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Media Ban: Can the White House Block Media Coverage?

Just a few months ago in December, Press Secretary Sean Spicer told the world that it is open media access which distinguishes a democracy from a dictatorship.  This statement has become fairly ironic after, a little over a week ago, several news outlets which had previously reported unfavorably on President Trump were barred from a private press briefing in Sean Spicer’s office.  This press briefing replaced the usual daily public briefing.  Most of the biggest media outlets were allowed a representative at the meeting: NBC, ABC, Fox News, and CBC.  However, several much smaller, heavily conservative, news outlets were also given a seat at the table: the Washington Times, the One America News Network, and Breitbart–the far-right news organization founded by White House Chief Strategist Steve Bannon.  The news organizations banned from the meeting included CNN, the New York Times, the Los Angeles times, and nearly every foreign news provider including the BBC.

Media outlets, both those invite to the meeting and those barred, have spoken out against the move; calling it “unamerican” and an unprecedented move towards a lack of transparency.  The move has also received substantial criticism from the public.  Much of this criticism is focused either on the importance of a government that is accessible to its people and the potential that the move violated the First Amendment.

Media BanClosed doors meetings, only inviting those media outlets most favorable to an administration, certainly smacks of impropriety.  However, to call it a violation of the First Amendment is going a bit further than the legal reality.  So let’s look at exactly what the White House did here, why they say they did it, and exactly how what they did interacts with the First Amendment.

Why They Say They Made the Change and How it is Legal

When the government is keeping out news reporters because they don’t like what they say, that’s bad news for the country.  Protecting political speech and the transparency of government to comment on their actions is crucial.  Were the stated goal of the government in keeping specific news outlets, those unfavorable to them, to silence their opposition then there would be a serious case that they are violating the First Amendment.  However, the White House has provided a more neutral reason behind their choice to conduct themselves as they did.

While Sean Spicer has promised to “aggressively push back” against news outlets negatively reporting on the Trump administration, he says this is not the reason for limiting access to the press briefing.  Instead Mr. Spicer stated that the space for seating was limited that day due to time and space being more limited due to President Trump’s CPAC speech earlier the same day.  It is true that it is fairly common for the press to be represented by a smaller press pool.  The members of this pool rotate from day to day and report what they are told to the remainder of the certified press.  What Sean Spicer did was choose to allow a few extra news outlets, news outlets most favorable to the Trump administration, to join that small group.

It may or may not surprise you that there is no actual requirement for the government to give reporters completely equal access to information based on the First Amendment Freedom of the Press.  However, when the government opens up a public forum such as the daily press briefings have been for decades they are required to allow access to the press in a neutral manner.  This means that they can’t act with the intention of limiting access to those whose message or coverage they prefer.  Sean Spicer’s stated reason of limiting access, the amount of space, is likely a neutral approach–even if the result of their actions looks like they are favoring news outlets which report more positively on the administration.  If this happened several more times, with the same people left out, the story might change as the neutral explanation of lack of space and time would become less believable.

The concept of the government and politicians allowing more access to reporters they know to be favorable to their cause is far from a new one.  There have been many cases, both very recent and decades since finished, which have addressed the issue.

Repressing the Press: Court Rulings on How the Government Can Limit Press Access

Since a 1977 U.S. Court of Appeals ruling, the White House press facilities have been public sources of information for the press afforded First Amendment protection.  This means that the access of the press cannot be denied arbitrarily for less than a compelling reason.  Any restrictions must be no more arduous than necessary and individual reporters–from specific publications–cannot be arbitrarily excluded from a source of information such as a White House press briefing.  That basically just means the White House needs to be able to provide an explanation for any limitations, especially when it comes to barring specific publications.  They also need to make their limitations as narrow as possible.  This means that if space and time was indeed limited, they’ve provided sufficient reason for their actions barring a proven bias in who was allowed in.

This doesn’t mean that the government must always offer all types of access neutrally.  There have been several cases in the past establishing that a government official can choose who they want to give an interview to, and even bar their employees from speaking to some news providers.  They just can’t call a press conference and limit who can show up by barring specific reporters or news sources.

