In Whole Woman’s Health v. Hellerstedt (2016), the Supreme Court invalidated a Texas law that required abortion providers to have admitting privileges at local hospitals. According to Justice Stephen Breyer’s majority opinion, that regulation served no legitimate health or safety purpose and placed “a substantial obstacle in the path of women seeking a previability abortion,” thus creating an unconstitutional “undue burden on abortion access.” Among the dissenters in Whole Woman’s Health was Chief Justice John Roberts. He would have let the abortion regulation stand.
Today the Supreme Court decided a nearly identical case—June Medical Services v. Russo—on nearly identical legal grounds. At issue was a Louisiana law requiring physicians who perform abortions to have admitting privileges at local hospitals. Once again, Justice Stephen Breyer wrote the opinion. The “substantial obstacle” to abortion access that the Louisiana law creates, he argued, “and the absence of any health-related benefit” render the law unconstitutional.
There was one notable difference between the two abortion rulings. This time around, Chief Justice Roberts sided with the Court’s Democratic appointees and voted to strike down the state regulation. What changed?
“I joined the dissent in Whole Woman’s Health and continue to believe that the case was wrongly decided,” Roberts wrote in a lone concurrence. “The question today however is not whether Whole Woman’s Health was right or wrong, but whether to adhere to it in deciding the present case.”
For the chief justice, that question was answered by the legal doctrine of stare decisis, a Latin phrase meaning “to stand by things decided.”
“Stare decisis requires us, absent special circumstances, to treat like cases alike,” Roberts wrote. “The Louisiana law imposes a burden on access to abortion just as severe as that imposed by the Texas law, for the same reasons. Therefore Louisiana’s law cannot stand under our precedents.”
Writing in dissent, Justice Neil Gorsuch made the case for a different judicial role, arguing that the law should have been upheld under “the deference owed to the legislative process.” The Louisiana legislature “found that requiring abortion providers to hold admitting privileges at a local hospital within 30 miles of the clinic where they perform abortions would serve the public interest by protecting women’s health and safety,” he wrote. In Gorsuch’s view, the Court should have respected the wisdom of that legislative determination.
The Supreme Court’s decision in June Medical Services v. Russo is available here.
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83 Tons Of Fake Gold Bars: Gold Market Rocked By Massive China Counterfeiting Scandal Tyler Durden
Mon, 06/29/2020 – 12:15
Over the years, we have periodicallyreported of the occasional gold bar discovered as counterfeit in Manhattan’s Diamond District which instead of containing the yellow precious metal would be filled with gold-plated tungsten or in some cases copper. The news would spark a brief wave of outrage, prompting physical gold holders to run ultrasound spot checks of their inventory, at which point interest would wane and why not: buyer, after all, beware in gold as in every other market, and if someone is spending thousands to buy fake gold, well that’s Darwinism in action.
Yet one market which seemed stubbornly immune to any counterfeiting was that of physical gold in China, which was odd considering that over the past decade China had emerged as the world’s biggest counterfeiter of various, mostly industrial metals used to secure bank loans, better known as “ghost collateral“, and which adding insult to injury, would frequently be rehypothecated meaning often several banks would have claims to the same (fake) asset.
All that is about to change with the discovery of what may be one of the biggest gold counterfeiting scandal in recent history. And yes, not only does it involve China, but it emerges from a city that has become synonymous for all that is scandalous about China: Wuhan itself.
With that preamble in mind, we introduce readers to Wuhan Kingold Jewelry Inc., a company which as the name implies was founded and operates out of Wuhan, and which describes itself on its website as “A Company with a Golden future.”
In retrospect, it probably meant “copper” future, because as a remarkable expose by Caixin has found, more than a dozen Chinese financial institutions, mainly trust companies (i.e., shadow banks) loaned 20 billion yuan ($2.8 billion) over the past five years to Wuhan Kingold Jewelry with pure gold as collateral and insurance policies to cover any losses. There was just one problem: the “gold” turned out to be gold-plated copper.
Some more background: Kingold – whose name was probably stolen from Kinross Gold, one of the world’s largest gold miners – is the largest privately owned gold processor in central China’s Hubei province. Its shares are listed on the Nasdaq stock exchange in New York (although its current market cap of just $10MM is a far cry from its all time highs hit when the company IPOed on the Nasdaq around 2010) . The company is led by Chairman Jia Zhihong, an intimidating ex-military man who is the controlling shareholder.
What could go wrong?
Well, apparently everything as at least some of 83 tons of gold bars used as loan collateral turned out to be nothing but gilded copper. That has left lenders holding the bag for the remaining 16 billion yuan of loans outstanding against the bogus bars. And as Caixin adds, the loans were covered by 30 billion yuan of property insurance policies issued by state insurer PICC Property and Casualty and various other smaller insurers.
The fake gold came to light in February when Dongguan Trust (one of those infamous Chinese shadow banks) set out to liquidate Kingold collateral to cover defaulted debts. As the report continues, in late 2019 Kingold failed to repay investors in several trust products. To its shock, Dongguan Trust said it discovered that the gleaming gold bars were actually gilded copper alloy.
The news sent shockwaves through Kingold’s creditors. China Minsheng Trust – another shadow banking company and one of Kingold’s largest creditors – obtained a court order to test collateral before Kingold’s debts came due. On May 22, the test result returned saying the bars sealed in Minsheng Trust’s coffers are also copper alloy.
And with authorities investigating how this happened, Kingold chief Jia flatly denies that anything is wrong with the collateral his company put up. Well, what else could he say…
As Caxin notes, the Kingold counterfeiting case echoes China’s largest gold-loan fraud case, unfolding since 2016 in the northwest Shaanxi province and neighboring Hunan, where regulators found adulterated gold bars in 19 lenders’ coffers backing 19 billion yuan of loans, or about USD $2.5 billion. In that case, a lender seeking to melt gold collateral found black tungsten plate in the middle of the bars.
In the case of Kingold, the company said it took out loans against gold to supplement its cash holdings, support business operations and expand gold reserves, according to public records. It then appears to have decided to apply a gold-layer to tons of copper and pretend it was money-good gold collateral. And even more shocking, for years nobody checked the authenticity of the pledged collateral!
In 2018, the company beat a number of competitors in bidding to buy a controlling stake in state-owned auto parts maker Tri-Ring Group. Kingold offered 7 billion yuan in cash for 99.97% of Tri-Ring. The Hubei government cited the deal as a model of so-called mixed-ownership reform, which seeks to invite private shareholders into state-owned enterprises. But Kingold has faced problems taking over Tri-Ring’s assets amid a series of corruption probes and disputes involving Tri-Ring.
