Tony Scalia's Son Hard At Work Undermining Dodd-Frank Regulations

Tony Scalia's Son Hard At Work Undermining Dodd-Frank Regulations

The apple didn't fall far from that tree, did it? Some people believe that any regulation is bad regulation, and will do anything in their power to stop them, and some of those people make quite a bit of money when they do so. Sounds like Eugene Scalia is one of those people:

Ambrose Bierce once quipped that a lawyer is one skilled in the circumvention of the law. By that definition, Eugene Scalia is a lawyer of extraordinary skill. In less than five years, the 50-year-old son of Supreme Court Justice Antonin Scalia has become a one-man scourge to the reformers who won a hard-fought battle to pass the 2010 Dodd-Frank Act to rein in the out-of-control financial sector. So far, he's prevailed in three of the six suits he's filed against the law, single-handedly slowing its rollout to a snail's pace. As of May, a little more than half of the nearly four-year-old law's rules had been finalized and another 25 percent hadn't even been drafted. Much of that breathing room for Wall Street is thanks to Scalia, who has deployed a hyperliteral, almost absurdist series of procedural challenges to unnerve the bureaucrats charged with giving the legislation teeth.

Scalia has "created this sense that we're paralyzed, because if we write a rule we're just going to be reversed," says Lisa Donner, executive director of the watchdog group Americans for Financial Reform. The threat of more suits, she says, has "cast a real chill" over Wall Street regulators, particularly at the Securities and Exchange Commission (SEC).

Scalia's legal challenges hinge on a simple, two-decade-old rule: Federal agencies monitoring financial markets must conduct a cost-benefit analysis whenever they write a new regulation. The idea is to weigh "efficiency, competition, and capital formation" so that businesses and investors can anticipate how their bottom line might be affected. Sounds reasonable. But by recognizing that the assumptions behind these hypothetical projections can be endlessly picked apart, Scalia has found a remarkably effective way to delay key parts of the law from going into effect.

Former Rep. Barney Frank (D-Mass.) says Scalia and the big banks are attempting an end run around the law he coauthored: "These are ideologues who want to kill the rules. They can't say they're unconstitutional. They are doing this because it's the only possible way to knock them out." (Scalia declined to comment for this article.)

And here's a neat trick:

Today, Scalia is a partner, though he does not share in any revenue from the firm's cases before the Supreme Court (otherwise his dad might be pressured to recuse himself).

The payoff isn't in money, it's prestige. But SCOTUS writes its own code, so....


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