House Financial Services Committee holds hearing entitled "The Bureau of Consumer Financial Protection’s Unconstitutional Design"

Go here to view the witnesses' written testimony. (The witnesses were Ted Olson, Saikrishna Prakash, Adam White, and Brianne Gorod.) To watch the hearing, click here or on the embedded video below.

 

 

Congress's power to obtain, review, and disclose Trump's (and other tax filers') tax returns

Law prof George Yin has written a brief and timely paper called Congressional Authority to Obtain and Release Tax Returns. Yin is the former chief of staff of Congress's Joint Committee on Taxation.

In his paper, Yin explains that particular congressional committees possess the power to obtain, review, and disclose filers' tax returns in limited circumstances and that, in Trump's case, the committees should exercise at least their obtain-and-review authority:

In the present situation, concerns over President Trump’s possible conflicts of interest — including conflicts with tax legislation the committees may soon be asked to approve — would certainly seem to justify a tax committee effort to obtain and inspect his confidential tax information. A review could also assure the American public that the IRS is treating him like any other taxpayer and not giving him preferential treatment. ... Whether there should be disclosure of any information obtained is a separate question. There must also be a legitimate purpose for any disclosure. Once the tax committees complete their investigation, they can determine whether any disclosure to the public would be appropriate.

Here is the abstract of Yin's paper:

President Trump's continuing refusal to release his tax returns despite the contrary common practice of presidents over the last 40 years has spurred interest in finding alternative ways to obtain the information. This article describes the authority of the tax committees in Congress to obtain, inspect, and disclose the confidential tax information of any taxpayer, including the president, without the taxpayer's consent.

Should administrative rule makers take account of moral obligations and, if so, how?

That's the topic of Moral Commitments in Cost-Benefit Analysis by law profs Eric Posner and Cass Sunstein. Here is the abstract:

The regulatory state has become a cost-benefit state, in the sense that under prevailing executive orders, agencies must catalogue the costs and benefits of regulations before issuing them, and in general, must show that their benefits justify their costs. Agencies have well-established tools for valuing risks to health, safety, and the environment. Sometimes, however, regulations are designed to protect moral values, and agencies struggle to quantify those values; on important occasions, they ignore them. That is a mistake. People may care deeply about such values, and they suffer a welfare loss when moral values are compromised. If so, the best way to measure that loss is through eliciting private willingness to pay. Of course it is true that some moral commitments cannot be counted in cost-benefit analysis, because the law rules them off-limits. It is also true that the principal reason to protect moral values is not to prevent welfare losses to those who care about them. But from the welfarist standpoint, those losses matter, and they might turn out to be very large. Agencies should take them into account. If they fail to do so, they might well be acting arbitrarily and hence in violation of the Administrative Procedure Act. These claims bear on a wide variety of issues, including protection of foreigners, of children, of rape victims, of future generations, and of animals.

Virginia Updates Its Anti-SLAPP Law, Stiffening the Standard for Many Libel Claims

by Paul Alan Levy

With the signature of Governor Terry McAuliffe having been added last week, Virginia has adopted a modest improvement to its very narrow anti-SLAPP statute.   The new law, SB 1413,  is not nearly as strong as in the anti-SLAPP laws in California and other model states, but it has something that we have not seen in other state’s anti-SLAPP laws: a stiffening of the substantive standard for libel plaintiffs.  

Under Section 8.01-223.2 of the Virginia Code as it stands today, claims for tortious interference with contract and similar theories, when brought over a statement made at a public hearing or similar proceeding, are subject to an immunity defense unless uttered with knowledge of falsity or reckless disregard of falsity; when such claims ate dismissed pursuant to this immunity, the plaintiff may be awarded reasonable attorney fees.  Effective July 1, 2017, however, under SB 1413, the immunity will protect against claims for defamation, and it will protect any statements “regarding matters of public concern that would be protected under the First Amendment [and that] are communicated to a third party.”  The exception to the immunity has been slightly rephrased: It does not apply to “statements made with actual or constructive knowledge that they are false, or with reckless disregard for whether they are false.”  