After obtaining the test results, Minsheng Trust executive said the company asked Jia whether the company fabricated the gold bars: “He flatly denied it and said it was because some of the gold the company acquired in early days had low purity,” the executive said. In a telephone interview with Caixin in early June, Jia denied that the gold pledged by his company was faked.
“How could it be fake if insurance companies agreed to cover it?” he said and refused to comment further. Well, the answer is simple: the insurance companies were in on the scam, but that’s a story for another day.
In early June, Minsheng Trust, Dongguan Trust and a smaller creditor Chang’An Trust filed lawsuits against Kingold and demanded that PICC P&C cover their losses. PICC P&C declined to comment to Caixin on the matter but said the case is in judicial procedure. A source from PICC P&C told Caixin that the claim procedure should be initiated by Kingold as the insured party rather than financial institutions as beneficiaries. Kingold hasn’t made a claim, the Caixin source said.
In total, Kingold pledge tens of thousands of kilograms of gold to no less than 14 creditors amounting to just under 20 billion yuan.
Caixin learned that the Hubei provincial government set up a special task force to oversee the matter and that the public security department launched an investigation. The Shanghai Gold Exchange, a gold industry self-regulatory organization, disqualified Kingold as a member as of last week.
Following Dongguan Trust and Minsheng Trust, two other Kingold creditors also tested pledged gold bars and found they were fake, Caixin learned. A Dongguan Trust employee said his company reported the case to police Feb. 27, the day after the testing result was delivered, and demanded 1.3 billion yuan of compensation from PICC P&C’s Hubei branch.
Meanwhile, Kingold defaulted on 1.8 billion yuan of loans from Dongguan Trust with an additional 1.6 billion yuan due in July.
The 83 tons of purportedly pure gold stored in creditors’ coffers by Kingold as of June, backing the 16 billion yuan of loans, would be equivalent to 22% of China’s annual gold production and 4.2% of the state gold reserve as of 2019.
In short, more than 4% of China’s official gold reserves may be fake. And this assume that no other Chinese gold producers and jewelry makers are engaging in similar fraud (spoiler alert: they are.)
* * *
Founded in 2002 by Jia, Kingold was previously a gold factory in Hubei affiliated with the People’s Bank of China that was split off from the central bank during a restructuring. With businesses ranging from gold jewelry design, manufacturing and trading, Kingold is one of China’s largest gold jewelry manufacturers, according to the company website.
The company debuted on Nasdaq in 2010. The stock currently trades around $1 apiece, giving Kingold a market value of $12 million, down 70% from a year ago. A company financial report showed that Kingold had $3.3 billion of total assets as of the end of September 2019, with liabilities of $2.4 billion.
Jia, now 59, served in the military in Wuhan and Guangzhou and spent six years living in Hong Kong. He once managed gold mines owned by the People’s Liberation Army, which means he likely has connections all the way to the very top.
Jia Zhihong
“Jia is tall and strong,” one financial industry source familiar with Jia told Caixin. “He’s an imposing figure and speaks loudly. He is bold, reckless and eloquent, always making you feel he knows better than you.”
Several trust company sources said Jia is well connected in Hubei – the epicenter of the coronavirus pandemic – which may explain Kingold’s surprise victory in the Tri-Ring deal. But a financial industry source in Hubei said Jia’s business is not as solid as it may appear.
“We knew for years that he doesn’t have much gold ― all he has is copper,” said the source, who declined to be named.
Local financial institutions in Hubei have avoided doing business with Kingold, but they don’t want to offend him publicly, the source said. Why? Because of his extnesive connections with the Chinese army.
“Almost none of Hubei’s local trust companies and banks has been involved in (Kingold’s) financing,” he said.
That explains why most of Kingold’s creditors are from outside Hubei. Caixin learned from regulatory sources that Minsheng Trust is the largest creditor of Kingold with nearly 4.1 billion yuan of outstanding loans, followed by Hengfeng Bank’s 3.9 billion yuan, Dongguan Trust’s 3.4 billion yuan, Anxin Trust & Investment Co.’s 1.9 billion yuan and Sichuan Trust Co.’s 1.8 billion yuan.
But wait, counterfeiting gold is just the tip of the company’s fraud iceberg: several industry sources told Caixin that the institutions were willing to offer loans to Kingold because Jia promised to help them dispose of bad loans.
Hengfeng Bank is the only commercial bank involved in the Kingold affair. The bank in 2017 provided an 8 billion yuan loan to Kingold, which in return agreed to help the bank write off 500 million yuan of bad loans, bank sources said. Kingold repaid half of the debts in 2018. But the loan issuance involved many irregularities as access to the pledged gold and testing procedures was controlled by Kingold, one Hengfeng employee said.
The loan was pushed forward by Song Hao, former head of Hengfeng’s Yantai branch. Song was placed under graft investigation in March 2018 in connection with the bank’s disgraced former Chairman Cai Guohua, whose downfall led to a major revamp in the bank’s management. In 2019, Hengfeng’s new management sued Kingold for the unpaid loans and moved to dispose the collateral. But a test of the gold bars found they are “all copper,” the bank source said.
It is still unclear whether the collateral was faked in the first place or replaced afterward. Sources from Minsheng Trust and Dongguan Trust confirmed that the collateral was examined by third-party testing institutions and strictly monitored by representatives from Kingold, lenders and insurers during the process of delivery.
“I still can’t understand which part went wrong,” a Minsheng Trust source said. Bank records showed that the vault where the collateral was stored was never opened, the source told Caixin.
The falling dominos
Public records showed that Kingold’s first gold-backed borrowing can be traced back to 2013, when it reached an agreement for 200 million yuan of loans from Chang’An Trust, with 1,000 kilograms of gold pledged. The two-year loan was to fund a property project in Wuhan and was repaid on time. Before this, Kingold’s financing mainly came from bank loans with property and equipment as collateral.
It appears that one way or another, the company realized that it could fabricate gold ownership and receive money in exchange for what were basically worthless copper bricks painted as gold; and thanks to Jia’s military connections nobody would ask any other questions.
As a result, starting in 2015, Kingold rapidly increased its reliance on gold-backed borrowing and started working with PICC P&C to cover the loans. In 2016, Kingold borrowed 11 billion yuan, nearly 16 times higher than the previous year’s figure. Its debt-to asset ratio surged to 87.5% from 43.4%, according to a company financial report. That year, Kingold pledged 54.7 tons of gold for loans, 7.5 times higher than the previous year.
It is now safe to assume that most of that gold never existed.
A person close to Jia said the surge of borrowing was partly due to Kingold’s pursuit of Tri-Ring. In 2016, the Hubei provincial government announced a plan to sell Tri-Ring stakes to private investors as a major revamp of the Hubei government-controlled auto parts manufacturer.
