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Is the Supreme Court Sending Trump a Message? · Bloomberg Law

0:02
Speaker 1: This is Bloomberg Law with June Grossel from Bloomberg Radio.
0:08
Speaker 1: President Trump is turning to the Supreme Court over and
0:12
Speaker 1: over again as lower court judges reign in his efforts
0:16
Speaker 1: to push the limits of executive power, and the court's
0:19
Speaker 1: conservative majority seems to be accommodating him with consecutive but
0:24
Speaker 1: narrow wins, even as the liberal minority dissents, led by
0:29
Speaker 1: Justice Sonya Soto Mayor, who expressed concerns for the rule
0:33
Speaker 1: of law at a Georgetown University forum last week.
0:37
Speaker 2: One of the things that's troubling so many right now
0:40
Speaker 2: is many of the standards that are being changed right
0:45
Speaker 2: now were norms that government that governed officials into what
0:52
Speaker 2: was right and wrong. Once norms are broken, then you're
0:56
Speaker 2: shaking some of the foundation of the rule of law.
0:59
Speaker 1: My guest is constitutional law expert David super, a professor
1:03
Speaker 1: at Georgetown Law. David, if my calculations are correct, the
1:09
Speaker 1: Trump administration has made eight emergency applications to the Supreme
1:14
Speaker 1: Court in less than three months. I'm sure that's a record,
1:18
Speaker 1: But why is the Supreme Court addressing so many of
1:21
Speaker 1: these issues?
1:23
Speaker 3: Well, the Trump administration is making sweeping changes in our
1:30
Speaker 3: system of government changing things that have been understood at
1:34
Speaker 3: least since the New Deal, in many of them since
1:37
Speaker 3: the founding. So these are important enough issues to merit
1:42
Speaker 3: the Supreme Court's attention when they are enjoyed for being unlawful.
1:46
Speaker 1: So last Friday, the Supreme Court allowed the Education Department
1:51
Speaker 1: to withhold money for teacher training projects in eight states.
1:55
Speaker 1: It was a five to four decision. Chief Justice John
1:59
Speaker 1: Roberts side with the court's three liberals, indicating they would
2:02
Speaker 1: have denied the government's request. Do you see why he
2:05
Speaker 1: was with the Court's liberals in that particular case.
2:08
Speaker 3: Well, he didn't write an opinion and he didn't sign
2:11
Speaker 3: the opinions written by the liberal justices. So my sense
2:16
Speaker 3: is that he simply didn't feel that the administration had
2:19
Speaker 3: made a sufficiently compelling case and he wasn't entirely persuaded
2:24
Speaker 3: by what the conservative majority wrote in their opinion.
2:28
Speaker 1: So did the conservative majority basically go off on a
2:30
Speaker 1: procedural point.
2:33
Speaker 3: Yeah, many of these cases are procedural. The majority is
2:39
Speaker 3: looking with a very powerful magnifying glass at the procedure
2:47
Speaker 3: and in particular about which court something is filed in,
2:51
Speaker 3: and are in three of the most significant cases, finding
2:55
Speaker 3: that they don't believe it was in the right court.
2:58
Speaker 3: That says nothing about the parents. If the cases get
3:01
Speaker 3: refiled in the court that the Supreme Court prefers, which
3:05
Speaker 3: some of them already have then, So I don't think
3:08
Speaker 3: we can read very much into it other than that
3:11
Speaker 3: this Court is hoping against hope that if they give
3:14
Speaker 3: the administration a little more time, that it will come
3:18
Speaker 3: into compliance with the law.
3:20
Speaker 1: Justice Katanji Brown Jackson, in a dissense, said it was
3:23
Speaker 1: beyond puzzling that a majority of justices conceive of the
3:27
Speaker 1: government's application as an emergency. I mean, it doesn't appear
3:31
Speaker 1: that there's a real emergency in most of these applications
3:35
Speaker 1: to the Court.
3:36
Speaker 3: No, it doesn't. There's no indication that funding these teacher
3:41
Speaker 3: training programs would do any devastating harm. But everything the
3:47
Speaker 3: administration does these days, it claims is an emergency. And
3:52
Speaker 3: their basic theme is that they get to define what
3:56
Speaker 3: an emergency is, no matter how absurd that claim is.
4:01
Speaker 3: And for the moment, the Supreme Court is humoring them
4:04
Speaker 3: on this. My sense is that that game will only
4:08
Speaker 3: work for so long.
4:10
Speaker 1: In probably the most high profile of these emergency petitions,
4:14
Speaker 1: on Monday, the court allowed Trump to continue deporting Venezuelan
4:19
Speaker 1: migrants to prison in L Salvador under the Alien Enemies Act,
4:24
Speaker 1: granting an emergency request on a five to four vote,
4:27
Speaker 1: without deciding if he was using that law lawfully.
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Speaker 3: Yes, they said that that case should not have been
4:34
Speaker 3: in the district of the District of Columbia, should have
4:37
Speaker 3: been in the Southern District of Texas, and the reasons
4:41
Speaker 3: for that are not silly, but not very compelling either.
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Speaker 3: There certainly were plausible reasons to have file the case
4:51
Speaker 3: where they did, but I think they're hoping that if
4:55
Speaker 3: they make the case start all over again in the
4:58
Speaker 3: Southern District of Texas, is the illustration will chalk that
5:02
Speaker 3: up as a whin and back off from its absurd policy.