In fact, just around a week ago another ruling has come out of New York clarifying just this issue.  The preliminary ruling decided that the New York Police Department had acted unconstitutionally by revoking the press credentials of a specific reporter.  The fact that they targeted a specific reporter based on the content of his reporting, although the NYPD stated they had neutral reasons behind revoking the man’s press pass, made their actions unconstitutional in the eyes of the judge on the case because they amounted to the government censoring a particular viewpoint in a public forum–a concept known in law as viewpoint discrimination.

Trump’s War With the Media

The choice to limit those who could attend a press briefing might not always have raised as many eyebrows as it has here.  President Trump has repeatedly attacked the media’s reputation and veracity, claiming that they either do not report on the right things or are misrepresenting him.  While he has made these claims repeatedly, he has not yet provided any evidence supporting these serious accusations.  However, regardless of the truth of President Trump’s words, the comments have drawn substantial attention to his relationship to the press.

President Trump is far from the first President to criticize the media, however he has taken his attacks further than any president has before–to the point of essentially questioning the legitimacy of the media altogether.  This is a huge accusation to make with very little evidence.  It is because of this that, when the White House chooses to limit press access, alarm bells are immediately raised.  Regardless of what you think about the media, allowing the government to limit which media outlets receive information has potentially terrifying implications when it comes to making our own government transparent to the people it serves.  This being said, the White House has not yet crossed any legal line.  There has been no similar limitation on access since President Trump’s CPAC speech.  While it is important to information about our government as available to the people as possible, for now the White House has done nothing unconstitutional.

 

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Hate Crime: The Feds Address Kansas Shooting

The nation has seen racial tensions, while far from new, enter the public consciousness in a way that has likely not been seen in decades.  From the recent travel ban, to the many reported shootings of minorities by police, to high profile trials with a focus on race such as the case of Trayvon Martin or Eric Garner.  Many would argue that the election of last year was characterized to a large degree by these racial tensions; because of this environment the scrutiny on the response to the sort of tragedies that stem from such tensions is properly higher than ever.  Just last week, one such tragedy struck hard in Kansas after a man shot two Indian-American citizens after heaping racially tinged verbal abuse upon them–killing one of the men.

On Thursday, February 23rd, there was a University of Kansas vs TCU basketball game on the television at the Austin’s Bar and Grill.  However, while Srinivas Kuchibhotla and Alok Madasani enjoyed the game at the bar as they often did after finishing their work day as engineers for the GPS company Garmin, one Adam Purinton reportedly shouted vitriol at them including ethnic slurs and suggestions that they did not belong in this country.  Adam Purninton was eventually asked to leave due to the scene he was causing.  He left, but later came back bearing a gun.  Witnesses reported him shouting racial slurs and telling the two engineers to “get out of my country” before opening fire.  Mr. Purinton shot both men, killing Mr. Kuchibhotla.  He shot another patron of the bar, Ian Grillot, as the man pursued him as he fled the scene.  Mr. Purinton was later arrested after telling an Applebee’s employee that he needed to lay low because he had just killed two Middle Eastern men.  He has since been charged in Kansas with one count of premeditated first-degree murder and two counts of attempted first degree murder.

What is conspicuously absent from this list of charges is an allegation that Mr. Purinton’s actions were a hate crime.  The silence on this issue in the days immediately following have been the cause of great consternation, especially considering the substantial evidence of a racial motivation behind Mr. Purinton’s acts.  To better understand this outrage, it is important to understand exactly how hate crime laws work and the response that has come out of the federal government.

Hate CrimeWhat is a hate crime?

The question is one that I’m certain most feel they could answer intuitively–a crime motivated by hate.  This is fairly accurate when speaking about hate crimes more generally.  However, as with most things in law, the exact reality is a bit more complex.