In 2018, Kingold was selected as the investor in a deal worth 7 billion yuan. According to the investment plan, Kingold’s purchase of Tri-Ring was part of a strategy to expand into the hydrogen fuel cell business, which is obviously a “logical” fit for a company involved in gold jewelry. Sources close to the deal said Kingold was attracted by Tri-Ring for its rich holding of industrial land that could be converted for commercial development.
Yes, at the very bottom of the fraud we finally get to the one true and endless Chinese asset bubble: real estate.
A Dongguan Trust investment document showed that Tri-Ring owns land blocks in Wuhan and Shenzhen that are worth nearly 40 billion yuan.
The deal drew immediate controversy as some rival bidders questioned the transparency of the bidding process and Kingold’s qualifications.
And here things get even crazier: according to Kingold’s financial reports, the company had only 100 million yuan of net assets in 2016 and 2 billion yuan in 2017, sparking doubts over its capacity to pay for the deal. Despite the fuss, Kingold paid 2.8 billion yuan for the first installment shortly after the announcement of the deal. The second installment of 2.4 billion yuan was paid several months later with funds raised from Dongguan Trust.
In December, Tri-Ring completed its business registration change, marking completion of Kingold’s takeover. However, the new owner has since faced troubles mobilizing Tri-Ring’s assets because of a series of corruption probes surrounding the auto parts maker since early 2019 that brought down Tri-Ring’s former chairman. As Caixin the notes, a majority of Tri-Ring’s assets were frozen amid the investigation and subsequent debt disputes, limiting Jia’s access to the assets.
The fraud is finally exposed
Hobbled by the Tri-Ring deal, which cost billions of yuan but has yet to make any return, Jia’s capital chain was eventually broken when Hengfeng Bank pushed for repayment, triggering a series of events that brought the fake gold to light, said a person close to the matter. Insurers’ involvement was key to the success of Kingold’s gold-backed loan deals. The insurance policies provided by leading state-owned insurers like PICC P&C were a major factor defusing lenders’ risk concerns, several trust company sources said.
“Without the insurance coverage from PICC P&C, (we) wouldn’t issue loans to Kingold as the collateral can only be tested through random picked samples,” one person told Caixin.
PICC P&C’s Hubei branch provided coverage for most of Kingold’s loans, Caixin learned. All the policies will expire by October. As of June 11, 60 policies were still valid or involved in lawsuits.
PICC P&C faces multiple lawsuits filed by Kingold’s creditors demanding compensation. But a PICC P&C spokesperson said the policies cover only collateral losses caused by accident, disasters, robbery and theft. Not fraud, and certainly not losses when the collateral never even existed!
Whose fault
Wang Guangming, a lawyer at Dacheng Law Offices, said the key issue is what happened to the pledged gold and which party was aware of the falsification. If Kingold faked the gold bars and both the insurers and creditors were unaware, the insurers should compensate the lenders and sue Kingold for insurance fraud, Wang said. Insurers are also responsible to compensate if they knew of Kingold’s scam but creditors didn’t, Wang said.
If Kingold and creditors were both aware of the fake collateral, insurers could terminate the policies and sue the parties for fraud. But if insurers were also involved in the scam, then all the contracts are invalid and every party should assume their own legal responsibilities, Wang said.
A financial regulatory official told Caixin that previous investigations of loan fraud cases involving fake gold pledges found there was often collusion between borrowers and financial institutions.
Earlier this year, PICC P&C removed its Hubei branch party head and general manager Liu Fangming. Sources said staff members involved in business with Kingold were also dismissed. PICC P&C said Liu’s removal was due to internal management issues. It didn’t answer Caixin’s question about whether Liu was involved in the Kingold scandal.
PICC P&C’s Hubei branch provided insurance for most of Kingold’s gold-backed loans.
* * *
The above story is shocking in exposing just how multi-faceted fraud is in China: capitalizing on pre-existing cronyism and connections with China’s powerful army, the founder of Kingold was allowed to basically do anything he wanted, no questions asked, including counterfeiting over 83 tons of gold bars to get billions in funds to participate in China’s housing bubble, only for a series of unexpected events to unwind the frauds one after another and expose the type of sordid scandal that is at the heart of most Chinese “enterprises” and business ventures.
As for the gold, yes – several billion in gold bars never existed and yet resulted in a cascade of subsequent cash flow events allowing tens of billions in funds to be released, “benefiting” not only founder Jia, but China’s broader economy. Which is, needless to say, terrifying: because whereas just after the financial crisis China was engaged in building ghost cities, everyone knew these were a symbol of demand that would never materialize, even if the cities themselves did exist. However, it now appears that a major part of China’s subsequent economic boom has been predicated on tens of billions in hard assets – such as gold – which simply do not exist.
As for what this means for the price of gold… well, Kingold is certainly not the only Chinese company engaging in such blatant fraud, and the consequences are clear: once Chinese creditors or insurance companies start testing the “collateral” they have received in exchange for tens of billions in loans and discover, to their “amazement”, that instead of gold they are proud owners of tungsten or copper, they have two choices: reveal the fraud, risking tremendous adverse consequences and/or prison time, or quietly buy up all the gold needed to literally fill the void from years of gold counterfeiting.
Something tells us option two will be far more palatable to China’s kleptoculture where one domino cold trigger a collapse of the entire financial system. What happens next: a panicked scramble to procure physical gold, one which even our friends at the BIS will be powerless to stop from sending the price of the precious metal to all time highs.
via ZeroHedge News https://ift.tt/3ibEENx Tyler Durden
Below is my column in USA Today on the D.C. Circuit ordering Judge Emmet Sullivan to dismiss the case of former National Security Adviser Michael Flynn. After this column ran, new evidence emerged that further undermined the FBI and the targeting of Flynn, as discussed in another recent column. Notes from fired FBI Special Agent Peter Strzok show that former FBI Director James Comey told President Barack Obama and Vice President Joe Biden that Flynn’s call to the Russian diplomat “appear legit.”
Nevertheless, Biden (who denied having anything to do with the case) is noted as raising the idea of a charge under the facially unconstitutional Logan Act, a law that has never been used successfully to charge a single person since the beginning of this Republic.
Comey of course was the one who later bragged that he “probably wouldn’t have … gotten away with it” in other administrations, but he sent “a couple guys over” to question Flynn, who was settling into his new office as national security adviser. We now know that, when Comey broke protocols and sent the agents, he thought the calls were legitimate ant that agents wanted to dismiss the investigation in December for lack of evidence. They were prevented from doing so as Strzok, Biden, and others discussed other crimes, any crime, to nail Flynn just before the start of the Trump Administration.
If all of that seems “illegitimate” and “irregular,” it pales in comparison to how two judges on the D.C. panel reviewed the handling of the Flynn case by Judge Emmet Sullivan. It seems that everyone from the President to the Vice President to the FBI Director to ultimately the federal judge have engaged in a dangerous form of improvisational law when it came to Michael Flynn. That will now hopefully end though many questions still remain.
