- CBA on
- CBA Media
Compass Point: Top Takeaways from SCOTUS Nomination
July 10, 2018
On July 9, President Trump announced that U.S. Circuit Court of Appeals for the District of Columbia Judge Brett Kavanaugh would be his nominee to replace Justice Anthony Kennedy on the Supreme Court of the United States (SCOTUS). Ultimately, we expect Judge Kavanaugh to win confirmation and consequently cement a reliably conservative majority on the SCOTUS. We include below four brief observations at this stage of the process.
- A Bruising Nomination Fight Ahead, but Odds Favor Confirmation. Judge Kavanaugh has a long record on the bench and inside the beltway, which will provide his opponents with a veritable cornucopia of issues to attack. We expect a bruising nomination process in the weeks ahead, but the odds favor confirmation given the GOP’s slim majority in the Senate and electoral dynamics for red state Democrats facing tough races in November. Applying the average timelines of the last four SCOTUS nominations, and assuming no bumps in the road, we estimate that the committee hearing will be in early September and the floor vote confirming Judge Kavanaugh could be held by October. Our view is that Judge Kavanaugh’s confirmation is not guaranteed, but the balance of probabilities clearly favor confirmation.
- CFPB Governance Structure Debate Dynamics Shifting. During a stage of the PHH v. CFPB case, Judge Kavanaugh authored an opinion and stated: “The director of the CFPB possesses more unilateral authority – that is, authority to take action on one’s own, subject to no check – than any single commissioner or board member in any other independent agency in the U.S. government…The CFPB’s concentration of enormous executive power in a single, unaccountable, unchecked director not only departs from settled historical practice, but also poses a far greater risk of arbitrary decision-making and abuse of power, and a far greater threat to individual liberty, than does a multi-member independent agency.” Notably, following the nomination, Consumer Bankers Association President and CEO Richard Hunt said: “We appreciate the President nominated someone who recognizes the consequences of having so much power vested in a sole director at the Bureau. A bipartisan commission would give consumers the certainty and stability they deserve.” Given persistent legal debate over the CFPB's constitutionality, the odds of SCOTUS being forced to consider the Bureau’s structure have increased in our view. We continue to believe that near-term action to shift the Bureau’s governance structure from a single director to a commission is unlikely, but we note that conventional wisdom regarding this issue appears to be shifting on Capitol Hill and the added dynamic of an external catalyst from SCOTUS could tilt the debate in favor of a legislative change.
- Conservative Majority Will Cement Pro-Business Bend. If Judge Kavanaugh is confirmed as expected, there will be a reliably conservative majority on the SCOTUS that should prove consistently sympathetic to business interests. Judge Kavanaugh’s record in a wide array of cases – from EPA regulations to net neutrality – demonstrates a deep disdain for perceived governmental overreach. Within our coverage universe, we could ultimately envision pro-business rulings in cases relating to disparate impact lending claims, the “valid when made” concerns generated by Madden, and the CFPB.
- Change to Chevron Doctrine Would Narrow the Scope of Federal Rulemaking Deference. The Chevron doctrine – which effectively compels judicial deference to regulatory agencies in the interpretation of ambiguous statute – could face an existential threat in the coming years. If the Chevron doctrine is ultimately overturned, the scale and scope of the federal regulatory authority would be narrowed.