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Speaker 1: They also didn't address the fact that hundreds of Venezuelan
5:11
Speaker 1: migrants have been shipped to L Salvador already and are
5:15
Speaker 1: in prison there a harsh prison, and a Bloomberg News
5:19
Speaker 1: review found that just seven out of the two hundred
5:23
Speaker 1: and thirty eight migrants have been found guilty of serious crimes.
5:27
Speaker 1: I mean, they're sending people there based on tattoos and
5:30
Speaker 1: the kind of clothes they're wearing and the court just
5:33
Speaker 1: let that go by.
5:35
Speaker 3: Well, the Court said that there wasn't jurisdiction in the
5:39
Speaker 3: district of Columbia, so they haven't said this is okay.
5:43
Speaker 3: They have instead insisted that all that he's be crossed
5:47
Speaker 3: and all the eyes be dotted before a court takes
5:51
Speaker 3: action on this. Jurisdiction is one of the fundamental attributes
5:56
Speaker 3: of courts, and they do need to attend to their jurisdiction.
6:00
Speaker 3: On the other hand, past court have been willing to
6:05
Speaker 3: resolve close questions on jurisdiction in favor of getting justice done,
6:10
Speaker 3: and here five members of the Court were not willing
6:12
Speaker 3: to do that.
6:14
Speaker 1: Again, it was a five to four, but this time
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Speaker 1: Justice amy Cony Barrett joined the liberal justices. Any accounting
6:21
Speaker 1: for the sort of the Chief and Justice Barrett switching
6:24
Speaker 1: positions in these two cases, do you see a reason
6:28
Speaker 1: for that?
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Speaker 3: I think that both cases, the majority's argument was tenuous
6:36
Speaker 3: and it wasn't enough to persuade the Chief in the
6:40
Speaker 3: first instance, and it wasn't enough to persuade Justice Barrett
6:44
Speaker 3: in the second instance. Both of us are signaling that
6:48
Speaker 3: they are not rubber stamps for the administration. But both
6:52
Speaker 3: of them, I think, are also signaling that they would
6:56
Speaker 3: like to give the administration a chance to come into
6:59
Speaker 3: comply on its own. How long their patients will last
7:03
Speaker 3: remains to be seen.
7:05
Speaker 1: Then on Tuesday, in the first mass firing case to
7:08
Speaker 1: reach the court, the justices bolstered Trump's campaign to fire
7:13
Speaker 1: federal workers, blocking a judge's order that required the administration
7:17
Speaker 1: to reinstate employees. So this was seven to two, with
7:21
Speaker 1: Justices Sonya Sotomayor and Katanji Brown Jackson dissenting again based on.
7:26
Speaker 3: Procedure Yes, The argument was that these cases should have
7:32
Speaker 3: been brought initially through the merit system's civil service process
7:37
Speaker 3: and resolved there rather than in federal court. If there
7:41
Speaker 3: have been one individual person fired based on a quibble
7:46
Speaker 3: over whether they were taking too much sickly, absolutely, the
7:49
Speaker 3: merit system's process would be the right place. When it's
7:53
Speaker 3: being done as a matter of policy on a mass basis,
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Speaker 3: without any consideration of individual circumstances, an injunction seems more appropriate.
8:03
Speaker 3: But here the court decided to again insist on jurisdictional perfection.
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Speaker 1: Is the majority sort of checking the easy way out
8:12
Speaker 1: in these cases by making it more about procedure than
8:16
Speaker 1: about the merits or the administration's policies.
8:20
Speaker 3: Oh, yes, very much. So you're not seeing opinions endorsing
8:25
Speaker 3: what the administration has done. That would be very easy
8:28
Speaker 3: for them to write either as an opinion of the
8:31
Speaker 3: Court or as a concurring opinion from Justice Alito or whomever.
8:36
Speaker 3: And you're just not seeing that. You're seeing nitpicking on jurisdiction.
8:41
Speaker 3: So no one is sending the administration signs that what
8:44
Speaker 3: it's doing is okay. And I think if the administration's
8:49
Speaker 3: lawyers are paying the least bit of attention, they will
8:51
Speaker 3: recognize that they're being given time but absolutely no encouragement
8:55
Speaker 3: on the merits. And once the plain is iss follow
8:59
Speaker 3: the instruction to the court as to how to obtain jurisdiction.
9:03
Speaker 3: The court is giving the administration no encouragement that it
9:07
Speaker 3: will get support on the merits.
9:09
Speaker 1: Yesterday, after a decision by the entire DC Circuit to
9:13
Speaker 1: reinstate to independent agency officials fired by Trump without cause,
9:18
Speaker 1: Trump went to the Supreme Court and the Chief Justice
9:21
Speaker 1: issued in order putting the federal appeals court decision on hold,
9:25
Speaker 1: so the fired workers remain fired. Does Robert's action indicate
9:30
Speaker 1: support for Trump's efforts to remove any limits on his
9:35
Speaker 1: power to hire and fire.
