Watchdog

Policymaking under uncertainty is difficult.

Supreme Court Rejects Challenge to Consumer Watchdog’s Funding

The first big challenge of the season to the administrative state was the Supreme Court’s decision on the funding for the Consumer Financial Protection Bureau. On this narrow question, the Court ruled that “an appropriation is simply a law that authorizes expenditures from a specified source of public money for designated purposes.”

The two big cases coming up refer to Chevron deference and also to the constitutionality of the SEC’s tribunals.

“The Supreme Court rejected a challenge on Thursday to the way the Consumer Financial Protection Bureau is funded, one that could have hobbled the bureau and advanced a central goal of the conservative legal movement: limiting the power of independent agencies.

“The vote was 7 to 2, with Justice Clarence Thomas writing the majority opinion.”

UAW bureaucracy limits “stand up” strike against police crackdown to one campus, UC Santa Cruz

Without any irony, socialists complain that bureaucracy is inhibiting their impact.

“The UAW bureaucracy claims that limited strikes can convince the UC administration to bargain with students. That this is a lie is proven by the fact that the administration is preparing to attack the “standup strike” itself. But even if it were true, any agreement limited to the UC system exchanging toothless pledges to divest for the shutdown of the protests, would do nothing to stop the genocide.”

Senate Votes to Overturn SEC’s Crypto Regulation SAB 121

SAB 121 is an accounting rule that had the practical effect of discouraging banks from acting as custodians in the cryptocurrency space. Given the narrow Democratic Party control of the Senate, the 60-38 vote to push back on the SEC is remarkable.

Lobbying from cryptocurrency advocates was successful.

The defense of liberty requires deep pockets.

“SAB 121 required custodians to list digital assets as liabilities on balance sheets. This regulation has been heavily criticized for several reasons. The primary issue is its impracticality and potentially detrimental impact on the banking sector. If a bank holds $1 billion in Bitcoin for customers, it must also hold $1 billion in cash to offset this “liability”.

“This requirement makes little sense because the assets belong to the customers, not the bank. Critics say SAB 121 discourages banks from entering crypto, leading to less customer protection. Also, it contradicts OCC guidance, adding to regulatory confusion.”

Federal Regulations Remain Under Fire After Supreme Court’s CFPB Ruling

Article cautions against reading a broader defense of the administrative state into the recent CFPB ruling by the Supreme Court. The judgment may have been more technical than anything else.

The big rulings are yet to be decided.

“In Thursday’s 7-2 decision, the Supreme Court upheld the CFPB’s funding mechanism, which draws money from the Federal Reserve instead of Congress. This ruling was a win for President Joe Biden’s administration. However, legal experts said that this decision does not guarantee the long-term protection of federal agency powers, the Reuters report said.

“The term “war on the administrative state” refers to conservative efforts to weaken federal agencies that regulate various aspects of American business and life. The court’s 6-3 conservative majority has aligned with this effort, raising concerns among some about the future of federal regulation, per the report.”

Statement by Chair Gensler on Amendments to Regulation S-P

SEC seeks to update privacy protection rules to require firms to report data breaches to their customers.

“Today, the Commission is considering amendments to Regulation S-P that will require covered firms to notify their customers of data breaches. I support these amendments because, through making critical updates to a rule first adopted in 2000, these amendments will help protect the privacy of customers’ financial data.”

No ‘cop on the beat’: Why the SEC may deny new ether ETFs this month

The SEC tells us that crypto doesn’t merit a separate regulatory framework because crypto are securities. Existing laws and practices are sufficient. Yet, there is plenty of evidence of fraud. This is compounded by the fact that professional investment advisors don’t want to take the regulatory risk. Why isn’t the SEC on an enforcement spree?

Regulation by enforcement would solidify the impact of the agency’s message.

Instead, we get neither new rules nor proper enforcement of existing rules. This stunts the growth of the industry and harms investors.

“Edelman, an investor and personal finance author, thinks there needs to be an emphasis on regulations to protect people from crypto scams. He notes current laws are more than a half century old and are not built for digital technology.

“Without any cop on the beat, it’s forcing investors to go on their own outside of the investment advisory community because the community can’t help them because we don’t know what the rules are. And they’re ending up in scams and frauds,” he said. “The sad irony is that [SEC Chair Gary] Gensler is claiming to be wanting to protect the consumer. But his refusal to write regulation is actually harming the consumer rather than helping.”

Dimon Led Bank CEOs to Fend Off Tougher Capital Rules

In the words of F. Scott Fitzgerald, “Let me tell you about the very rich. They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft where we are hard, and cynical where we are trustful, in a way that, unless you were born rich, it is very difficult to understand.”

The banks pushed back and appear to have obtained a significant reduction in the mandated increase in equity capital regulators pushed for. How did they do it? They knew the pressure points. They applied pressure.

“Dimon at a meeting in Washington last fall told his fellow CEOs to bypass Michael Barr, the central bank’s vice chair for banking supervision and the main architect of the original plan. Dimon urged his fellow bankers to instead press other Fed governors, in particular Chair Jerome Powell, to alter the proposed capital rules.”

Chaos Plagued This Year’s Financial-Aid Process. How the Government Botched the Rollout.

Good piece from the Wall Street Journal telling the story of the FAFSA disaster. Apparently, someone in the Department of Education thought it would be a good idea to keep the system integrator role in-house. Also, the DoE system runs on Cobol.

“The Education Department was already more than a year behind schedule on rolling out the new Free Application for Federal Student Aid. Then, last October, staffers were alerted to a major oversight: The formula for determining aid didn’t account for inflation.”

A Supreme Court Victory for the Administrative State

What’s to stop the government from establishing other controversial agencies with funding from the Fed as a way to circumvent governance norms?

Alito writes in dissent:

‘Justice Alito stresses that the CFPB boasts a combination of legislative and enforcement power, unlike the early Post Office and other historical analogies cited by the majority. “In the last several months alone, the Bureau has announced plans to effectuate not one, but three major changes in consumer protection law,” he notes.

‘“These may or may not be wise policies, but Congress did not specifically authorize any of them, and if the CFPB’s financing scheme is sustained, Congress cannot control or monitor the CFPB’s use of funds to implement such changes,” the Justice writes. “It is not an exaggeration to say that the CFPB enjoys a degree of financial autonomy that a Stuart king would envy.”’

P = NP? Not exactly, but here are some research questions from the Office of Technology.

After a too-cute setup, the FTC introduces a set of questions it has about AI.

A Win for the Federal Government’s Contracting Power

Should the federal government use its procurement authority to exert control over private actors who contract to provide goods and services?

“Last month, the U.S. Court of Appeals for the Tenth Circuit upheld President Biden’s executive order mandating higher wages for federal contract workers. The decision affirmed the President’s broad authority to set rules that govern the federal procurement process. The Administration should use this authority to establish new standards for government contracting, including finalizing its proposal to require greenhouse gas emissions inventory and climate risk assessments from firms that contract with the government.

“A handful of recent court losses have sparked concerns inside and outside of the Administration about the scope of the government’s authority to impose conditions on federal contractors, who directly employ around 20 percent of the U.S. workforce.”