We’ve discussed exactly how hate crimes work a bit in the aftermath of the mass shooting at Pulse Nightclub in Orlando.  However, it’s good to review the details a little bit because this case has some unique issues with it.  As mentioned above, the basics of a hate crime law are relatively intuitive, although the requirements to prove a hate crime can be a bit more complicated to establish.  Hate crimes can generally be discussed as crimes motivated by bias or prejudice against a protected group.  When a crime is considered a hate crime, an enhanced penalty is applied to the perpetrator.  A few examples of crimes that can be enhanced when motivated by prejudice against the victim include: assault, murder, rape, sexual assault, vandalism, defamation, denial of certain rights, and others.

So, looking at the definition of a hate crime, what would need to be proven to show Mr. Purinton committed a hate crime would be his mental state going in–that the motivation behind the shooting was bias or prejudice against a certain race.  The fact that he was completely incorrect in his assumption of the race of the men he shot would not generally be relevant to such a determination.  If the witnesses to the shooting, and the Applebee’s employee Mr. Purinton later confessed his crime to, have accurately related what happened then what happened was almost certainly a hate crime.  Shouting racial epithets and telling Mr. Kuchibhotlamand Mr. Madasani to “get out of my country” immediately before opening fire is pretty dang strong evidence that Mr. Purinton’s actions were motivated by racial hatred; not to mention the slurs he reportedly threw before being asked to leave the bar.

You may be asking, if the evidence is so strong then why didn’t Kansas bring hate crime charges?  The answer is that hate crime laws are different state to state and under federal law.  While 45 of the 50 states have hate crime laws, exactly what constitutes a protected group varies from state to state.  Some of the most common protected groups include race, age, sex, gender, disability, gender identity, and sexual preference or orientation.  In 31 states, a hate crime also gives rise to a civil cause of action above and beyond the enhanced criminal charges brought against the perpetrator.  This civil lawsuit is brought by the victim of the hate crime or their surviving family.  What’s more, while most states have hate crime laws, not every state has a hate crime statute.  The distinction here is that a statute creates an independent charge of a hate crime, many states instead opt for laws allowing enhanced penalties if it is found a person was motivated by hate after they are found guilty of a base crime.  Kansas, while it has allowed for enhanced sentencing based on where a crime is motivated bias or prejudice since 2009, has no independent hate crime charge.

While Mr. Purinton could face 50 years in prison should he be found guilty of the charges already brought, there is no law in Kansas under which a hate crime charge or enhancement could be brought to bear against him.  This means that any hate crime charges brought against Mr. Purinton would have to be brought at the federal level.  This has been a large part of why there has been such intense scrutiny on the federal government’s response to the horrendous crime.

Slow Response from the White House and the Federal Government

In the wake of the shooting, public outcry for the White House to respond to the shooting and declare the act a hate crime was near instantaneous.  However, days rolled on with no comment whatsoever from President Trump on the shooting and no word on whether the federal government had any plans whatsoever to investigate.  The only comment out of the White House press secretary Sean Spicer saying “any loss of life is tragic..but I’m not going to get into.”  Mr. Spicer then spent the remainder of his short commentary on the shooting saying that he wanted to make sure everybody understood that there was no correlation between the shooting and Trump’s comments and stances on immigration–specifically when it comes to Muslims and the Middle-East.

Many questioned the choice of President Trump to stay silent on the issue and, despite Sean Spicer’s protestations, much of the criticism stemmed from Trump’s own history when it comes to immigrants and Muslims.  Pakistani-American comedian Kumail Nanjani commented “”The President could say “Don’t shoot innocent brown people. It’s wrong.” And he would save lives. But he won’t. & that doesn’t surprise us.”  In India, there was immense media coverage questioning why President Trump didn’t immediately condemn the attack.

President Trump has espoused a fair bit of rhetoric damning immigrants, refugees, and Muslims in particular.  Calling immigrants from Mexico rapists, proposing a law requiring all Muslims to register with the government, introducing travel bans specifically targeting Muslim-majority countries.  He made a point of inviting three people with relatives killed by illegal immigrants to the same speech where he mentioned the Kansas shootings.  It’s easy to see how one might worry that these statements might embolden those who might commit crimes based on hatred, why it was so important that President Trump immediately condemn the crime, and why Mr. Spicer felt such a need to distance the President’s stances and statements from this shooting.