9:37
Speaker 3: That's not clear. The Chief Justice has previously daid actions
9:42
Speaker 3: of lower courts and then turned around and voted against
9:46
Speaker 3: the administration on the merits. So at the moment, all
9:50
Speaker 3: we could assume is that this stay is an indication
9:54
Speaker 3: that he thinks that all the justices ought to be
9:56
Speaker 3: able to weigh in, which is sensible enough on an
9:58
Speaker 3: issue of this scale. I. On the other hand, the
10:01
Speaker 3: question of independent agencies may be a more complicated one
10:05
Speaker 3: in the court because several justices have indicated that they
10:09
Speaker 3: don't like independent agencies or don't believe that their independence
10:14
Speaker 3: is appropriate. So on this one, it certainly is possible
10:17
Speaker 3: that one all is said, in time, the administration will
10:20
Speaker 3: succeed in changing constitutional law. I don't like the administration's
10:24
Speaker 3: chances on most of the others, really, So you.
10:26
Speaker 1: Think that in this one the justices will expand presidential
10:32
Speaker 1: power even further.
10:33
Speaker 3: I think it's possible. There are justices who have said
10:36
Speaker 3: that the old Humphrey's Executor case, that is the foundation
10:40
Speaker 3: for independent agencies, was badly decided and should be rejected.
10:45
Speaker 3: We don't know how most of the Court will rule.
10:48
Speaker 3: I think it's very possible that some of the justices
10:52
Speaker 3: will feel that this is not the time to do
10:55
Speaker 3: away with agencies independence when you have a president who
10:58
Speaker 3: is hyper power artisan and pursuing an agenda with apparently
11:03
Speaker 3: very little consultation with lawyers. But it may be that
11:07
Speaker 3: they will take this as an occasion to make the
11:10
Speaker 3: ruling that they've hinted at and get rid of the
11:13
Speaker 3: independence of these agencies.
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Speaker 1: Does it seem like there are four solid votes to
11:18
Speaker 1: allow Trump to do whatever he wants.
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Speaker 3: No, I don't think there are. I think if there were,
11:25
Speaker 3: you would see them writing concurrences endorsing what the administration
11:31
Speaker 3: is doing on the merits. I think the justices sitting
11:36
Speaker 3: now are all serious people. They're people who I disagree
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Speaker 3: with on a great many issues, but I think that
11:44
Speaker 3: they have to be concerned with the threat to the
11:47
Speaker 3: rule of law here, and their silence on the merits
11:51
Speaker 3: could indicate that they're hoping the administration will understand it
11:56
Speaker 3: can't overplay its hand.
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Speaker 1: Administration keeps taking bows saying it's winning. It's you know,
12:03
Speaker 1: it's winning at the Supreme Court.
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Speaker 3: So even though their lawyers are any good, they're telling
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Speaker 3: them behind the scenes that you're dodging a bullet here
12:14
Speaker 3: and dodging a bullet there, but that the silence of
12:18
Speaker 3: even the most conservative justices on the merit of your
12:21
Speaker 3: action is quite deafening.
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Speaker 1: Even if these wins are temporary and procedural, aren't they
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Speaker 1: backing the backing Trump's actions to transform the federal government,
12:35
Speaker 1: you know, allowing him to go forward? You know, at
12:38
Speaker 1: least in the public's mind, that's what they're seeing.
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Speaker 3: Oh, certainly the public's perception, this looks like Trump is winning.
12:45
Speaker 3: And until we get a case that doesn't have the
12:49
Speaker 3: procedural glitches that the case is getting to the court
12:53
Speaker 3: so far I've had, we won't know for sure how
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Speaker 3: the justices will break out on the merits of this.
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Speaker 3: The fact that they can't hold a consistent five should
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Speaker 3: be a warning side for the administration, but we won't
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Speaker 3: know until we get actual decisions. When the administration shows
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Speaker 3: that it is utterly unwilling to listen to these hints
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Speaker 3: from the Supreme Court and polity orders from the lower court,
13:21
Speaker 3: we will get a much clearer decision where the justice
13:24
Speaker 3: is all right on the merits of some important issue,
13:27
Speaker 3: and we find that where it all stands, we'll see.
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Speaker 1: How long it actually takes them to get to the
13:33
Speaker 1: merits of a case. Great having you on, David, Thanks
13:35
Speaker 1: so much. That's Professor David super of Georgetown Law Coming
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Speaker 1: up next. Crypto enforcement is dying down. This is Bloomberg.
13:46
Speaker 1: The Justice Department is disbanding its crypto enforcement team and
13:51
Speaker 1: scaling back on enforcement in line with President Trump's directives.
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Speaker 1: Joining me is an expert in financial market regulation, Yasha Yadiv, Upper,
14:00
Speaker 1: professor at Vanderbilt University Law School. The Justice Department has
14:04
Speaker 1: shut down this unit that investigates cryptocurrency fraud effective immediately.
14:11
Speaker 1: In a memo, Deputy Attorney General Todd Blanche said, quote,
14:16
Speaker 1: the prior administration used the Justice Department to pursue a
14:19
Speaker 1: reckless strategy of regulation by prosecution, which was ill conceived
14:25
Speaker 1: and poorly executed. Why are they doing this really.
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Speaker 4: Well, Jane, It's a very interesting question, because what we
14:34
Speaker 4: have here is a cryptocurrency enforcement team that I think
14:39
Speaker 4: was really the envy of the world in many ways.