It is possible for Judge Sullivan to appeal, though the upcoming hearing on Flynn has been removed from the docket.
Here is the column:
The dismissal of the case against former National Security Adviser Michael Flynn sent shock waves across Washington, including Congress which was hours away from a hearing addressing the case. Any appellate decision taking unprecedented measures to stop “irreparable harms” and “irregular” conduct is newsworthy. However, those admonishments were not describing Flynn’s conduct but that of his trial judge, U.S. District Judge Emmet Sullivan. The D.C. Circuit panel took the exceptionally rare step of ordering Sullivan to stop further proceedings and dismiss the case to avoid further damage caused by his prior orders.
The case should have been dismissed
One month ago, I wrote a column criticizing the handling of the Flynn case by Judge Sullivan after the government moved to dismiss its own prosecution.
The law in this case is clear and the case should have been dismissed. Instead, Sullivan took the extraordinary action of appointing a retired judge, John Gleeson, to argue positions that neither of the actual parties supported. Gleeson not only had publicly denounced the administration over its handling of the case but, as a judge, was reversed for “irregular” conduct in usurping the authority of prosecutors. In addition, Sullivan suggested that he might charge Flynn with perjury for alleging that he was wrongly charged despite the support of the Justice Department in finding abuses in his case.
Criticizing Sullivan, who I have appeared before for years as counsel and previously complimented for his demeanor, was not popular. Legal analysts in The Washington Post, CNN and other outlets insisted that his actions were entirely appropriate and justified. Yet, another letter from “former prosecutors” was given unquestioning media coverage to show that Sullivan should deny the motion in the case.
In an opinion piece, UCLA Law Professor and former U.S. Attorney under Bill Clinton, Harry Litman even explained how Sullivan could “make trouble” for the Trump administration in these hearings. Litman insisted that I was “a very lonely voice in the wilderness” of academia in contesting the use of an outside lawyer to make arguments in a criminal trial case that neither the defense nor the prosecution supported.
The wilderness now appears to include at least two other voices from the D.C. Circuit. The panel specifically denounced the “irregular” use of Gleeson and his hyperbolic arguments in the case. Gleeson suggested that the court should actually send Flynn to jail despite prosecutors raising evidence of misconduct and abuse as the basis for dismissal. He also argued that, rather than give Flynn a trial on a new charge from Sullivan of perjury, Flynn should just be sentenced in light of such perjury as part of his prior non-perjury charge.
Even for those of us who believed that Sullivan was operating well outside of the navigational beacons for a court in such case, the decision was breathtaking. Most of us expected that the appellate court would remand the case to allow Sullivan a face-saving hearing with an inevitable order to dismiss. The panel, however, clearly had little trust in the plans for this hearing or any true judicial purpose. Indeed, it may have been convinced that the primary purpose was indeed to “make trouble” for the administration.
As some of us wrote previously, the appellate court was particularly alarmed by the implications of Sullivan’s orders, including noting that the “invitation to members of the general public to appear as amici…”The panel said that such an invitation by Sullivan “suggests anything but a circumscribed review.” Moreover, it noted that the Justice Department had submitted troubling evidence of possible misconduct. And that “each of our three coequal branches should be encouraged to self-correct when it errs.”
Gleeson, wrong appointment
The greatest irony is that Sullivan’s unwise decision to appoint Gleeson to make the case was perhaps too successful. Gleeson ultimately proved not the case against Flynn but against Sullivan. In reviewing Gleeson’s brief, the panel declared “we need not guess if this irregular and searching scrutiny will continue; it already has.” The panel noted that Sullivan’s appointed counsel “relied on news stories, tweets, and other facts outside the record to contrast the government’s grounds for dismissal here with its rationales for prosecution in other cases.”
The panel was also aware of past concerns raised in the case, including the rather bizarre first sentencing hearing held in December 2018. In that hearing, Sullivan suggested that Flynn might be guilty of treason in a case involving comparatively minor charges of false statements to federal investigators. Sullivan dramatically used the flag in the courtroom as a prop and accused Flynn of being “an unregistered agent of a foreign country while serving as the national security adviser to the president of the United States. Arguably, that undermines everything this flag over here stands for. Arguably, you sold your country out.” (He later apologized for his comments.)
The irony, however, is that Sullivan proved the best thing that could have happened to Flynn. After that unnerving exchange, Sullivan asked if Flynn still wanted him to sentence him or wait. He indicated that he might go substantially beyond what Special Counsel Robert Mueller’s team had demanded. Flynn wisely decided to wait. The resulting delay allowed the damaging evidence from his case to be review and released. Had Sullivan simply sentenced Flynn last December, it would have been much more difficult for Flynn to have raised these issues.
Sullivan then handed down his novel orders including appointing his own counsel to argue for prosecution against the actual prosecutors.
This record proved too much for the appellate court. Rather than order Sullivan off the case, it decided to order Sullivan to dismiss the case. Short of an order of actual recusal of a judge, a mandamus order is the most stinging indictment of the handling of a case that can come from an appellate court.
The ruling in this case is unlikely to force any real circumspection by legal analysts or the media in the prior coverage. Nuanced legal questions quickly evaporate in this age of rage. Conflicting case law is dismissed in favor of the clarity demanded by echo journalism. The law however brings its own clarity and the message of this opinion could not be clearer.
Sullivan’s actions in the case did not spell “trouble” for the Trump administration, but rather, they spelled trouble for the administration of justice in our court system.
via ZeroHedge News https://ift.tt/2YJV5Zu Tyler Durden
Houston Hospital Boss Shatters Media’s COVID Fearmongering: “Only About 3 Or 4 More People In ICU” Tyler Durden
Mon, 06/29/2020 – 11:47
Headlines like “Houston facing ‘apocalyptic’ July 4” sparked fear and panic across most of America’s media over the weekend as talk of max’d out ICUs and soaring case-numbers dominated every pixel (with very few able to see any link to this resurgence in cases and the riots and protests that began to take place a few weeks ago).
As per usual in this highly politicized world, another leading voice has emerged to clarify that this heightened state of alarm was all for naught, since Houston actually has the situation in its hospitals well in hand.
Houston Methodist CEO Dr. Marc Boom told CNBC on Monday that the demographics of the outbreak have “flipped” and that the mostly-younger people arriving in the state’s hospitals often don’t require ICU beds, even though many do get very sick.
“Even though we have about 200 more patients in house, about double, we only have about three or four more people in the ICU, so that’s encouraging.”
Additionally, as CNBC reports, Boom says Houston Methodist has the necessary capacity to handle the Covid-19 outbreak, echoing similar comments on CNBC Friday from Dr. David Callender, CEO of Memorial Hermann Health System in Houston.