The President’s long silence on the shooting was especially troubling considering how quick President Trump has been to comment on violent incidents abroad, often to the point of misattributing the violence to an entirely different group of perpetrators (namely Muslims and refugees) or simply citing incidents that did not occur at all.

There is No Room for Bigotry and Hate

However, thankfully, the White House’s silence on the matter was not a permanent one.  Nearly a week after the shooting occurred, President Trump briefly mentioned the shooting in an address to Congress.  In an official statement, the White House condemned the shooting as an “act of racially motivated hatred.”  The FBI has also officially begun an investigation, working alongside local police, into the shooting as a hate crime.

We should never hesitate to condemn acts of bigotry and hate within our community; neither should out leaders.  While the federal government has eventually responded, it’s halfhearted approach will do nothing to deter acts of hatred.  On March 4th, a Sikh man was shot in his own driveway in Washington while working on his car.  A man with a mask over the bottom of his face approached him, told him “go back to your own country,” and shot him to death.  The White House has had no comment.

Protest Peacefully and Lose Your House Under Arizona S.B. 1442

As one controversial law, executive order, or policy position after another comes out of Congress or the White House, it is little surprise that we’ve seen an incredible amount of protests in the last few weeks.  Protesting is a tradition as American as apple pie, from the Boston Tea Party from which the hard-right conservative party took their name to the Civil Rights Movement of the 50s, 60s, and 70s.  The tradition has been carried forward, with protests abounding on both side of issues ranging from abortion to taxation to federal use of land.

In recent months, however, protesting has become a bit of a target for criticism–especially where protests occasionally result in violence or property damage. Compounding these criticisms has been the widely cited, and essentially unsupported, accusation of “paid protesters” making a living off their involvement in demonstrations.

Protest

Conservative politicians in Arizona have begun moving forward on legislation based on these accusations, a bill known as S.B. 1442.  This is still a bill, not yet a law, so it isn’t taking effect just yet.  However, it has made it past the House in Arizona and is moving forward to a primarily conservative State Senate.  The bill is, frankly, incredibly questionable both in what it seeks to achieve and its constitutionality.  With that in mind, let’s take a look at what this law does, why it seeks to do it, whether it has the potential to pass constitutional muster if passed, and the results of litigation over similar laws in the past.

The Law, What it Does, and Why They Say They Want It

S.B. 1442, as written, expands racketeering laws and the definition of rioting.  While this sounds innocuous, the goal and effect of the law is to expand the power of police to arrest protesters and the ability to crack down on protests.  For example, it allows police to arrest peaceful protesters if they believe the protest may eventually turn violent.  It also provides the power to criminally prosecute, and seize the assets of, anybody who plans or is involved in a protest where property damage occurs–regardless of their immediate involvement in the actual damage.  It does this by expanding racketeering laws, the same ones initially instituted to help target organized crime such as the Mafia by allowing the police to more easily target an entire criminal enterprise, to include rioting.  It is worth noting that rioting itself is barely defined at all within the legislation, allowing an extremely broad approach to what exactly could constitute a riot.

Racketeering law, and the Racketeer Influenced and Corrupt Organization (RICO) Act specifically, are notable for being exceptions to a general rule that you are unlikely to be punished for the unpredictable criminal acts of a third party unless you have a fairly direct level of involvement in promoting the act itself.  This makes sense, if the guy in front of you in line at the bank robs the place, you wouldn’t expect the police to arrest the whole line.   However, S.B. 1442 takes these racketeering rules to a genuinely terrifying place.  They give the police the power to preemptively make arrests just because a planned protest might turn violent.  They can even arrest organizers who weren’t at the protest.  Planning a protest could lead to losing your property as the police could seize assets under the law.  The law would allow arrests where people not actually associated with a protest commit property damage in its vicinity.