14:41
Speaker 4: What this team brought together was a deep amount of
14:45
Speaker 4: interdisciplinary expertise and intelligence across the Justice Department, which had
14:50
Speaker 4: proven itself as being extremely effective at marshaling technical expertise,
14:56
Speaker 4: at coordinating amongst different groups, at developing a strategy for
15:02
Speaker 4: pursuing some of the most aggressive bad actors in the
15:07
Speaker 4: crypto currency economy, most particularly like for example, the North
15:11
Speaker 4: Koreans or Relentless Hackers. One of the most successful cases
15:15
Speaker 4: of this team was really the Bits the Next Hack,
15:18
Speaker 4: in which they prosecuted Iliah Liechtenstein and the famous rapper
15:22
Speaker 4: Razzl Khan infamous rapper in some ways and collected a
15:26
Speaker 4: great deal of stolen crypto. As a result of this,
15:29
Speaker 4: they pursued dark markets and what that has shown is
15:32
Speaker 4: that the Justice Department, through this team, as well as
15:34
Speaker 4: of the personnel obviously, are extremely adept at keeping up
15:38
Speaker 4: with some of the technical innovations, the creativity, the cat
15:42
Speaker 4: and mouth chase that the technology enables, and this team
15:46
Speaker 4: was bringing that expertise together to do that. You know,
15:49
Speaker 4: what this enabled was making sure that the prosecutions that
15:52
Speaker 4: were coming up to hold bad actors accountable had the
15:57
Speaker 4: evidence that they needed to back them up, had the
16:00
Speaker 4: technical know how to ensure that the standards of liability
16:03
Speaker 4: would be met through the evidence of what was really happening.
16:07
Speaker 4: And so this team did a lot from that perspective,
16:10
Speaker 4: and so it'll be interesting to see what happens next
16:12
Speaker 4: in terms of how that expertise as it diffuses across
16:16
Speaker 4: the Justice Department can be marshaled still to prosecute the
16:19
Speaker 4: bad actors in the crypto economy.
16:21
Speaker 1: I mean, are they interested in pursuing the bad actors?
16:25
Speaker 1: The Security Exchange Commission has also dismissed lawsuits and pending
16:30
Speaker 1: investigations involving crypto firms.
16:33
Speaker 4: The memo. What it said was essentially that the financial
16:37
Speaker 4: regulators would play the lead role in taking into account
16:41
Speaker 4: the regulatory failures that are happening in the cryptoeconomy, and
16:45
Speaker 4: that the Justice Department would be less aggressive in this regard.
16:48
Speaker 4: You know, what's interesting at this point is that the
16:51
Speaker 4: regulatory framework for crypto is still being built. For example,
16:54
Speaker 4: Congress is working on a number of pieces of legislation
16:57
Speaker 4: to create that regulation perimeter, to find exactly who gets
17:01
Speaker 4: to regulate particular kinds of assets, how they're going to
17:05
Speaker 4: do it, what kind of particular provisions need to be
17:07
Speaker 4: put in place. So, for example, right now, you know,
17:10
Speaker 4: one of the major pieces of legislation involves stable coins.
17:13
Speaker 4: This is the kind of crypto asset that is very,
17:15
Speaker 4: very popular and impactful for payments. And what that means
17:19
Speaker 4: when is you know, for something like payments, is that
17:22
Speaker 4: aspects like money laundering, aspects like you know, knowing people's
17:25
Speaker 4: identity and how to make sure that bad actors are
17:28
Speaker 4: not implicated. You know, these things become involved. But at present,
17:32
Speaker 4: these plainworks are really not there to the same extent,
17:35
Speaker 4: and so the financial regulator is for example, as you know,
17:38
Speaker 4: the SEC has said, for example, they won't regulate mean coins.
17:41
Speaker 4: This is an area of the crypto economy that has
17:43
Speaker 4: been perceived as being quite cd where allegations of pump
17:49
Speaker 4: and dumps have been rife, and so the SEC at
17:51
Speaker 4: that point says this is not their jurisdiction. Other regulators,
17:55
Speaker 4: that the CFP be, the Consumer Financial Protection Bureau, have
17:58
Speaker 4: seen a grade to the sort of legal dismantling about
18:02
Speaker 4: their apparatus. And so the question really is who's going
18:05
Speaker 4: to police the bad actors here? And you know, in
18:08
Speaker 4: the case of the justice departments, they have not been
18:11
Speaker 4: bringing claims with respect to, for example, whether or not
18:14
Speaker 4: crypto assets or securities, whether there's certain kinds of commodities,
18:17
Speaker 4: that's not the Justice Department's business. That's not what they're doing.
18:20
Speaker 4: What they've been doing is prosecuting cases that involve criminal
18:24
Speaker 4: activity very much on their beats, such as money laundering,
18:28
Speaker 4: terrorist financing, fraud, and so the question becomes, really, how
18:32
Speaker 4: are these kinds of bad, you know, illicit activity is
18:36
Speaker 4: going to be dealt with going forward. One last thing
18:39
Speaker 4: just to say on this is that the need to
18:41
Speaker 4: protect the crypto market, the need to ensure it's clean,
18:45
Speaker 4: the need to make sure that it's perceived as being
18:48
Speaker 4: immaculate and trustworthy, is something that many in the industry
18:52
Speaker 4: wants themselves. They want to see this industry as being
18:56
Speaker 4: one that people can trust, particularly after dream cooins scams, STX,
19:01
Speaker 4: sam Backmin Freed and you know Celsius and other, you know,
19:04
Speaker 4: various hacks that have happened. You know, the industry itself
19:07
Speaker 4: wants to be seen as, you know, it's one that's
19:08
Speaker 4: worthy of trust. And so the Justice Department has played
19:11
Speaker 4: a big role in that. Certainly not perfect. There have
19:14
Speaker 4: been lots of instances where it's been criticized for certain cases,
19:17
Speaker 4: but broadly, by and large, they've shown themselves as being
19:20
Speaker 4: extremely intelligent and adept at doing the job that they've done.
