matter with humility, integrity, and dispatch,” so as to best “maintain the public’s trust that we are faithfully discharging our solemn obligation to equal justice under law.” He and his colleagues could well reflect on whether the solemn obligation of discharging equal justice under law can be achieved with so many millions in dark money enmiring the court. I submit it cannot.

Sen. Sheldon Whitehouse represents Rhode Island in the U.S. Senate. A former Rhode Island attorney general and U.S. attorney, Whitehouse serves on the Senate Judiciary, Budget, Finance, and Environment and Public Works committees.

By: Sheldon Whitehouse