Financial blogger Mike Konczal has a piece in Bloomberg today about how the financial industry is using federal circuit courts to kill the financial reform law passed by Congress and signed by the president in 2010. He writes:
Banks and their lawyers have found a surprisingly effective way to stymie financial reform: Kill new rules in the courts. It's a strategy that may cripple regulators, undermine the legitimacy of the judicial system and ultimately come back to haunt the banks.
Litigators working for the financial industry have been scoring some important victories, using the courts to block rules required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Notably, the U.S. Court of Appeals for the D.C. Circuit struck down a Securities and Exchange Commission rule that would have given shareholders more say in the selection of corporate directors, on the grounds that the regulation lacked adequate cost-benefit analysis. A lower court struck down a Commodity Futures Trading Commission rule imposing position limits on traders because of supposedly ambiguous wording.
The courts are likely to keep playing an outsized role in financial regulation. This is bad news for those seeking reform. ...
Konczal proceeds to lay out several systemic reasons that the powerful banks have been so successful in the courts (and it isn't because they're always right on the law.) He also calls on President Obama to "put more focus on appointing judges to vacant positions. This would help correct an ideological tilt to the right that has made the courts particularly receptive to Dodd- Frank challenges."
Indeed, even into President Obama's second term, many circuits remain dominated by judges who were nominated by Republican presidents dedicated to enacting a right wing ideological agenda from the bench. The most important of these is the DC Circuit, second in importance only to the Supreme Court. Four of its 11 seats are vacant, and Republicans last month filibustered the exceptionally well qualified Caitlin Halligan last month. President Obama is the first full-term president since Woodrow Wilson not to have a judge confirmed to the DC Circuit by the end of his first term. PFAW's report America's Progress at Risk: Restoring Balance to the D.C. Circuit examines the damage caused by the ongoing domination of this court by right wing judges in areas including financial reform, workers' rights, environmental protection, and consumer health and safety.
Next week, the Senate Judiciary Committee will hold a hearing on Obama's second DC Circuit nominee, Sri Srinivasan. Since Halligan has withdrawn her nomination, three vacancies remain without nominees, and the White House should quickly nominate highly qualified jurists and fight hard for their confirmation.