For many judicial conservatives, the last 90 years have been an aberration: The New Deal catalyzed an enormous — malign, in their view — growth in the federal government. Lost in the regulatory jungle, they claim, is a “constitution in exile” that will emerge only when the excesses of the federal administrative state are pruned away.
It’s a powerful vision. At least it is for the firms who must follow federal health, environmental or securities law. It’s less attractive if you bear the costs of financial crisis or environmental catastrophe. But the Roberts Court has been firmly on the side of those being regulated. The court’s interventions have cut deep into the regulatory state in recent years, yet none has struck a body blow to any federal agency, let alone to the coordinating role played by the federal government in steering the national economy. That may be about to change.
The U.S. Solicitor General recently asked for high-court review of a Fifth Circuit opinion that does effectively neuter a federal agency, the Consumer Financial Protection Bureau, which is much loathed on the right. The significance of the Fifth Circuit’s ruling, though, isn’t this localized effect: Rather, it casts broader doubt on funding sources for the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and, crucially, the Federal Reserve. While the Fifth Circuit took lawyerly pains to narrow its judgment, its efforts are thoroughly unconvincing. It has effectively launched an attack that could imperil much of the financial regulatory infrastructure that saved the U.S. economy in 2008 and 2020.
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