While violence is not something we should necessarily congratulate, peaceful protest is one of the most poignant forms of political speech available to the public.  Publically questioning the political status quo quite rightly receives the protection of the First Amendment–both through freedom of speech and freedom of assembly–the constitutional right to come together and express your ideas as a group.  So one has to ask, what is the motivation behind such a sweeping law with such huge connotations when it comes to curtailing First Amendment rights of people on both sides of essentially any issue?

When asked, the politicians promoting the bill provided a couple of justifications for the law.  The primary one has been that the existing laws are not enough to discourage violent protest.  A particularly odd position given that all the elements of rioting–property damage, assault, etc–are already crimes allowing arrest and criminal punishment.  However, the politicians behind S.B. 1442 have said that this isn’t enough.  They say that it’s necessary to stop the potential for crime before it starts.   However, when you are essentially targeting people based on future speech a law becomes a lot more questionable.

A secondary justification for this bill has been the idea of paid protesters, or as one politician behind the law has called them “professional agent-provocateurs.”  To start with, as mentioned above, there is actually no evidence behind this oft repeated accusation.  It certainly is a common enough talking point, but one with no actual factual support.  There are certainly organizers behind many protests, as  has been the case with most protests for a long time, but that doesn’t make a protest paid and in fact makes it notably less likely to be violent in nature.  What’s more, the law itself is much more broad in scope then its creators perhaps intended.  It could be applied to any protest, regardless of affiliation, stance, or belief–allowing police to arrest those peaceful protesters.

Similar Situations Have Already Reached the Supreme Court

Given the shaky ground S.B. 1442 is already based on, you’d think it would either be the first situation of its kind or at least learned from the mistakes of its predecessors.  However, the Supreme has actually ruled on a case including similar attempts to broaden the application of racketeering laws in the case of Scheidler v. National Organization for Women.  The case did not go well for the expansion of racketeering law, to the tune of an 8-1 decision.

The case, decided in 2002 in the end to a 17-year old case, the National Organization for Women against anti-abortion activists.  The case sought to extend the provisions of the RICO Act to these anti-abortion protestors.  They argued that such activity could be considered extortion and properly fell under racketeering law–a sort of nationwide conspiracy to shut down abortion clinics.

The Supreme Court did not agree.  They said that these protesting activities did not fall within the realm of federal racketeering law as written.  What’s more, Justice Ginsberg’s concurring opinion noted that the court was “rightfully reluctant” to expand the scope of racketeering law to include political protesting.  She specifically noted that such a change had the danger of treating the sit-ins of the Civil Rights Movement as criminal.

Is S.B. 1442 Constitutional?

No, almost certainly not.  I’m not going to beat around the bush here, the proposed rules actually fly in the face of the values of the Constitution.  Where a law curtails the First Amendment rights of the public, as S.B. 1442 clearly does, it is held to the highest levels of scrutiny before it can be considered constitutional.  Such a law must apply the minimum possible level of restriction to Constitutional rights in support of an absolutely crucial government interest.  What’s more, courts are particularly suspicious on prior restraints on speech–attempts by the government to chill or prohibit speech before it occurs.

The content of the bill is of the sort most disfavored by courts determining if a law is constitutional.  Instituting the threat of arrest for a peaceful protest prior to the protest even happening, allowing the police to seize your property based on this arrest–that is the definition of a government action chilling speech before it happens.

While preventing crime and protecting the public can be a crucial government interest, to call S.B. 1442 the least restrictive means to that end is outright laughable.  There are already laws making all the elements of rioting a crime, those limit the value of this would be law and already act as deterrents to such behavior.

If S.B 1442 becomes law, something that is looking fairly likely given the composition of the Arizona State Senate, it will almost certainly not remain so for long.  It is not only nearly certainly unconstitutional, it is even contrary to the previous stance of the Supreme Court of the United States.  The idea of a law like this is outright un-American, the fact that it was introduced frankly disappoints me personally.  If it is indeed passed, expect lawsuits challenging the constitutionality of the law–along with a likely injunction halting the effect of the law–to quickly follow.