19:24
Speaker 1: So you mentioned Sam Bankman freed, would a case like
19:28
Speaker 1: his go under the radar without this unit in place
19:32
Speaker 1: and with the new emphasis at the Justice Department, Well, the.
19:36
Speaker 4: Memo did say that they would be pursuing hacks, that
19:39
Speaker 4: they'd be pursuing illicit activities connected with crypto, for example,
19:44
Speaker 4: things like human trafficking. The memo also mentioned, you know,
19:47
Speaker 4: the potential for kind of defive protocols that may be
19:50
Speaker 4: facilitating cleaning post a kind of hack, that these would
19:54
Speaker 4: also be pursued. So it's certainly not ruling out prosecutions
19:59
Speaker 4: for crypto so currency related criminal activity. What the dismantling
20:04
Speaker 4: of this unit, however, potentially could lead to is difficulties
20:08
Speaker 4: in creating the evidentiary trails and keeping track of where
20:13
Speaker 4: the vulnerabilities are with respect to the hackers having a
20:17
Speaker 4: leg up in terms of technical advantage and speed and
20:21
Speaker 4: the capacity to innovate, and the government not having the
20:24
Speaker 4: ability then to keep up with these developments and so,
20:28
Speaker 4: you know, one of the things that was interesting in
20:29
Speaker 4: the bits the Next Hack for example, and the prosecutions
20:32
Speaker 4: of Ilia Liechtenstein and Rassal Khan, was that the government
20:36
Speaker 4: Saffa David showed that they were incredibly good at following
20:40
Speaker 4: really complicated transaction trails where money was being filtered through
20:44
Speaker 4: numerous blockchains and using you know, various kinds of different
20:48
Speaker 4: marketplaces darkness that kind of clean the cash. And so
20:52
Speaker 4: these are evidentiary intelligence that this unit was able to create.
20:56
Speaker 4: And similarly for sambagmuin Freed and other sort of major
21:00
Speaker 4: large scale wrongdoers that are very sophisticated potentially at moving crypto,
21:06
Speaker 4: at hiding their evidence of their transactions. Even though the
21:10
Speaker 4: blockchain is transparent, one can use all sorts of different
21:13
Speaker 4: protocols to try and you know, maybe clean the money
21:16
Speaker 4: very quickly, as it happened with respect the North Korean
21:18
Speaker 4: bibit hack. And so you know, these are things that
21:21
Speaker 4: this unit was good at. And so it's not that
21:24
Speaker 4: the prosecutions are not likely to happen. I'm sure that
21:27
Speaker 4: you know, the Justice Department will do what the Justice
21:29
Speaker 4: Department does. But at the same time, it's about being
21:32
Speaker 4: able to collate that evidence, to be able to get
21:36
Speaker 4: ahead of the technology, to be able to predict where
21:39
Speaker 4: some of the bad actors might go next, and then
21:41
Speaker 4: prepare the government to make those prosecutions really stick.
21:44
Speaker 1: Do you think there'll be an increase in state regulatory activity?
21:48
Speaker 1: Last month, California's AG said it would continue protecting consumers
21:53
Speaker 1: from crypto confidence scams and ags in New York, Massachusetts
21:58
Speaker 1: and Illinois said similar things things. You think we'll see
22:01
Speaker 1: more enforcement on the state level.
22:03
Speaker 4: Absolutely, so. I think the states are definitely revving up
22:07
Speaker 4: to step into some of the gaps that may be
22:10
Speaker 4: left here. One has seen states in general over the
22:13
Speaker 4: last couple of years is you know, crypto has been
22:16
Speaker 4: gaining a foothold in the mainstream, states have stepped up
22:19
Speaker 4: in any event to try and regulate this marketplace. So
22:23
Speaker 4: some notable examples here include New York and Wyoming, for example,
22:27
Speaker 4: that have put you know, perimeters in place for cryptoactivities.
22:31
Speaker 4: And so with respect to just general wrongdoing in crypto,
22:34
Speaker 4: certainly one is going to see the states step up,
22:36
Speaker 4: you know, as you mentioned California, New York and others.
22:39
Speaker 4: I'm sure we'll be paying close attention. In addition, of course,
22:44
Speaker 4: you know, one aspect that does need to be addressed
22:47
Speaker 4: here is that certain crimes are federal crimes which do
22:50
Speaker 4: require federal intervention. So when one thinks of money laundering,
22:55
Speaker 4: terrorist financing, why are fraud these are cases that are
22:59
Speaker 4: being brought federally as federal crimes. Often these can carry
23:03
Speaker 4: higher penalties and therefore potentially have you know, a steeper
23:08
Speaker 4: the terrance effect? And so the question really becomes, does
23:11
Speaker 4: the lack of federal emphasis here? I mean, there's certain
23:14
Speaker 4: kinds offenses such as money laundering, terrorists, financing, fail to
23:18
Speaker 4: get the intensity or prosecution that they have currently and
23:22
Speaker 4: what will be the effect of that on you know,
23:25
Speaker 4: bad actors in this economy potentially taking advantage off the US,
23:29
Speaker 4: which has been the kop on the block worldwide, not
23:31
Speaker 4: just here in the US, of the Justice Department, potentially
23:35
Speaker 4: taking its foot off the pedal with respect to the
23:37
Speaker 4: aggressiveness of which it pursues these claimed.
