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Blog Post | July 7, 2023

Coup Memo Author John Eastman Tells SCOTUS To Gut The CFPB

2020 Election/TransitionConsumer ProtectionFinancial RegulationIndependent AgenciesJudiciarySupreme Court
Coup Memo Author John Eastman Tells SCOTUS To Gut The CFPB

UPDATE 8/14/23: John Eastman has been criminally indicted alongside Donald Trump and 17 co-conspirators by Fulton County D.A. Fani Willis for trying to overturn the 2020 election in Georgia. He was previously named as an unindicted co-conspirator in Special Counsel Jack Smith’s indictment of Donald Trump.

Next year, the Supreme Court will decide Community Financial Services Association v. Consumer Financial Protection Bureau, a lawsuit filed by predatory payday lenders alleging the CFPB’s funding structure is unconstitutional. Consumer advocates and good governance groups (us included) have opposed the lawsuit, citing its catastrophic implications for consumers and the financial system writ large. Business lobby groups like the Chamber of Commerce (which has long sought to shield its lawbreaking members from having to follow the rules) have cheered the plaintiff’s arguments and are salivating at the thought of SCOTUS affirming them

But the business lobby’s latest ally in this case is one they may soon regret having: former Trump attorney John Eastman, who recently filed an amicus brief supporting the plaintiffs in CFSA. Eastman is best known for helping Trump try to overturn the 2020 election:

  • Eastman represented Trump in backing Texas v. Pennsylvania, a failed GOP attempt to overturn presidential election results in four Biden-won swing states.
  • Eastman, a former clerk for Clarence Thomas, secretly emailed Thomas’ “Stop The Steal”-supporting wife Ginni ahead of the January 6th Electoral College certification. 
  • Prior to the certification, Eastman authored two memos that falsely claimed Vice President Mike Pence could reject electors from seven Biden-won states and certify Trump as the winner. Pence ultimately rejected Eastman’s “coup memos” while Trump famously did not, despite Eastman himself acknowledging his advice was likely illegal.  
  • Eastman spoke at Trump’s Ellipse rally on the morning of January 6th. In the days following the January 6th attack, Eastman repeatedly emailed Rudy Giuliani asking for a presidential pardon from Trump. He never received one.  
  • Eastman was referred for potential DOJ prosecution on criminal charges by the House 1/6 Committee last year and remains a central figure in both Special Counsel Jack Smith’s and the Fulton County D.A.’s ongoing criminal probes of Trump. Federal agents seized Eastman’s phone last June. On August 1st, 2023, Eastman was confirmed to be one of six unindicted co-conspirators in Smith’s indictment of Trump.
  • Eastman stepped down as Chapman University Law School Dean in 2021 after 160 faculty members called for his resignation, citing his involvement in the election plot.
  • Eastman is currently facing 11 disciplinary charges for violating the State Bar of California’s code of ethical conduct, all related to his involvement with Trump’s election subversion schemes. If convicted, Eastman could permanently lose his law license. 

Eastman’s own precarious legal situation hasn’t stopped him from continuing to advance crackpot legal theories. In his CFSA amicus brief filed on behalf of the Claremont Institute’s Center for Constitutional Jurisprudence (CCJ), Eastman claimed the CFPB’s current funding structure was an affront to the text of the Constitution. Arguing that “the power to appropriate [and fund agencies] is vested solely in Congress”, Eastman characterizes the CFPB’s funding mechanism as either “a forever appropriation to the Bureau or a delegation of Congress’s exclusive power of appropriation to the Federal Reserve Board” and asserts that both options “violate the Constitution’s finely tuned structure of separation of powers.”

Various constitutional law experts have cast doubt on his claims, noting that both the text of the Constitution and two centuries of administrative and judicial precedent have long upheld CFPB-style funding structures (some have even said as much in their own amicus briefs):