Boom reiterated his comments from last week that the number of hospitalizations are “being misinterpreted, and, quite frankly, we’re concerned that there is a level of alarm in the community that is unwarranted right now.”
“We do have the capacity to care for many more patients, and have lots of fluidity and ability to manage,” Boom said.
He pointed out that his hospital one year ago was at 95% ICU capacity, similar to the numbers the hospital is seeing today.
“It is completely normal for us to have ICU capacities that run in the 80s and 90s,” he said.
“That’s how all hospitals operate.”
One twitter user @LWinthorpe noted that the CEO of another one of Houston’s main hospitals has issued a statement pushing back against the “unnecessarily alarm[ing]” reporting on ICU capacity in the state.
“The TMC issued a serious statement about ICU capacity that unnecessarily alarmed our community, making it inaccurately appear that hospitals are in an imminent ICU capacity crisis. The letter was released prematurely Wednesday and it had unintended consequences.
What was intended to alert the community to the critical need to change behaviors, actually panicked the community.
Capacity is often misunderstood by media and the public and it was clear that we needed to correct the misunderstanding to best serve the public.”
Does make one wonder, just what was the point of all this fearmongering?
One former NYT Op-Ed contributor reminds us…
“To whom should propaganda be addressed? To the scientifically trained intelligentsia or the less educated masses? It must be addressed always and exclusively to the masses.”
~ Adolf Hitler (1998). “Mein Kampf”, Houghton Mifflin Harcourt (Mein Kampf originally published July 18, 1925)
“There is not a scenario, in my opinion, where the demand for our beds … would eclipse our capability,” he continued.
“I cannot imagine that. I just cannot.”
2/ “The capacity that’s being reported is base capacity … we have the ability to go far higher than that in terms of the ICU beds….We are seeing younger patients, we are seeing a shorter length of stay, we are seeing lower immortality, and we are seeing lower ICU utilization.”
Josh Brown’s Ritholtz Wealth Management Pays Off Its PPP Loan By Taking On A Line Of Credit Tyler Durden
Mon, 06/29/2020 – 11:30
Recall, almost one month ago to the day, we reported that Barry Ritholtz and Josh Brown’s Ritholtz wealth management had taken out an SBA-backed payroll protection loan.
“Thank you, Chase Bank! Thank you, SBA! It’s the news I needed and it came at the right time,” Josh Brown blogged at the time. He also toldFinancial Advisor, who asked about the loan: “It’s nobody’s business how a firm choses to finance itself.”
Read this from the #WSJ
Big Josh Brown @reformedbroker took PPP
Ritholtz Wealth Management with $1.3 billion in assets with only 30 employees took it and got caught. pic.twitter.com/gs8eLCnvg8
… damage control that started just days after they disclosed taking out the loan, the firm has decided to pay it back by replacing it with a line of credit, according to Citywire USA.
“By May, we looked into replacing the PPP loan with a line of credit. Last week, we did that, and repaid the loan in full (plus interest),” Ritholtz said.
Nice of him to note they paid it back with interest; we can’t imagine how difficult servicing what was likely a 1% loan you had drawn on for barely a month was.
Meanwhile, Ritholtz could still be paying (more) interest on its newly established line of credit that it replaced the PPP loan with. And the fact that they paid off one loan to draw on more expensive cash, seems to suggest that the firm had, or has, some kind of funding hole.
This is especially odd since the market has now rebounded significantly from its March lows. Which means, hypothetically, if one was adhering to the same “patience, discipline, long only, buy value on dips” strategy one was selling to its clients, you’d expect to be almost be ahead of where you were in March at this point.
On June 5, the firm’s ADV update stated: “We intend to pay back the loan in full as per the terms of the loan.” This had replaced language suggesting the loan was forgivable “provided our firm satisfies the terms of the loan program.”
Regardless, the optics appear to be less than stellar. Perhaps the firm should just sit on its hands when it comes to doing any more “PR” or “damage control” in the future.
via ZeroHedge News https://ift.tt/31rv0QR Tyler Durden
In Whole Woman’s Health v. Hellerstedt (2016), the Supreme Court invalidated a Texas law that required abortion providers to have admitting privileges at local hospitals. According to Justice Stephen Breyer’s majority opinion, that regulation served no legitimate health or safety purpose and placed “a substantial obstacle in the path of women seeking a previability abortion,” thus creating an unconstitutional “undue burden on abortion access.” Among the dissenters in Whole Woman’s Health was Chief Justice John Roberts. He would have let the abortion regulation stand.
Today the Supreme Court decided a nearly identical case—June Medical Services v. Russo—on nearly identical legal grounds. At issue was a Louisiana law requiring physicians who perform abortions to have admitting privileges at local hospitals. Once again, Justice Stephen Breyer wrote the opinion. The “substantial obstacle” to abortion access that the Louisiana law creates, he argued, “and the absence of any health-related benefit” render the law unconstitutional.
There was one notable difference between the two abortion rulings. This time around, Chief Justice Roberts sided with the Court’s Democratic appointees and voted to strike down the state regulation. What changed?
“I joined the dissent in Whole Woman’s Health and continue to believe that the case was wrongly decided,” Roberts wrote in a lone concurrence. “The question today however is not whether Whole Woman’s Health was right or wrong, but whether to adhere to it in deciding the present case.”
For the chief justice, that question was answered by the legal doctrine of stare decisis, a Latin phrase meaning “to stand by things decided.”
“Stare decisis requires us, absent special circumstances, to treat like cases alike,” Roberts wrote. “The Louisiana law imposes a burden on access to abortion just as severe as that imposed by the Texas law, for the same reasons. Therefore Louisiana’s law cannot stand under our precedents.”
Writing in dissent, Justice Neil Gorsuch made the case for a different judicial role, arguing that the law should have been upheld under “the deference owed to the legislative process.” The Louisiana legislature “found that requiring abortion providers to hold admitting privileges at a local hospital within 30 miles of the clinic where they perform abortions would serve the public interest by protecting women’s health and safety,” he wrote. In Gorsuch’s view, the Court should have respected the wisdom of that legislative determination.
The Supreme Court’s decision in June Medical Services v. Russo is available here.
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We’ve come a long way from the March day when New York Gov. Andrew Cuomo threatened to sue Rhode Island over restrictions on travelers from his pandemic-hotspot state. Now, questions about reasonableness and legality are out the window as New York joins with Connecticut and New Jersey to effectively close their borders to people from states more recently hard-hit by COVID-19.
There’s a strong hint of tit-for-tat in a move that has little to do with health and a lot to do with regional and political posturing in a not-so-united country. The interstate chest-puffing might have some entertainment value, but Americans shouldn’t feel any obligation to obey the pointless rules.