23:40
Speaker 1: I mean, do you think this sort of led up
23:44
Speaker 1: in crypto enforcement is because Trump wants to make this
23:49
Speaker 1: the crypto capital of the planet. Do they see less
23:53
Speaker 1: enforcement as part of that goal?
23:56
Speaker 4: I think one of the you know, one of the
23:58
Speaker 4: aspects here that was indicated in the memo itself is
24:01
Speaker 4: a reaction to the perception of the last administration was
24:06
Speaker 4: very aggressive in using litigation as a strategy for creating
24:10
Speaker 4: a regulated perimeter for crypto. So, in general, there has
24:13
Speaker 4: been a lot of criticism of regulation by enforcements trying
24:17
Speaker 4: to make cryptocurrency fit existing rules through litigation, through bringing
24:23
Speaker 4: lawsuits rather than creating rules, and creating a perimeter through
24:28
Speaker 4: a conversation with the industry rather than mis litigating against
24:31
Speaker 4: the industry. So, you know, it feels like this memo
24:35
Speaker 4: seems to be kind of reflecting a backlash to that approach.
24:39
Speaker 4: One of the aspects that the memo sort of singles
24:42
Speaker 4: out is that it speaks to the perception that some
24:46
Speaker 4: of the cases that were brought by the Justice Department,
24:48
Speaker 4: for example against Tornado Cash, against developers in this space
24:53
Speaker 4: were ones that were overly aggressive, were ones that you
24:56
Speaker 4: overstep the balance of what the Justice Department should be doing.
25:00
Speaker 4: And particularly, just to give you some background, the Justice
25:02
Speaker 4: Department brought a case against a number of developers, those
25:05
Speaker 4: who write the code. You know, they were bringing cases
25:08
Speaker 4: against developers of mixers. These were codes that can potentially
25:13
Speaker 4: create a greater degree of obfuscation between who owns the
25:17
Speaker 4: crypto and the kind of transaction trails that might exist there.
25:20
Speaker 4: And for the developers, these were privacy enhancing code. There's
25:25
Speaker 4: a privacy enhanting tools. And furthermore, you know, writing code,
25:30
Speaker 4: they have argued, is a free speech right, and so
25:32
Speaker 4: prosecuting it led to a great deal of criticism against
25:35
Speaker 4: the Justice Department from the industry, and so part of
25:38
Speaker 4: this memoir appears to reflect that feeling that developers, that
25:42
Speaker 4: those who are writing code, that those who are creating
25:44
Speaker 4: in this space were potentially being targeted in ways that
25:47
Speaker 4: were unfair. But you know, equally, the question and becomes
25:50
Speaker 4: what happens when you know the entire enforcement approach is
25:54
Speaker 4: geared towards scaling back, especially when the industry is now
25:57
Speaker 4: becoming mainstream, when every day users are looking to get
26:01
Speaker 4: into crypto in a big way, when it's being encouraged
26:04
Speaker 4: as a very mainstream activity for Americans, spy an administration
26:08
Speaker 4: that's really backing this industry, and the industry is coming
26:11
Speaker 4: into its own.
26:12
Speaker 1: At this point, it seems like something may fall through
26:16
Speaker 1: the cracks. Thanks so much for being on the show.
26:19
Speaker 1: That's professor Yasha Yadiv of Vanderbilt University Law School coming
26:23
Speaker 1: up next. Trump cuts labor mediators from one hundred and
26:27
Speaker 1: forty three down to four. This is Bloomberg. The Federal
26:33
Speaker 1: Mediation Conciliation Service is a small labor agency that has
26:38
Speaker 1: played an outsized role in some of the nation's largest
26:41
Speaker 1: workplace negotiations over the last several years, including those at Starbucks, Boeing,
26:47
Speaker 1: and Apple. But now the Trump administration has gutted the
26:51
Speaker 1: FMCS of nearly all its labor mediators, endangering a key
26:57
Speaker 1: means of resolving employer union conflicts, driving up negotiation costs
27:02
Speaker 1: and potentially leading to more strikes and lockouts. Joining me
27:07
Speaker 1: is Bloomberg Law reporter Parker Purifoid. Parker tell us about
27:11
Speaker 1: the Federal Mediation and Conciliation Service.
27:14
Speaker 5: It was, you know, kind of a small agency and
27:18
Speaker 5: its main role was to provide mediators to employers and unions.
27:25
Speaker 5: They do both public sector and private sector work, so
27:29
Speaker 5: they send mediators in when there's some kind of dispute
27:33
Speaker 5: over a contract or grievance or something like that. They'll
27:38
Speaker 5: try to get the parties both on the same page.
27:41
Speaker 1: There are one hundred and forty three mediators before Trump
27:45
Speaker 1: took office. How many are there now?