Book Published on the CFPB From Birth to 2015

The book is Meltdown: The Financial Crisis, Consumer Protection, and the Road Forward (Praeger 2017), by research economist Larry Kirsch and sociologist Greg Squires (George Washington University Sociology Department). Here's an abstract:

Meltdown is the first book length account of the CFPB from its inception through 2015. With a foreword based on an interview with Elizabeth Warren and an afterword contributed by Michael Barr, Meltdown could hardly be a more timely read for all the doers and viewers immersed in the current political/legal threats to the Bureau. The book is written for both subject matter specialists (academics and practitioners) and general public affairs readers; its brisk narrative style plus detailed endnotes make it accessible and very useful for scholarship.

Meltdown is based on extensive in-depth interviews with more than 50 current CFPB staffers (at various levels and places throughout the agency, including Director Cordray); Bureau alumni including some of the pioneers; and a host of key stakeholders from industry, the consumer and fair-lending advocacy communities, the press, academia, and the Hill.

Among its major contributions, Meltdown profiles some of the key early players inside and out of the Bureau (including Director Cordray, Raj Date, Michael Barr, and Mike Calhoun) and offers diverse perspectives relating to the origins and early days of the CFPB from the stand-up (2010) through 2015. It features detailed case studies of the CFPB’s auto lending and mortgage origination initiatives as vehicles for probing and making preliminary observations about some of the fundamental conflicts the Bureau was called on to balance and resolve. Among them were striking the right balance between consumer protection and the risk of reduced credit access, finding ways of adapting to changing market conditions, bringing about maximum voluntary compliance among regulated lenders without sacrificing the agency’s firm objectives, making subtle judgments about how hard to push while standing right on the nebulous border of regulatory overreach, and finding ways to get industry to invest in structural changes in their consumer lending practices (to promote safety and fairness) when the benefits—from the industry perspective—seem tenuous though the costs are in plain sight.

 

"Trump administration rolls back protections for people in default on student loans"

That's the name of this article by Danielle Douglas-Gabriel.

Some background: In mid-2015, the Court of Appeals for the Seventh Circuit held that student-loan guaranty agencies may not assess collection costs against borrowers who enter the federal government’s loan rehabilitation program within 60 days of defaulting on their loans. One of the two judges in the Seventh Circuit majority deferred to a Department of Education "Dear Colleague" letter that maintained that costs could not be lawfully assessed under those circumstances.

The Department has now rescinded its earlier Dear Colleague letter, saying that the issues addressed in the letter "would have benefited from public input." Douglas-Gabriel notes that, in anticipation of possible action by the Department, "Sen. Elizabeth Warren and Rep. Suzanne Bonamici [had last week] sent a letter urging the Education Department to uphold the Obama administration’s guidance on the collection fees, which they said 'results in an unnecessary financial burden on vulnerable borrowers.'"

For more information on the Seventh Circuit case, go here. 

"Trump's Washington Hotel is a Bridge Too Far for Fair Competition"

That's the name of this opinion piece by Steven Schooner & Alan Morrison, two of the lawyers for the Cork Wine Bar in its unfair competition suit against Trump and his new hotel in D.C. (Subscription possibly required.) For more information about the suit, go to our original post about the suit. Here is an excerpt from the Schooner-Morrison piece:

The D.C. restaurant and hotel business is intensely competitive. Any new hotel, convenient to the White House and Congress, would attract business. But the Trump Hotel boasts a unique advantage: its owner is the president. Patrons flock there to curry favor with — or avoid the displeasure of — the hotel's and restaurants' beneficial owner, Trump. As one diplomat told The Washington Post: "Why wouldn't I stay at his hotel ... [and] tell the new president, 'I love your new hotel!' Isn't it rude to ,,, say, 'I am staying at your competitor?'" This special and unfair advantage that Trump's hotel lords over its competitors forms the basis for our lawsuit. The allegations are simple. Cork is losing business to the Trump Hotel restaurants and its catering business because of the unfair advantage inherent in the owner being the president. Under D.C. law, that is unfair competition, because the president's ownership tilts the playing field in Trump's favor.