“New Jersey Governor Phil Murphy, New York Governor Andrew M. Cuomo, and Connecticut Governor Ned Lamont today announced a joint incoming travel advisory that all individuals traveling from states with significant community spread of COVID-19 quarantine for a 14-day period from the time of last contact within the identified state,” the three governors jointly announced on June 24. The advisory isn’t toothless, either, with New York threatening violators with a fine of up to $10,000.
As of June 28, the quarantine orders apply to travelers from Alabama, Arkansas, Arizona, Florida, North Carolina, South Carolina, Texas, and Utah.
Well, they apply to most travelers, but “do not apply to any individual passing through designated states for a limited duration (i.e., less than 24 hours) through the course of travel.” That’s a recognition of the impracticality of restricting the wanderings of the many businesspeople who keep those states prosperous, the medical professionals from elsewhere who treat their pandemic patients, and the transport of food, medicine, and other necessities across borders so that life can be maintained. But those unavoidable exceptions are a big flaw in travel restrictions.
“Such policies, health experts say, don’t take into account truck drivers, airline workers, people transporting necessary supplies and equipment or those who just slip across state lines,” The Hillnoted last month in a critical examination of travel restrictions as a tactic for containing disease.
Among those skeptical health experts are the authors of a 2014 review of the literature on the effectiveness of internal and international travel restrictions published in the Bulletin of the World Health Organization. They determined that internal travel restrictions delay pandemic influenza spread by about one week, and the peak of pandemics by about one and a half weeks.
“Only extensive travel restrictions—i.e. over 90%—had any meaningful effect on reducing the magnitude of epidemics” at both the domestic and international levels, they concluded. Restrictions are not recommended at all once a pandemic is established globally.
With regard to the current situation, Sciencereported in April that China’s domestic travel restrictions “only delayed epidemic progression by 3 to 5 days within China” and that “early detection, hand washing, self-isolation, and household quarantine will likely be more effective than travel restrictions at mitigating this pandemic.”
That makes it difficult to justify travel restrictions imposed to keep potential COVID-19 patients out of states that already have hundreds of thousands of reported cases of the disease and tens of thousands of deaths. A few virus cases journeying from Miami to Brooklyn really won’t make a difference now.
Legally, the status of domestic travel restrictions is a little vague. Americans enjoy protection for wide-ranging freedom of movement under the Constitution. That said, “courts have typically upheld [quarantines and travel bans] in deference to the states’ broad powers to protect public health,” according to Northeastern University’s Wendy Parmet and Dr. Michael S. Sinha of the Harvard-MIT Center for Regulatory Science in the New England Journal of Medicine.
Legal or not, “these old tools are usually of limited utility for highly transmissible diseases, and if imposed with too heavy a hand, or in too haphazard a manner, they can be counterproductive,” warn Parmet and Sinha.
So, with COVID-19 well-established across the U.S., travel restrictions are expected to be something between ineffective and counterproductive, though probably resistant to legal challenge. What’s the case for them, then?
Finger-pointing at other states, quarantine mandates, and threats of penalties make more sense if you toss away all of the medical language and view them in the context of political theater. It’s always tempting for government officials befuddled by a crisis and busily making it worse to deflect attention from their own failings by pointing to external enemies. In an increasingly fractious time, those enemies can be found within the borders of the same country, residing in another state, and perhaps affiliated with an opposing political faction.
We saw northeastern governors screaming in March about travel restrictions imposed by other states, only to turn around months later and impose quarantine orders on travelers from many of the samejurisdictions. It gets even sillier when you remember that New York’s health commissioner, Howard Zucker, vowed on March 25 that “I would not follow” quarantine directives aimed at residents of his state. Now Zucker’s department administers his own state’s quarantine order.
Connecticut, New Jersey, and New York, the Democrat-led states issuing the current travel restrictions, were at the center of the “multi-state council” announced in April to establish pandemic policy independent of the Republican Trump administration. Most of the states targeted in the joint travel advisory are Republican-led and had earlier targeted the northeastern states with their own quarantine orders (though Rhode Island which fired the initial salvo against New York has a Democratic governor who, returning to the fold, later joined the multi-state council).
This is less about public health than it is about political warfare. And the major victims of this warfare are, as always, regular people who have little say in policymaking and are just trying to muddle as best they can through a very difficult time.
Travel restrictions rarely inconvenience the politically powerful, but they hobble suffering people who need access to friends, family members, and jobs across state lines.
Given the extremely limited degree to which public health plays a role in these travel restrictions and the enormous burdens they place on people’s lives and liberty, Americans who need to go from one state to another should feel fully justified in ignoring such rules. That doesn’t mean officials won’t try to catch violators, but with state borders often little more than invisible lines perforated by multiple backroads, it’s easy enough to evade detection if you keep a low profile. Importantly, stay away from anybody who might inform the authorities, such as hotels and car rental agencies.
In a time of pandemic, people should act responsibly to reduce their vulnerability to infection and, especially, to limit the risk they pose to others. But acting responsibly doesn’t mean there’s any obligation to submit to travel restrictions imposed by political clowns using the public as pawns in their feuds.
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In early 1775, Benjamin Franklin and his European colleague, Charles Dumas, developed a secret method of communicating with each other.
Dumas had spent years gathering intelligence in Europe to assist the Americans in their revolt against Britain. But the two needed a secure way to pass information across the Atlantic.
So they developed a special cipher– a crude form of encryption where letters and words were substituted for numerals.
The decryption key changed with every letter; so, for example, in a letter from Franklin dated March 2, 1781, the word “MERCHANT” was written as “23. 3. 4. 13. 6. 14. 24. 18.”
At the same time, the physician James Jay (brother to the first Chief Justice of the Supreme Court, John Jay) developed an invisible ink so that revolutionary leaders could communicate in secret.
These encrypted communications became critical to the Revolution. And it’s safe to say there would probably not be a United States if they hadn’t developed a secure way to send information.
Ironically, politicians are trying to destroy modern methods of encryption.
Over the past few months while everyone has been in mandatory isolation, cowering in fear in their homes… and over the past few weeks while the Land of the Free has been consumed with rage. . .
. . . a few US Senators have once again proven that chilling political adage– ‘never let a good crisis go to waste.’
Exhibit A: Senate Bill 4051, the “Lawful Access to Encrypted Data Act”, which was quietly introduced last week when everyone’s attention was consumed elsewhere.
First thing’s first, like all freedom-killing bills, this one has a catchy name.
The Lawful Access to Encrypted Data Act is LEAD for short, as in “Move over China! The Land of the Free will LEAD the way in destroying the last remaining freedoms of its citizens.”
(In that way it seems more like ‘lead’, the highly toxic metal that poisons the brain and creates severe intellectual disability.)