27:48
Speaker 5: There are four lefts now, from what we can tell
27:51
Speaker 5: from speaking to employees there, The administration gave various offers
27:57
Speaker 5: for early retirement and sent to or other like more
28:02
Speaker 5: buy out structured incentives to leave. So we know that
28:05
Speaker 5: some of the mediators took those incentives to leave the
28:09
Speaker 5: administration and then the rest after that were laid off.
28:14
Speaker 5: So they're on administrative leave right now, and then they'll
28:18
Speaker 5: be kind of rolled into the reduction enforce procedures and
28:23
Speaker 5: laid off.
28:24
Speaker 1: Explain how the mediation service has been crucial in preventing
28:29
Speaker 1: and ending strikes in recent years. Tell us about some instances.
28:34
Speaker 5: Yeah, I always say that they kind of fly under
28:38
Speaker 5: the radar because no one really talks about them. Reporters
28:42
Speaker 5: don't talk to them, like they're not quoted in any
28:45
Speaker 5: of these big stories. But they are on hand a
28:48
Speaker 5: lot in these, you know, really big labor disputes. So
28:52
Speaker 5: one example was the strike between Boeing and their machinists
28:58
Speaker 5: last year. The fm CS mediators were on hand for that,
29:02
Speaker 5: and also, as I'm sure you can recall, there's been
29:06
Speaker 5: some contract disputes with the dock workers in East and
29:10
Speaker 5: West Coast ports over the last couple of years, and
29:13
Speaker 5: the mediators were also on hand during that. Another examples
29:17
Speaker 5: that they helped facilitate a first contract between Apple and
29:22
Speaker 5: some of its retail workers up in Thousand, Maryland last
29:26
Speaker 5: year as well in twenty twenty three, they helped negotiate
29:30
Speaker 5: almost twenty five hundred collective bargaining negotiations, so they're involved
29:36
Speaker 5: in quite a lot of them.
29:37
Speaker 1: Jefferson Diedrich and FMCS commissioner said in March twenty sixth
29:43
Speaker 1: post that it saved the economy over five hundred million
29:47
Speaker 1: annually with less than one hundred and fifty mediators and
29:51
Speaker 1: point zero zero one four percent of the federal budget.
29:55
Speaker 1: So this was a tiny agency comparatively, right.
29:59
Speaker 5: I think it's budget was somewhere in the ballpark of
30:02
Speaker 5: fifty to seventy million dollars, so really tiny compared to,
30:07
Speaker 5: you know, most of the other agencies. But yeah, as
30:10
Speaker 5: Jefferson said in his post, they certainly have kind of
30:13
Speaker 5: an outsized impact on the economy when you think about
30:17
Speaker 5: all of the work that they do to prevent strikes
30:20
Speaker 5: that could be you know, crippling to the economy.
30:23
Speaker 1: Has the effect of this been felt yet.
30:27
Speaker 5: Yeah, definitely. I actually spoke to a number of attorneys,
30:32
Speaker 5: mostly in the in the private sector, who said that
30:36
Speaker 5: they found out about the layoffs because the mediators that
30:39
Speaker 5: they were working with in their you know, current negotiations
30:44
Speaker 5: had to leave the bargaining table because they were told
30:47
Speaker 5: that they were laid off. One concrete example is Starbucks
30:51
Speaker 5: and Starbucks Workers United has been involved in kind of
30:55
Speaker 5: a month long negotiation process to try to come up
31:00
Speaker 5: with a framework for bargaining their contracts, and their negotiations
31:05
Speaker 5: were being mediated by FMCS mediators, and one of the
31:09
Speaker 5: two of their mediators were laid off and pulled off
31:12
Speaker 5: of the table. But I think that more than that,
31:15
Speaker 5: I have heard a lot of anxiety amongst attorneys in
31:21
Speaker 5: the last couple of weeks who say that now they're
31:23
Speaker 5: going to have to look to getting private mediators, and
31:27
Speaker 5: they're going to have to split the costs, you know,
31:30
Speaker 5: the employer in the union are going to have to
31:31
Speaker 5: split the cost of the mediators, and so all of
31:34
Speaker 5: this is just going to drive up the cost of
31:37
Speaker 5: negotiations and also bring in more potential for strikes or
31:44
Speaker 5: lockouts or other eventualities like that.
31:47
Speaker 1: What happens in the public sector where some federal and
31:51
Speaker 1: state agencies are contractually required to mediate through fmcs, So
31:57
Speaker 1: what would happen there?
31:59
Speaker 5: Yeah, I think it's pretty fact specific, but like you said,
32:03
Speaker 5: a lot of state and federal agencies have to involve
32:09
Speaker 5: an FMCS mediator somewhere in their process before they can
32:13
Speaker 5: go to either like arbitration over a dispute, or in
32:18
Speaker 5: the federal sector, when a union is trying to negotiate
32:23
Speaker 5: a contract and they're having a difficult time reaching an
32:26
Speaker 5: agreement with the government, the mediator will step in try
32:30
Speaker 5: to mediate that dispute. If the mediator can't you help
32:34
Speaker 5: them reach an agreement, then the mediator needs to sign
32:38
Speaker 5: off in order for the dispute to go before a
32:41
Speaker 5: panel who will ultimately decide what the terms of the
32:45
Speaker 5: agreement are. So this is kind of just placing, i
32:49
Speaker 5: would say, even more significant roadblocks for the public sector
32:53
Speaker 5: because they are contractually obligated to seek the approval of
32:59
Speaker 5: FMCS mediators and now that you could potentially take months
33:04
Speaker 5: or years to do that. Now that there are only
33:06
Speaker 5: four mediators available for the whole country.