  

Car insurance, driver distraction, car safety, and the cost of fixing teched-up cars

This article by Deirdre Fernandez explains why, according to the insurance industry, car insurance rates are on the rise: "Drivers distracted by their smartphones are crashing their cars more often, and those cars are now more expensive to repair because they’re loaded with sensors and devices." Some excerpts: 

TrueMotion is a Boston company that makes an app to track how much drivers use their phones. In its most recent data covering 18,000 users, TrueMotion found that drivers spent 20 percent of every trip on a call, holding their phone, or texting and scrolling through social media. The National Highway Traffic Safety Administration said fatalities attributed to distracted driving, which includes texting, fiddling with GPS, even eating, increased by 8.8 percent in 2015, the latest year available. Those incidents helped reverse a long-running decline in automobile-related fatality rates. In 2015, the overall number of motor vehicle fatalities in the United States increased 7.2 percent, the largest jump in half a century. * * * [According to industry spokespersons,] [o]ther factors are also driving rates up, particularly the increasing amount of technology packed into cars these days, such as sensors that monitor and measure nearly every aspect of performance. Just fixing a damaged bumper cost $1,705 more in 2016 than it did two years earlier ... . A simple windshield replacement that used to cost about $350, now involves higher-quality glass and connections to the car’s sensors, and costs twice as much.

"I spent my childhood on Medicaid, and Trump’s plan to roll it back is disastrous"

That is the name of this essay by consumer columnist Michelle Singletary. Here is an excerpt:

When my siblings and I went to live with my grandmother, we were a sickly bunch. There were five of us. ... I was 4. .. We were all undernourished. My brother Mitchell had seizures almost every night. He would lose consciousness and thrash about so much that he would wake up his twin, with whom he shared a bed.  . . .  [He needed regular treatment and medication.] My younger sister had a severe case of eczema. She scratched so much that she had dry ashen patches all over her legs and arms. She also had food allergies and asthma. And I had juvenile rheumatoid arthritis. Walking was difficult. At one point, the joint pain in my legs was so excruciating that I crumbled to the ground during recess as I tried to cross the schoolyard. I spent a summer in the hospital getting physical therapy. After my grandmother took us in, she applied for medical assistance through Medicaid. It was the only thing she ever asked for from the state. With five grandchildren to care for and only a low-wage nursing aide job, she could have gotten financial assistance. But Big Mama refused the money. “No, I only want the medical insurance,” she recalled telling the social worker. * *  * The nonpartisan Congressional Budget Office estimates that the Republican plan for replacing Obamacare, which expanded Medicaid, would result in a reduction of $880 billion in federal outlays for the program. That figure represents millions of Americans — including children — without health coverage who will suffer. It’s Mitchell. It’s my younger sister. It’s me.

Author of "The Imbecilic Executive" to Testify Before Congress on CFPB's Constitutionality

by Jeff Sovern

I originally had a different title for this post in mind, but I didn't have the discipline to resist the one above.  Not that anyone should have any doubts, but the CFPB director is not the executive the article refers to.  Anyway, the House Financial Services Committee is having a hearing titled “The Bureau of Consumer Financial Protection’s Unconstitutional Design” (nice that they have an open mind on the issue) on Tuesday. More here.   The witness list consists of:

• The Honorable Theodore Olson, Partner, Gibson, Dunn & Crutcher LLP (who represents PHH)
• Professor Saikrishna Prakash, James Monroe Distinguished Professor, University of Virginia School of Law (former clerk for Justice Thomas and author of The Imbecilic Executive, published in the Virginia Law Review)
• Mr. Adam White, Research Fellow, Hoover Institution
• Ms. Brianne Gorod, Chief Counsel, Constitution Accountability Center (whose essay we linked to here)