At its core, the LEAD Act is an encryption killer. It aims to require technology companies to build ‘back doors’ into their products to ensure that the government can remotely access your data, your device, and your life.
This is nothing short of earth shattering.
Apple, for example, currently provides device encryption on its iPhones and iPads. And once you encrypt your device, only YOU can decrypt it. Apple can’t. Hackers can’t. And the government can’t.
So if your device is ever stolen (or confiscated), your data cannot be compromised.
Under the LEAD Act, this practice would become illegal. Apple would no longer be able to offer device encryption, and they’d have to provide a way for the federal government to remotely access your device, and all of its contents.
The same goes for your favorite chat applications.
WhatsApp, for example, is one of the most popular texting apps in the world. A few years ago, Facebook (which owns WhatsApp) began implementing end-to-end encryption for all WhatsApp data.
This means that any message you send someone via WhatsApp is immediately encrypted the moment it leaves your phone.
That messages arrives to the WhatsApp servers fully encrypted. So any hacker (or Facebook engineer) who intercepts the data will see nothing but a garbled mess.
And the message isn’t decrypted until it arrives to the intended recipient’s device. So the only people who can see the message in “clear text” are the two people participating in the conversation.
No one else can eavesdrop, or download the data.
But again, under the LEAD Act, this too would become illegal… and Facebook will be obligated to build in a ‘back door’ for the government to remotely access your conversations.
LEAD also requires developers of operating systems, like Microsoft Windows and Apple’s MacOS, to provide backdoor access to your computer.
It’s extraordinary to think of how far-reaching the effects of this legislation will go.
For example, do you use an online password manager like OnePassword?
They will also be required to give the government access to your data… which essentially would give the government access to EVERYTHING you do online.
Do you upload files and photos to iCloud? Yup. That too. Apple will be required to build a back door and give the government access to your data.
Any ‘zero knowledge’ encryption, whether it’s for storing files, sharing photos, texting friends, making video calls, sending encrypted emails, etc., will become illegal under this legislation.
And to be crystal clear about what that means, CRYPTOCURRENCY will effectively become illegal under the LEAD Act as well.
That’s right. Cryptocurrency relies on data encryption too.
Your ‘wallet’ is essentially a public key / private key combination. And in theory, only you are supposed to have access.
But that’s exactly what this legislation aims to prevent. The government wants backdoor access to everything.
Honestly this legislation would be hilarious if it weren’t actually true… because it shows how totally clueless these people really are.
The politicians are calling it as ‘lawful access’, as if only the government would be able to use these back doors. Clearly these people understand nothing about cybersecurity.
There is no such thing as a ‘back door’ that only the government can access.
Once a technology company creates a way to remotely access a device, then that back door is available to ANYONE who can crack it.
It’s not like some hacker, or foreign intelligence agency, is going to probe the back door on your iPhone and say, “Oh, nevermind, this is only for the US government. I guess I’ll try to find another way in.”
If this law passes, not only will the government be able to access your devices, but hackers will have endless new treasures of data to steal… courtesy of the United States Senate.
We’ve come a long way from the March day when New York Gov. Andrew Cuomo threatened to sue Rhode Island over restrictions on travelers from his pandemic-hotspot state. Now, questions about reasonableness and legality are out the window as New York joins with Connecticut and New Jersey to effectively close their borders to people from states more recently hard-hit by COVID-19.
There’s a strong hint of tit-for-tat in a move that has little to do with health and a lot to do with regional and political posturing in a not-so-united country. The interstate chest-puffing might have some entertainment value, but Americans shouldn’t feel any obligation to obey the pointless rules.
“New Jersey Governor Phil Murphy, New York Governor Andrew M. Cuomo, and Connecticut Governor Ned Lamont today announced a joint incoming travel advisory that all individuals traveling from states with significant community spread of COVID-19 quarantine for a 14-day period from the time of last contact within the identified state,” the three governors jointly announced on June 24. The advisory isn’t toothless, either, with New York threatening violators with a fine of up to $10,000.
As of June 28, the quarantine orders apply to travelers from Alabama, Arkansas, Arizona, Florida, North Carolina, South Carolina, Texas, and Utah.
Well, they apply to most travelers, but “do not apply to any individual passing through designated states for a limited duration (i.e., less than 24 hours) through the course of travel.” That’s a recognition of the impracticality of restricting the wanderings of the many businesspeople who keep those states prosperous, the medical professionals from elsewhere who treat their pandemic patients, and the transport of food, medicine, and other necessities across borders so that life can be maintained. But those unavoidable exceptions are a big flaw in travel restrictions.
“Such policies, health experts say, don’t take into account truck drivers, airline workers, people transporting necessary supplies and equipment or those who just slip across state lines,” The Hillnoted last month in a critical examination of travel restrictions as a tactic for containing disease.
Among those skeptical health experts are the authors of a 2014 review of the literature on the effectiveness of internal and international travel restrictions published in the Bulletin of the World Health Organization. They determined that internal travel restrictions delay pandemic influenza spread by about one week, and the peak of pandemics by about one and a half weeks.
“Only extensive travel restrictions—i.e. over 90%—had any meaningful effect on reducing the magnitude of epidemics” at both the domestic and international levels, they concluded. Restrictions are not recommended at all once a pandemic is established globally.
With regard to the current situation, Sciencereported in April that China’s domestic travel restrictions “only delayed epidemic progression by 3 to 5 days within China” and that “early detection, hand washing, self-isolation, and household quarantine will likely be more effective than travel restrictions at mitigating this pandemic.”
That makes it difficult to justify travel restrictions imposed to keep potential COVID-19 patients out of states that already have hundreds of thousands of reported cases of the disease and tens of thousands of deaths. A few virus cases journeying from Miami to Brooklyn really won’t make a difference now.
Legally, the status of domestic travel restrictions is a little vague. Americans enjoy protection for wide-ranging freedom of movement under the Constitution. That said, “courts have typically upheld [quarantines and travel bans] in deference to the states’ broad powers to protect public health,” according to Northeastern University’s Wendy Parmet and Dr. Michael S. Sinha of the Harvard-MIT Center for Regulatory Science in the New England Journal of Medicine.
Legal or not, “these old tools are usually of limited utility for highly transmissible diseases, and if imposed with too heavy a hand, or in too haphazard a manner, they can be counterproductive,” warn Parmet and Sinha.
So, with COVID-19 well-established across the U.S., travel restrictions are expected to be something between ineffective and counterproductive, though probably resistant to legal challenge. What’s the case for them, then?
Finger-pointing at other states, quarantine mandates, and threats of penalties make more sense if you toss away all of the medical language and view them in the context of political theater. It’s always tempting for government officials befuddled by a crisis and busily making it worse to deflect attention from their own failings by pointing to external enemies. In an increasingly fractious time, those enemies can be found within the borders of the same country, residing in another state, and perhaps affiliated with an opposing political faction.
