A Supreme Court Victory for the CFPB Won’t End a Regulatory Fight

Regulatory wars

The Supreme Court lifted the existential threat hanging over the Consumer Financial Protection Bureau, rejecting a challenge to the agency’s funding.

The decision could have huge consequences for a raft of conservative-led lawsuits involving administrative authority — but business groups and Republicans are vowing to fight on.

A recap: Payday lenders had sued the C.F.P.B. over a rule that would limit the number of times they could withdraw money from a customer’s account for repayment.

The companies and conservative groups argued that the practice wasn’t harmful, and said the way the regulator is funded — via annual allocations from the Fed’s profits rather than from Congress — was unconstitutional.

The stakes were high for an agency created after the 2008 financial crisis. If the C.F.P.B. lost, its past enforcement actions could have been under threat. More widely, other similarly funded federal regulators and agencies — including the Federal Deposit Insurance Corporation — would face similar questions.

Democrats cheered the decision. Senator Elizabeth Warren, the Massachusetts Democrat who helped create the agency, took to the steps of the Supreme Court to marvel that Justice Clarence Thomas, the conservative who wrote the decision, saved it. “Will wonders ever cease?” she asked.

The ruling could have ripple effects on other legal fights. Last week, another court temporarily blocked a C.F.P.B. rule on credit-card late fees in a case brought by the Chamber of Commerce and the Consumer Bankers Association. But that was based on the same argument that the Supreme Court just rejected.

Separate legal challenges to the agency’s actions were on hold until the Supreme Court ruled, including a rule requiring banks to share data on small business loans so regulators can police them for incidences of discriminatory lending practices and enforcement actions against FirstCash, the pawnshop chain, and MoneyGram, the international money transfer group.

The fight isn’t over. Daryl Joseffer, the Chamber of Commerce’s chief counsel, told DealBook that the group would try to block the fee rule on different grounds and was ramping up an “unprecedented” litigation campaign against the government’s “regulatory tsunami.”

What next? The Supreme Court is expected to rule on two other challenges to agency power in the coming weeks: a lawsuit on the so-called Chevron Doctrine, which allows agencies to interpret ambiguous laws, and another on the constitutionality of the S.E.C.’s administrative tribunals.

• In other regulatory news: Democrats, including officials from Warren’s office, have been working to protect Martin Gruenberg, the embattled F.D.I.C chair, after a scathing report into management at the agency, according to Semafor.

HERE’S WHAT’S HAPPENING

Reddit’s stock jumps after striking a deal with OpenAI. Shares in the social media company were up 12 percent in premarket trading today after it allowed OpenAI to train its artificial intelligence models on its forums’ huge store of content; Reddit struck a similar deal with Google in February. In related news, Sony Music warned A.I. companies about unauthorized use of work from its artists — including Beyoncé and Harry Styles — to train their models.

China will buy homes to revive its moribund real estate market. The plan, which was accompanied by a lowering of mortgage rates and down-payment requirements, is intended to strengthen efforts to revive a key part of the Chinese economy. The plan came as Beijing reported economic data showing a record amount of unsold homes and plummeting housing prices.

Tesla’s chair says winning investor support for Elon Musk’s big pay package is a huge challenge. Robyn Denholm told The Financial Times that the company must climb “Mount Everest” to persuade the electric car maker’s shareholders to re-approve a plan to award Musk $56 billion in compensation, after a Delaware judge voided the scheme. A vote on the package is planned at Tesla’s annual meeting on June 13.

Figma announces its Plan B after the collapse of its $20 billion sale to Adobe. The design company said it would allow employees to sell up to $900 million worth of stock at a $12.5 billion valuation, with backing from investors including Andreessen Horowitz, Kleiner Perkins and Sequoia Capital. The transaction will be a relief to Figma workers hoping to cash in via the Adobe deal.

When business moguls pressed N.Y.C.’s mayor on university protests

In public, prominent business leaders including Robert Kraft and Barry Sternlicht have been outspoken opponents of the pro-Palestinian protests that gripped college campuses like those at Columbia.

In private, others appear to have gone further: Several moguls held a Zoom video call with Mayor Eric Adams of New York City last month, urging him to more forcefully disperse the Columbia protest, according to The Washington Post.

The report — which the newspaper said it based on named and unnamed participants in both the call and a broader group chat, as well as chat logs that it verified — underscores how strongly some business leaders feel about what they fear is rising antisemitism, as well as what steps they’re willing to take to combat it.

