The NLRB Goes Down

The much-awaited argument in Noel Canning, arising over purported recess appointments to the National Labor Relations Board and the Consumer Financial Protection Bureau, was a bit of a yawner (transcript here). And it won’t be a big test of originalism, textualism, etc: If (as here) the government doesn’t have an argument from text, or structure, or history, or functionality, what does it matter? And if the Senate was in session anyhow, why are we arguing about recess appointments? You don’t have to follow the argument. Just count the lines in the transcript: the justices let Miguel Estrada, who made that argument on behalf of Republican Senators, drone on for five minutes at a time. That means they’ve made up their minds. Here, it means that the government loses, most likely on those grounds. Told you so.

To share another brilliant insight, or at any rate a speculation: Noel Canning may prove to be much less important than today’s (Jan. 14) case. The question is whether controversies over private rights can be committed to non-Article III tribunals—here, bankruptcy courts. In the last case over that question, the Court held that Congress can’t do that (and the Chief nearly threw a fit). The question now is whether parties in bankruptcy can divest federal (Article III) courts of their jurisdiction by consent.

Get the joke? Noel Canning was an NLRB adjudication over private rights. Constitutional? If “no,” why worry about the appointments?

Totally great FedCourts questions. But also a larger perplexity of constitutional law and litigation: you want it to be understandable. But all that matters, maybe, happens deep in the weeds.

Friday Roundup, March 15th

  • The current Liberty Law Talk is with Amity Shlaes on Calvin Coolidge. There are many impressive elements in Shlaes’ new biography of the thirtieth president. Of note is Coolidge’s discipline and refusal to place tax dollars at the service of numerous projects: agriculture, pensions, public works, etc. Federal coffers were flush, why not spend it, many asked? Coolidge frequently chose the pocket veto to say no to them. He vetoed over 50 bills while in office. So Ronald Reagan is adored by advocates of limited government, but it was Coolidge who actually cut the government, halved tax rates and didn’t spend the increased revenue (yes, they understood the Laffer curve in the 20s), vetoed attempts that would have had federal policy direct agricultural markets, and presided over an economy that grew at an annual 3-4% clip.
  • What does it mean for federal and state governments to be neutral toward religion? When does neutrality actually operate more like exclusion of citizens with views informed and shaped by religion? These are the questions considered in our featured review of Andrew Koppelman’s Defending American Religious Neutrality.
  • Is the CFPB legal? That’s the question Congressman Jeb Hensarling, Chairman of the House Financial Services Committee is asking Ben Bernanke. As Todd Zywicki notes, “the argument is straightforward in light of Noel Canning: “As you know, the Dodd-Frank Wall Street Reform and Consumer Protection Act… authorizes the Board to transfer funds to carry out the authorities of the CFPB only at the request of its director.  Because it appears there is not presently a validly-appointed director of the CFPB, I question the circumstances under which the Board may lawfully fund the CFPB’s operations.”
  • We should remember Edmund Burke, a tremendous Irishman, on this St. Patrick’s Day weekend. Burke’s Reflections on the Revolution in France, among his other contributions, serves as a preeminent warning to the enthusiasts of so many ideological stripes. Those who are convinced that their understanding of liberty, equality, and virtue is so perfect that our past inheritances of citizenship, patriotism, religion and morality “with the solidity of property; with peace and order; with civil and social manners” can so easily be dispensed with would do well to keep his Reflections close by in such fervent moments:


Edmund Burke

When I see the spirit of liberty in action, I see a strong principle at work; and this, for a while, is all I can possibly know of it. The wild gas, the fixed air, is plainly broke loose: but we ought to suspend our judgment until the first effervescence is a little subsided, till the liquor is cleared, and until we see something deeper than the agitation of a troubled and frothy surface. I must be tolerably sure, before I venture publicly to congratulate men upon a blessing, that they have really received one. Flattery corrupts both the receiver and the giver; and adulation is not of more service to the people than to kings. I should therefore suspend my congratulations on the new liberty of France, until I was informed how it had been combined with government; with public force; with the discipline and obedience of armies; with the collection of an effective and well-distributed revenue; with morality and religion; with the solidity of property; with peace and order; with civil and social manners. All these (in their way) are good things too; and, without them, liberty is not a benefit whilst it lasts, and is not likely to continue long. The effect of liberty to individuals is, that they may do what they please: we ought to see what it will please them to do, before we risque congratulations, which may be soon turned into complaints. Prudence would dictate this in the case of separate insulated private men; but liberty, when men act in bodies, is power. Considerate people, before they declare themselves, will observe the use which is made of power; and particularly of so trying a thing as new power in new persons, of whose principles, tempers, and dispositions, they have little or no experience, and in situations where those who appear the most stirring in the scene may possibly not be the real movers.

Policy-Based Evidence-Making at the Consumer Financial Protection Bureau

New mortgage rules released by the CFPB show why heightened oversight is necessary.

The BadgeThe Consumer Financial Protection Bureau is one of the most powerful and least accountable regulatory agencies in American history.  Immune from budgetary oversight by Congress and headed by a single director who cannot be removed by the President, the agency wields unconstrained, vaguely-defined powers to regulate virtually every consumer and small business credit product in America.  The Bureau has defended its extraordinary independence by claiming that its regulations will be “evidence-based” on unbiased, unimpeachable economic evidence, and thus is above the usual political concerns that justify bipartisan commissions and engaged congressional oversight.

The Rules

Last week’s issuance of its new rules on residential mortgages (summarized here), however, shows why the new regulator can’t be trusted to regulate itself. The rules impose new burdens on lenders to ensure borrowers’ “ability to pay” their loans and create a safe harbor for so-called “qualified mortgages” that are perceived as especially safe by regulators, such as fixed rate mortgages and—don’t laugh—loans issued according to Fannie Mae and Freddie Mac’s underwriting criteria. 

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The Revenge of Richard Nixon: The Consumer Financial Protection Bureau Spreads Its Tentacles

Last month marked the one-year anniversary of the Consumer Financial Protection Bureau (CFPB).  At the time the Bureau was created I predicted that it would be a bureaucratic train wreck: an institution that is almost perfectly designed to manifest all of the worst pathologies that scholars of regulation have identified over the past several decades.  Unfortunately, its operations to date have confirmed those fears.

The institutional structure of the CFPB is novel in American history—not merely an independent agency, it is an independent agency tucked inside another independent agency (the Federal Reserve).  Its decision-making is not only independent of any review by the President or Congress, but also from the Federal Reserve itself. 

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