Transgender Rights are At Risk Under Trump

Through the Department of Justice, the Trump administration makes its priorities known by deciding what sort of cases to pursue and what cases, generally cases brought by states or private parties disputing the validity of federal laws or actions of the federal government, to defend against in court.  Up until about a week ago, the Department of Justice has been defending a case which had the potential to strengthen the protections against discrimination for transgender people–no more.

A few months before the end of his presidency, the Obama administration issued a statement to public schools that trans students were protected under federal civil rights law and that schools needed to let those students use bathrooms aligned with their gender identity.  Several states brought lawsuits over the statement, declaring it a misinterpretation of federal law.  Just recently, the Trump administration announced that the Department of Justice would be withdrawing from defending all these lawsuits.

Transgender Rights

This isn’t really a surprise, Trump called the Obama administration’s approach on trans rights overreach on the campaign trail and has certainly not made LGBT rights his priority.  However, the step certainly is a giant step backwards in terms of protecting the rights of trans people.  In order to understand the exact effect of the move, let’s look at exactly what the guidance from the Obama administration did and didn’t do, the effect these cases could of had if they had gone forward, and the effect of the Trump administration’s decision to withdraw altogether from

Effects of the Obama Administration’s Guidance

The Obama administration’s statements came a time when trans rights were squarely in the public eye–right on the tails of the Department of Justice and North Carolina initiating a lawsuit over a law out of North Dakota barring laws across the state protecting the LGBT community from discrimination.  This law was one of many along the same lines passed or moving forward through the country.  The Obama administrations goal was to combat laws allowing, or in North Carolina’s case enforcing, discrimination against the LGBT community

However, the guidance the Obama administration was just that-guidance.  It wasn’t a law, that would take an act of Congress.  It didn’t even have the legal force behind and executive order or presidential memorandum.  Instead, it was exclusively a change in policy on the part of the Department of Justice and the Department of Education.

However, calling it just a policy change belies the full effect of the statement.  The statement determined that it was the view of President Obama, and the agencies under his purview, that schools, sports teams, housing, school fraternities or sororities, and the like were all legally required to allow a transgender person to use a bathroom–or locker room–that aligned with their gender identity.  The statement based this conclusion on Title IX of the Education Amendments of 1972.  Title IX forbids schools from discriminating based on a student’s sex.  The statement determined that a student’s gender identity was their sex for purposes of sex discrimination.  Thus, it further argued that bans revolving around gender identity spring forth from expectations and stereotype of how somebody assigned a specific birth gender should behave and appear.

So basically, the statement said that, while schools could include things allowing additional privacy where transgender students were using a bathroom or changing room, outright denying them access to bathrooms or locker rooms of their actual gender identity was a violation of federal law.

So this wasn’t a law or an executive order, but it had a very definite legal effect.  By determining that such actions violated federal law, it would mean an end to federal funding to schools–and even states–which refused to follow the Obama administration’s guidance.  As you might imagine, the response in the courts from schools who refused to change their rules to follow the statement was basically immediate.  Lawsuits cropped up quickly, and a federal court in Texas even put a temporary injunction on the rule–preventing it from taking effect across the nation.

The Department of Justice has been defending these lawsuits, and their outcomes could have had serious, far-reaching results as legal precedent.  The same arguments made for how to approach gender in sex discrimination could have been extended to more housing rules, rights in the workplace, and other situations involving discrimination against transgender people.  However, with the Trump administration withdrawing from the defense of these lawsuits there is no real chance of this now.  Instead, the guidance itself will almost certainly–barring action by Congress or a future President–never take effect.  Any possible ripple effect, benefiting trans people throughout the United States of America, is put on hold at a minimum.

The Trump Administration’s Withdrawal and Similar Litigation Around the Country

As mentioned above, this withdrawal is not particularly surprising.  However, it is disappointing to the nearly one and half million transgender people in the U.S. who have seen a light of hope, with the potential of protecting their right to their gender identity, snuffed out.  Fortunately, these lawsuits weren’t the only litigation of their type going on around the country.  Unfortunately, it’s uncertain how long those lawsuits and policy changes will stay in play.