The call arose out of a WhatsApp group chat involving top executives, according to The Post. Formed after Hamas’s Oct. 7 attacks on Israel, the chat group members include Howard Schultz, the former Starbucks C.E.O.; Michael Dell, the tech mogul; the financiers Bill Ackman, Dan Loeb, Sternlicht and Josh Kushner; and Daniel Lubetzky, the founder of Kind snack bars, the Post reported. (A number of the business leaders confirmed to The Post that they were members of the group chat.)

Since the group’s formation, some of its members have discussed a $50 million anti-Hamas media campaign that was reported earlier by Semafor and held background briefings with top Israeli government officials.

Members sought to persuade Adams to use the police to break up the Columbia encampment, The Post reports. The April 26 call — whose attendees included Loeb, Lubetzky, the industrialist Len Blavatnik and the real estate mogul Joseph Sitt — included discussions about making political contributions to the mayor, who is up for re-election next year; ways to get Black leaders to condemn antisemitism (one member asked if anyone knew Jay-Z or Alicia Keys); and offers to pay for private investigators to help the police.

The next day, Loeb wrote in the chat that it was “a sad state that we feel the need to grovel to ask our elected officials to do their jobs.”

On April 30, the police returned to Columbia and arrested dozens of protesters who had stormed a university building.

Adams officials pushed back against the report: A lawyer for the mayor’s campaign said several members hadn’t made political donations, but didn’t comment on a $2,100 contribution from Blavatnik that a spokeswoman for the businessman confirmed was made last month.

Fabien Levy, a deputy mayor for communications, said police officers were sent to Columbia after “specific written requests” from school leaders, adding, “Any suggestion that other considerations were involved in the decision-making process is completely false.”

The group was shut this month, after months of inactivity from some members (including Schultz, Ackman and Sternlicht), according to The Post.

But business groups have continued to respond to concerns about rising antisemitism. Sullivan & Cromwell, the white-shoe law firm, said this week that it would more closely vet potential hires for “participation in pro-terrorist groups and other similar activities.”

“If you say you are targeting China, people will ask why we are not also talking about others.”

— Puma Shen, a lawmaker from Taiwan’s ruling Democratic Progressive Party, on why the country hasn’t banned TikTok, but is instead tightly regulating all social media platforms that can be used to spread disinformation.

Copper diplomacy

Copper is the new gold. Futures prices have soared this year, hitting a record in New York and far outperforming oil and tech stocks as global demand skyrockets for the metal, a key element in the artificial intelligence and energy transition fields.

That has set up an international race to snatch up copper supplies — and is weighing on the Biden administration as it considers easing sanctions on an Israeli mining mogul.

Why copper is so important: It’s used in batteries and in data centers. The mineral “is the foundation of current climate policy,” the International Energy Forum wrote in a report this week, adding that there’s not enough being mined to meet the world’s electric vehicle and electricity targets.

Such is the demand for copper that police are dealing with a global crime wave of scrap-metal thieves targeting copper wires in Europe’s train yards, copper pipes in the Midwest and copper cabling in Australia. And it’s a major driver behind BHP Group’s $43 billion hostile takeover bid for its rival, Anglo American.

The surge in demand has increased global attention on Africa’s copper belt. China has used its presence in Zambia and the Democratic Republic of Congo to secure a steady supply of the minerals needed to build up its E.V. sector and power its cities and high-tech industry.

Meanwhile, the U.S. and the European Union have funneled nearly $1 billion into a massive infrastructure project that spans Angola, the D.R.C. and Zambia. It includes the Lobito rail project, which would transport copper and cobalt from the heart of Africa to a port in Angola, en route to the U.S. and Europe. (China aims to expand the rail infrastructure in the other direction, by bringing mined materials from the same region to Africa’s eastern coast and onward to Asia.)

The Biden administration is stepping up its copper diplomacy efforts. The White House is debating whether to allow Dan Gertler, who was sanctioned by the U.S. in 2017, to sell three of his Congolese copper and cobalt mines, The Times reports.

The hope is that Western-leaning companies would buy the concessions, securing a new supply line for U.S. companies. But the plan’s future is far from certain, amid strong opposition from some Treasury and State Department officials.

THE SPEED READ

Deals

• Ping An, the big Chinese insurer, is reportedly considering options to sell down its 8 percent stake in HSBC after failing to win support for its plan to shake up the British bank. (Bloomberg)

• A.I.G. agreed to sell a 20 percent stake in Corebridge, the life insurance and annuities provider it spun out but still controls, to Nippon Life for $3.8 billion. (WSJ)

Policy

Best of the rest

• The Serbian government approved plans by Jared Kushner to build a luxury hotel in Belgrade, putting the two in business as his father-in-law, Donald Trump, seeks re-election. (NYT)

• Inside the Disney succession race, which many think is increasingly led by Dana Walden, the media company’s entertainment co-chair. (Vanity Fair)

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