The Supreme Court’s War on Regulation Is Going to Tank the Economy

when the effects of public policies change substantially due to shifts in the surrounding economic or social context and then, despite the recognition of alternativespolicymakers fail to update policies due to pressure from intensified minority interests or political actors.

Loper Bright is, among other things, very pro-drift. The more the economy—indeed, all of contemporary life—migrates away from the regulatory mechanisms that govern it, the more the high court likes to shrug and say, “Our hands are tied.” But in the case of Loper it does the opposite, arrogating to judges the power to decide whether new regulations live or die. Now it’s the regulators whose hands are tied.

The biggest bank regulation under consideration right now is a rule proposed jointly by the Fed, the FDIC, and the Comptroller to bring US banks into compliance with an international agreement struck after the financial crisis. The agreement, called Basel IIIrequired banks to build up more capital reserves against a downturn, take on less debt, and respond more quickly to market conditions. The nation’s largest banks would have to increase capital reserves by 19 percent. The banking industry is dead set against the new requirements because they would cut into profits, and it’s managed to get Fed Chair Jerome Powell to promise “broad and material” changes before the rule is issued in final form. Even so, the bank lobby will almost certainly challenge the final rule in court.

How will Loper Bright affect such litigation? The law firm Venable is advising its banking clients that it will strengthen legal challenges based on the 1946 Administrative Procedures Act (which Chevron deference violated, according to Loper Bright) and the “major questions” and “nondelegation” doctrines, which also curb regulatory authority. Loper Bright will also empower banks’ legal challenges to anti-laundering regulations, Venable said, and might help thwart regulating cryptocurrency by the Securities and Exchange Commission.