In the last few years, the Equal Employment Opportunity Commission (EEOC) has been hard at work trying to ensure the rights of the LGBT community in the workplace.  Using similar arguments to those in the Obama administrations statements, the EEOC has been involved in a few lawsuits asserting that sex discrimination protections incorporate protections based on sexual orientation and gender identity.

The EEOC announced just last week that they would continue to appeal a case of sex discrimination where a transgender funeral director was fired for refusing to comply with their employer’s sex specific dress code.  The EEOC asserted the arguments we’ve discussed above in support of the funeral director’s right to their gender identity, in response the funeral home based their defense on the Title VII exemption in the Religious Freedom Restoration Act (RFRA)–essentially arguing that they have genuinely held religious belief and Title VII anti-discrimination rules are substantially interfering  with their practice of that religion.  While the RFRA is, in much of the country, not allowed in cases brought by non-government entities, in an odd twist the fact that this case was brought by the EEOC allowed the defense.  The case itself includes some complicated and contentious areas of evolving law, from sex-based dress codes to the proper application of the RFRA in Title VII cases.  All of this could lead to huge strides when it comes to LGBT rights and clarifying the interaction of rights and workplace discrimination.  However, even this litigation may be short lived.   The EEOC have recently released a statement that their position on the case may change given the stances of AG Jeff Sessions and once General Counsel for the EEOC is confirmed.

The rights and protection of the LGBT community, and specifically transgender people, are more at risk then ever.  The courts are often where the most substantial changes in rights and protections come from and the Trump administration has shown that they will not stand up for the rights of LGBT citizens.  The sad truth is, if they continue as they have been, much of strides this country has taken in protecting right will have been for naught.

Trump is Giving Power Back to Wall Street with Another Executive Order

In the wake of the Great Recession of 2007-2009 and the many bank failures that substantially contributed to the recession itself, the nation was calling out for laws ensuring that banks “too big to fail” never again caused a similar recession.  Many found the idea that a bank could fail and then necessitate buyout on the taxpayers dime, and potentially deal a serious blow to the economy in the process, was particularly upsetting.  While the fury of the nation was real, and the government began the process of attempting reforms, actually putting regulations into effect which held banks to a higher standard was more of an uphill battle than one might expect–even in the wake of huge bank buyouts shaking the economy to the core.  However, in 2010 President Obama finally signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act–one of the most substantial banking reforms the nation has seen.  Now, less than a decade later, one of President Trump’s recent executive orders threatens to remove the precautions against a repeat of the many bank failures in the early millennium.

The move isn’t necessarily a surprise, Trump and those close to him have repeatedly targeted Dodd-Frank as overly restrictive and bad for business–making investing more difficult than necessary.  Trump was quoted during an open portion of a meeting with CEOs of businesses such as Wal-Mart and Pepsi stating that he would be “cutting a lot out of Dodd-Frank.”  In truth, his position is even less of a surprise given that the law has been labeled by conservatives as government meddling with the private sector since it was first made law.

wall streetSo now that Trump has come down on Dodd-Frank, it seems like a good time to explain exactly what Dodd-Frank does and what President Trump’s executive order does to Dodd-Frank.

What Does Dodd Do?

Dodd-Frank itself is an incredibly complex bit of legislation, the Act itself is over 800 pages long with over 240 individual rules.  It’s one of the most substantial financial reforms in the history of the United States.  It’s been compared to the changes that came after the Great Depression and, in fact, it includes some elements of the Glass-Steagall Act–a set of banking reforms which were put in place after the bank failures of the Depression.

Despite its complexity, Dodd-Frank’s most important changes can be fairly simply explained–although a complete understanding could fill volumes.  Dodd-Frank creates a few new agencies which ensure the stability and best practices of banking institutions, requires greater government oversight of banking activities, removes Securities and Exchange Commission reporting loopholes, increases the amount a bank must keep in reserve to guard against economic downturns, and requires banks to keep larger portions of their money invested in things which can be easily turned into cash again.  It also reintroduced Glass-Steagall, as mentioned above.  Glass-Steagall was originally a law forbidding banks from running trading operations such as those that contributed to the real estate bubble, however the law had been systematically gutted since it was introduced back in 1933.  Dodd-Frank reintroduced some of these limitations as the Volcker Rule–substantially limiting the ability of banks to run trading operations.