We saw northeastern governors screaming in March about travel restrictions imposed by other states, only to turn around months later and impose quarantine orders on travelers from many of the samejurisdictions. It gets even sillier when you remember that New York’s health commissioner, Howard Zucker, vowed on March 25 that “I would not follow” quarantine directives aimed at residents of his state. Now Zucker’s department administers his own state’s quarantine order.
Connecticut, New Jersey, and New York, the Democrat-led states issuing the current travel restrictions, were at the center of the “multi-state council” announced in April to establish pandemic policy independent of the Republican Trump administration. Most of the states targeted in the joint travel advisory are Republican-led and had earlier targeted the northeastern states with their own quarantine orders (though Rhode Island which fired the initial salvo against New York has a Democratic governor who, returning to the fold, later joined the multi-state council).
This is less about public health than it is about political warfare. And the major victims of this warfare are, as always, regular people who have little say in policymaking and are just trying to muddle as best they can through a very difficult time.
Travel restrictions rarely inconvenience the politically powerful, but they hobble suffering people who need access to friends, family members, and jobs across state lines.
Given the extremely limited degree to which public health plays a role in these travel restrictions and the enormous burdens they place on people’s lives and liberty, Americans who need to go from one state to another should feel fully justified in ignoring such rules. That doesn’t mean officials won’t try to catch violators, but with state borders often little more than invisible lines perforated by multiple backroads, it’s easy enough to evade detection if you keep a low profile. Importantly, stay away from anybody who might inform the authorities, such as hotels and car rental agencies.
In a time of pandemic, people should act responsibly to reduce their vulnerability to infection and, especially, to limit the risk they pose to others. But acting responsibly doesn’t mean there’s any obligation to submit to travel restrictions imposed by political clowns using the public as pawns in their feuds.
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The Supreme Court handed down three big opinions today, each of which was closely divided. Here is a quick run down, with more to follow on these cases in later posts by various VC contributors.
First, the Court decided Agency for International Development v. Alliance for Open Society International, upholding a limitation on USAID grant funding to organizations with “a
policy explicitly opposing prostitution and sex trafficking” because foreign corporations operating abroad “possess no rights under the First Amendment,” even if those corporations are affiliates of domestic entities. Justice Kavanaugh wrote for the majority, joined by the conservative justices. Justice Thomas concurred. Justice Breyer dissented, joined by Justies Ginsburg and Sotomayor. Justice Kagan was recused.
Second, in June Medical Services v. Russo, the Court struck down a Louisiana law regulating abortion providers, largely on the grounds that the law closely resembles an equivalent Texas law struck down in 20 in Whole Women’s Health v. Hellerstedt. Justice Breyer wrote for the liberal justices. Chief Justice Roberts concurred in the judgment that abortion providers have “third-party standing” to challenge the law’s restrictions, and that the law should be invalidated under Whole Women’s Health, even though Roberts dissented in that case, and still maintains that it applied the wrong standard. The four remaining conservative justices all dissented on various grounds. Here’s how they broke down:
THOMAS, J., filed a dissenting opinion. ALITO, J., filed a dissenting opinion, in which GORSUCH, J., joined, in which THOMAS, J., joined except as to Parts III–C and IV–F, and in which KAVANAUGH, J., joined as to Parts I, II, and III. GORSUCH, J., and KAVANAUGH, J., filed dissenting opinions.
Third, and finally, the Supreme Court held in Seila Law v. Consumer Financial Protection Bureau that the structure of the Consumer Financial Protection Bureau is unconstitutional. Writing for the Court, Chief Justice Roberts holds that the for-cause removal provision, which is the source of the CFPB’s status as an independent agency is unconstitutional. Justice Kagan dissents.
As Chief Justice Roberts explains the decision:
While we need not and do not revisit our prior decisions allowing certain limitations on the President’s removal power [i.e. Humphrey’s Executor and Morrison v. Olson], there are compelling reasons not to extend those precedents to the novel context of an independent agency led by a single Director. Such an agency lacks a foundation in historical practice and clashes with constitutional structure by concentrating power in a unilateral actor insulated from Presidential control.
We therefore hold that the structure of the CFPB violates the separation of powers. We go on to hold that the CFPB Director’s removal protection is severable from the other
statutory provisions bearing on the CFPB’s authority. The agency may therefore continue to operate, but its Director, in light of our decision, must be removable by the President at will.
The Court is 5-4, along traditional ideological lines, on whether the for-cause removal provision, as applied to a single-director agency, is constitutional. Two of the five (Justice Thomas, joined by Justice Gorsuch) would hold that all for-cause removal provisions are unconstitutional (i.e. that Humphreys’s Executor was wrong and should be overruled.
On the question of remedy, the Court is 7-2. Chief Justice Roberts, joined by Justices Kavanaugh and Alito hold that the removal provision is severable from the rest of the statute creating the CFPB. Justice Kagan and the other liberals join this holding. Justice Thomas, joined by Justice Gorsuch, would not reach the severability question at all, and “would resolve this case by simply denying the CFPB’s petition to enforce the civil investigative demand.” In other words, there was not a single vote to strike down other portions of the statute on inseverability grounds.
Two quick thoughts on Seila Law. First, it’s the only major opinion (thus far) in which the Chief Justice has stuck with the other conservative justices. He broke ranks in June Medical Services, Bostock and the DACA case, but not here. Why? Perhaps because he cares more about this issue. After all, this opinion follows from his opinion in Free Enterprise Fund v. Public Company Accounting Oversight Board, in which the Court invalidated the PCAOB’s “double for-cause” removal provision.
Second, the Chief’s opinions in FEF and Seila Law seem to be the separation-of-powers versions of the Lopez and Morrison commerce clause decisions in that they declare “this far but not farther.” In Lopez and Morrison, Chief Justice Rehnquist (for whom Roberts clerked) cast doubt on the logic of the New Deal era commerce opinions, but would only hold that they could not be extended. Likewise, in FEF and Seila Law, Chief Justice Roberts casts doubt on the logic of Humphrey’s Executor, but simply declares that it will not be extended to agencies with novel structures. In both cases, Congress is free to do what it has done before, but it cannot extend the boundaries of what is constitutional. In this respect, the Chief’s Seila Law opinion is consistent with his minimalist, status-quo orientation—what I have called a doctrine of “anti-disruption”—that we also see in other opinions of his this term.
There will be more opinions tomorrow. There is one opinion left from those cases argued prior to the Covid-19 shutdown (Espinoza, concerning government aid to religious schools), and nine cases argued via teleconference in May. I would think the former is likely to be handed down tomorrow, but the Court will not finish all of its work in June.
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