  • “Nothing in the Appropriations Clause even arguably requires agencies to be funded by annual appropriations.  The Clause merely provides that “[n]o Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.”  […] In other words, the executive branch may not unilaterally spend the nation’s money; Congress gets a critical say in how the nation’s money is spent.  And that is exactly what happened here.  Congress provided that the CFPB should be funded as necessary, up to a certain amount, by the Federal Reserve, which does not draw money from the Treasury.  But if the Bureau ever needs additional funds, it has to come to Congress for an appropriation.  As a result, no money is drawn from the Treasury except as a consequence of appropriations made by law.  And that is all the Appropriations Clause requires. […] Congress has long exercised the flexibility the Constitution gives it to fund agencies through means other than appropriations from the Treasury.  As early as the 1790s, Congress authorized the post office to operate using permanent revolving funds, rather than withdrawals from the Treasury.” – CAC, 10/24/22
  • “The CFPB’s funding structure is not unique. The CFPB receives its funding from the Federal Reserve—indeed, it is a bureau of the Fed—which is also outside of the annual appropriations process. Other financial regulators do not receive annual congressional appropriations, including the FDIC, the Comptroller of the Currency (OCC), the National Credit Union Administration (NCUA), and the Federal Housing Finance Agency (FHFA), which have fewer congressional limits on their funding than the CFPB does.” – NCLC, 3/30/23
  • “Because no federal bank regulator is funded through annual appropriations, the court of appeals’ reasoning would apply to every other federal bank regulator, including the Federal Reserve Board. […] If upheld, the court of appeals’ hasty and mistaken conclusion would expose credit markets to acute and systemic distress. The court’s logic would further require defunding all federal banking regulators, not just the CFPB. The Appropriations Clause does not compel this result, and the financial system cannot withstand it.” – Adam Levitin, Patricia McCoy, Gregory Lipper, and Rebecca LeGrand; 5/15/23

That Eastman is spending what could be his final days as a lawyer advancing fringe legal theories is hardly surprising. Since Trump left office, Eastman has also filed amicus briefs on behalf of Claremont’s litigation division supporting extreme right-wing positions in:

  • Dobbs v. Jackson Women’s Health Organization (2022) – Eastman co-authored a CCJ amicus brief urging the Supreme Court to overturn its landmark Roe v. Wade abortion rights ruling. 
  • Sackett v. EPA (2023) – Eastman urged SCOTUS to not only strike down the EPA’s Obama-era Clean Water Act rules (which he deemed a “naked power grab”), but also scrap the Court’s “troubled Chevron deference doctrine,” which specifies regulatory agencies’ statutory rulemaking authority. 
  • 303 Creative LLC v. Elenis (2023) – Eastman endorsed a Christian website developer’s totally fabricated claim that creating a marriage announcement website for a gay couple violated her First Amendment rights. In his brief, Eastman said of LGBT anti-discrimination protections: “there is no governmental interest important enough to compel individuals ‘to mouth support for views they find objectionable.’”   
  • Moore v. Harper (2023) – Eastman, an early proponent of the fringe independent state legislature theory, filed a CCJ amicus brief urging the Supreme Court to give (GOP-controlled) state legislatures sweeping control over federal election laws. Had the Court sided with Eastman’s position, his coup memo recommendations would likely have been carried out swiftly by GOP lawmakers in key swing states ahead of the 2024 election.

While Eastman is no doubt a true believer in many of these right-wing causes, he’s probably getting an additional push to gut the regulatory state from Claremont donors who would personally benefit from the CFPB’s demise. Former Trump Education Secretary Betsy Devos (who has huge investments in predatory student loan servicers and for-profit colleges) and her husband Dick (former CEO of pyramid scheme titan Amway) have given over $640,000 to Claremont. Deregulation evangelist Charles Koch, whose philanthropic empire has spent millions trying to kill the CFPB and roll back Dodd-Frank, is also a Claremont donor. Dark money groups Donors Trust and Donors Capital Fund – which have received large sums from the Koch family – have given nearly $200,000 to Claremont. 

Now, Eastman has become one of the chief public faces behind the attack on the CFPB – whether the parts of the business lobby which didn’t fund him like it or not. Eastman has, to many, been far too direct in his opposition to populist majorities doing things like supporting Joe Biden over Donald Trump.or electing a Congress that wants to rein in financial predation. Savvier corporate lawyers know that embracing Eastman is anathema to their cause, even as Eastman is merely embodying their world view with less restraint. (for more context, read this Substack from former AFL-CIO political director Michael Podhorzer)

The news media should reward Eastman for his shamelessness by highlighting his amicus brief in all future coverage of the CFSA case. Trump’s co-conspirator has offered his complete and total support for this latest right-wing power-grab, and the public deserves to know it. From now on, the CFSA case should be known as the Coup Plotter-Endorsed Lawsuit To Protect Payday Lenders.

It is only fitting that the elite, arrogant lawbreakers who brought forth this anti-democratic attack on the CFPB in the first place have found a kindred spirit in John Eastman.

PHOTO: Wikimedia Commons, 3/21/13

2020 Election/TransitionConsumer ProtectionFinancial RegulationIndependent AgenciesJudiciarySupreme Court

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