33:10
Speaker 1: Can other agencies within the federal government fill in the gaps,
33:15
Speaker 1: like the NLRB.
33:17
Speaker 5: So the NLRB legally cannot use any of their money
33:22
Speaker 5: that's been appropriated by Congress to pay for mediation services.
33:28
Speaker 5: A lot of times, the NLRB will help connect parties
33:32
Speaker 5: to fmcs, but the NLRB cannot do that themselves. The
33:37
Speaker 5: Labor Department has been involved a little bit. Labor Department
33:42
Speaker 5: officials will frequently, I guess, get involved in some of
33:45
Speaker 5: these higher profile strikes or contract disputes, like under the
33:50
Speaker 5: Biden administration, Acting Labor Secretary Julie Sue would go out
33:56
Speaker 5: to negotiations pretty frequently to help negotiate. But you know,
34:01
Speaker 5: I think taking up all of the work that FMCS
34:05
Speaker 5: and just folding it into the Labor Department. What I've
34:09
Speaker 5: heard from sources is that that is not a feasible
34:12
Speaker 5: option at this point.
34:14
Speaker 1: A coalition of twenty one states sued the Trump administration
34:18
Speaker 1: last week over laying off staff and reducing the functions
34:22
Speaker 1: of seven federal agencies, including the FMCS. What are the
34:27
Speaker 1: grounds for that lawsuit?
34:29
Speaker 5: The states are basically alleging that the actions by the
34:33
Speaker 5: administration are having adverse impact on the states. So the
34:38
Speaker 5: states do mentioned in regard to the fmcs. They mentioned
34:42
Speaker 5: that a lot of their state agencies need to go
34:45
Speaker 5: through fmcs and if they were to have to engage
34:50
Speaker 5: with private mediators that that would place a large financial
34:54
Speaker 5: burden on the states to do so. And yeah, they're
34:58
Speaker 5: basically alleging that the agencies, not just FMCS, but these
35:03
Speaker 5: other small agencies, were created by acts of Congress, and
35:07
Speaker 5: they believe that the president can't just unilaterally essentially get
35:12
Speaker 5: rid of them.
35:13
Speaker 1: Is the FMCS just one agency among many that has
35:18
Speaker 1: been targeted or do people say that it's been targeted
35:22
Speaker 1: because it has to do with labor and labor unions,
35:26
Speaker 1: which the Trump administration has also targeted.
35:30
Speaker 5: I mean, I think, you know, the federal government is
35:33
Speaker 5: being pretty unprecedented level of layoffs. Certainly, Trump has stated
35:39
Speaker 5: and has indicated that he is willing to do everything
35:42
Speaker 5: that he can to, you know, reduce what he says
35:46
Speaker 5: is administrative blowed and fraud and wasting of taxpayer dollars.
35:53
Speaker 5: But certainly FMCS is only one of the labor agencies
35:57
Speaker 5: that has been impacted. Trump also fired one of the
36:02
Speaker 5: NLRB members right at the beginning of his term, along
36:07
Speaker 5: with members of other agencies that resolve disputes within the
36:12
Speaker 5: federal government. So certainly, many of the labor side attorneys
36:16
Speaker 5: that I talked to say that this is a deliberate
36:19
Speaker 5: targeting of the labor agencies in order to kind of
36:23
Speaker 5: remove workers' ads towards getting recourse, you know, in any
36:28
Speaker 5: of these these actions.
36:30
Speaker 1: According to an agency fact sheet, FMCS was involved in
36:34
Speaker 1: two thy four hundred sixty seven collective bargaining negotiations, one
36:39
Speaker 1: two hundred and sixty five high impact grievance mediations, and
36:43
Speaker 1: conducted one thousand, five hundred and sixty six training programs
36:48
Speaker 1: in twenty twenty three. Thanks so much, Parker. That's Bloomberg
36:53
Speaker 1: Law reporter Parker Purifoy. In other legal news, at the
36:56
Speaker 1: Justice Department, we're Attorney General Pam Bondi's has coincided with
37:01
Speaker 1: the removal or reassignment of a growing number of career officials.
37:06
Speaker 1: According to Bloomberg sources, the Justice Department removed the acting
37:11
Speaker 1: National Security head from his post hours after Bondie saw
37:15
Speaker 1: a portrait of former President Joe Biden continuing to hang
37:19
Speaker 1: in the division's front office. This happened in February, just
37:24
Speaker 1: weeks after Devin de Backer was elevated to serve as
37:28
Speaker 1: the acting chief of the National Security Division. He's a
37:32
Speaker 1: former associate White House counsel during the first Trump administration.
37:36
Speaker 1: His devotion came the same day BONDI saw the portraits
37:40
Speaker 1: of Biden, former Vice President Kamala Harris, and former Attorney
37:44
Speaker 1: General Merrick Garland still on the wall. And that's it
37:48
Speaker 1: for this edition of The Bloomberg Law Show. Remember you
37:51
Speaker 1: can always get the latest legal news on our Bloomberg
37:53
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38:01
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38:04
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38:08
Speaker 1: June Grosso and you're listening to Bloomberg