Where banks are particularly big, over $50B in assets, Dodd-Frank could requires annual stress tests–basically a report proving the bank could survive another recession like the one that just passed.  The biggest banks, the Chases and Bank of Americas of the world, are required to submit a report every year describing how they could be dismantled without harming the economy–basically a will for their business.

The agencies created by Dodd-Frank include the Financial Stability Oversight Council, the Office of Financial Research, and the Bureau of Consumer Financial Protection.  These all have duties regulating the banking industry and ensuring it’s stability.  For instance, the Bureau of Consumer Financial Protection is tasked with protecting the public from deceptive, unfair, or abusive financial services.  The Act also expands and changes the powers of existing regulatory agencies to some degree.

To sum it up, Dodd-Frank is put in place to make sure banks don’t go down a road that could lead to another Great Recession.  Many consider it the only truly effective law of its type to be successfully enacted after the many bank buy-outs.

Trump’s Executive Order

So what exactly does Trump’s order do to Dodd-Frank?  By itself, probably not as much as he’d like. Executive orders don’t “trump” congressional acts, they simply don’t have the authority.

Trump’s order, titled Presidential Executive Order on Core Principles for Regulating the United States Financial System, mostly puts forth seven principles of regulation which read as follows:

  • empower Americans to make independent financial decisions and informed choices in the marketplace, save for retirement, and build individual wealth;
  • prevent taxpayer-funded bailouts;
  • foster economic growth and vibrant financial markets through more rigorous regulatory impact analysis that addresses systemic risk and market failures, such as moral hazard and information asymmetry;
  • enable American companies to be competitive with foreign firms in domestic and foreign markets;
  • advance American interests in international financial regulatory negotiations and meetings;
  • make regulation efficient, effective, and appropriately tailored; and
  • restore public accountability within Federal financial regulatory agencies and rationalize the Federal financial regulatory framework.

On its face, this seems to almost support Dodd-Frank.  The Act definitely is designed to help prevent taxpayer-funded bailouts; one of the stated goals of the order.  However, a combination of context and another part of the act point in a different direction.

The order seeks to “make regulation more efficient.”  This has been a hallmark of Trump’s statements and actions, an attempt to make regulations more efficient by removing them all.  He recently signed an order requiring  agencies to identify two restriction of any type which could be removed before any new restriction will be considered–an entire order that less regulation must always be better than more regulation regardless of what it might accomplish.  That same order also puts a cap of $0 on the expenses involved in any new regulations in 2017.  With this and Trump’s many statements on his preferred approach to Dodd-Frank in mind, the Core Principles order gives agencies 120 days to identify elements of Dodd-Frank that aren’t working.

This sends a message that Dodd-Frank is in line for a pruning.  While Trump couldn’t do so explicitly by executive order, he can act through his many agency appointees to dismantle the rule in parts.  This was how Glass-Steagall was gutted decades ago.  He could reinterpret and alter the requirements of enforcement of Dodd-Frank and delay the implementation of some of its elements.  He may not even need to however, Congress itself has begun attacking elements of the law–just recently introducing bills aimed at closing the doors on the Bureau of Consumer Financial Protection.

Who Does this Help?

A complete repeal and replacement of Dodd-Frank is unlikely to leave the banks particularly happy.  They’ve already spent billions between them to ensure they are in compliance with Dodd-Frank, a new or changed set of regulations just makes them shell out to comply with it.  However, relaxing or delaying parts of the law–especially those allowing them to invest more widely and with less reporting and oversight–would certainly be in their best interests.

The argument for reducing restrictions on banks has primarily been that less regulations will mean more money and easier investment and loan activity for banks.  However, this is the exact situation we set out to avoid after bad bank investments led to bank failures which, just a few years back, brought our economy to such extreme lows.  Without Dodd-Frank, or with a gutted version of it, we’ll just have to hope banks have learned their lesson.

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