Introduction

Banking and finance have played an important role in the development of U.S. administrative agencies almost since the Founding—from the establishment of the Treasury Department¹See Julian Davis Mortenson & Nicholas Bagley, Delegation at the Founding, 121 Colum. L. Rev. 277, 345–46 (2021); see also Gillian E. Metzger, Through the Looking Glass to a Shared Reflection: The Evolving Relationship between Administrative Law and Financial Regulation, 78 Law & Contemp. Probs. 129, 129 (2015). to the creation of the Bank of the United States.²See McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316, 323 (1819). The creation of the national banking system during the Civil War and the enactment of the New Deal banking reforms following the Great Depression reinforced this connection.³See Saule T. Omarova, New Tech v. New Deal: FinTech as a Systemic Phenomenon, 36 Yale on J. Regul. 735, 746–50 (2019) (describing the “New Deal settlement” in U.S. financial regulation). But the New Deal, including the banking reforms enacted to protect investors and consumers from financial excesses, encountered a swift and forceful backlash from conservative economic and business interests.⁴See generally Kim Phillips-Fein, Invisible Hands: The Making of the Conservative Movement from the New Deal to Reagan (2009) (describing the rise of conservative politics in postwar America as a reaction to the New Deal). The Supreme Court struck down the Roosevelt administration’s New Deal rules governing the petroleum and poultry industries.⁵See Keith E. Whittington & Jason Iuliano, The Myth of the Nondelegation Doctrine, 165 U. Pa. L. Rev. 379, 384–85 (2017); A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495, 551 (1935) (striking down industry codes under the National Industrial Recovery Act, this opinion was joined by progressive Justice Louis Brandeis); Daniel A. Crane, How Much Brandeis Do the Neo-Brandeisians Want?, 64 Antitrust Bull. 531, 533 (2019). President Franklin D. Roosevelt referred to the Court’s actions as a “quiet crisis.”⁶President Franklin D. Roosevelt, Fireside Chat (March 9, 1937), in American Presidency Project, https://perma.cc/5FSQ-SCUE. Unlike the banking panic that had caused the Great Depression, there were “no lines of depositors outside closed banks,” but Roosevelt argued that the Court’s assertion of power would nonetheless be “far-reaching in its possibilities of injury to America.”⁷Id. The Court ultimately exercised judicial restraint, leaving much of the New Deal financial regulatory settlement intact.⁸See Douglas H. Ginsburg & Steven Menashi, Nondelegation and the Unitary Executive, 12 J. Const. L. 251, 257–58 (2010).

Today, the United States faces the prospect of another “quiet crisis.” Like in the New Deal era, the U.S. banking system has experienced fifteen years of instability from the 2008 financial crisis to COVID-19’s financial disruptions to the panic that swept across the banking system after the failure of Silicon Valley Bank (“SVB”).⁹See Graham S. Steele, Banking as a Social Contract, 22 U.C. Davis Bus. L.J. 65, 82–86, 102–20 (2021); see also Andrea Shalal, Howard Schneider & Pete Schroeder, After SVB Failure, US Acts to Shore Up Banking System Confidence, Reuters (Mar. 13, 2023, 2:35 PM), https://perma.cc/YVG3-HNCT. At the same time, courts have, through a series of administrative law decisions, “cast doubts on the ability of the elected Congress to protect us against catastrophe by meeting squarely our modern social and economic conditions.”¹⁰Roosevelt, supra note6; see, e.g., Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183, 2211 (2020) (finding the Consumer Financial Protection Bureau (“CFPB”) director’s for-cause removal provision unconstitutional); Collins v. Yellen, 141 S. Ct. 1761, 1787 (2020) (finding the Federal Housing Finance Agency director’s for-cause removal provision unconstitutional); Consumer Fin. Prot. Bureau v. All Am. Check Cashing, Inc., 33 F.4th 218, 242 (5th Cir. 2022) (holding the CFPB’s non-appropriated funding structure unconstitutional); Jarkesy v. SEC, 34 F.4th 446, 465 (5th Cir. 2022) (invalidating the Securities and Exchange Commission’s (“SEC”) authority to address securities fraud); see also Mark A. Lemley, The Imperial Supreme Court, 136 Harv. L. Rev. F. 97, 101 (2022) (“The Court has not (yet) gone so far as to dismantle the administrative state. But it is clearly embarked on a project to rein in the power of administrative agencies, at least when they do things the current Court majority doesn’t like.”).

This legal effort is responsible for the “rapid and curious rise” of the major questions doctrine,¹¹Adam Liptak, The Curious Rise of a Supreme Court Doctrine that Threatens Biden’s Agenda, N.Y. Times (Mar. 6, 2023), https://perma.cc/5TDW-XRDP. explicitly recognized for the first time by the Supreme Court in West Virginia v. EPA.¹²142 S. Ct. 2587 (2022); see Daniel T. Deacon & Leah M. Litman, The New Major Questions Doctrine, 109 Va. L. Rev. 1009, 1013 (2023). The Major questions doctrine restricts administrative agencies from addressing issues of significant policy importance unless Congress has explicitly enumerated the agency’s authority to address a given issue.¹³See infra Section II.A. Having overturned regulations including public health measures responding to the COVID-19 pandemic, environmental rules, and a student loan forgiveness program,¹⁴See id. there is growing interest in applying the major questions doctrine to financial regulations.¹⁵See Stefania Palma & Kiran Stacey, Supreme Court Ruling Casts Doubt on Powers of US Regulators, Fin. Times (July 4, 2022), https://perma.cc/9666-ULPZ. By doing so, courts would limit banking agencies’ authority to respond to the immediate issues raised by the SVB panic and take preemptive steps to prevent future banking crises.

The major questions doctrine not only risks a metaphorical crisis of the kind that President Roosevelt warned about, but also a literal financial crisis. While the doctrine presents itself as embodying the simple idea that agencies should “stick to [their] knitting,”¹⁶Jerome H. Powell, Chair, Bd. of Governors of the Fed. Rsrv. Sys., Central Bank Independence and the Mandate—Evolving Views, Remarks at the Symposium on Central Bank Independence 1 (Jan. 10, 2023). this framing is deceptive. The modern world—especially the financial market—is complex. That is why U.S. banking laws provide broad grants of authority for expert agencies to respond to a rapidly changing marketplace.¹⁷See infra Section I.B.1. Over 150 years, the meaning of “banking” evolved from redeeming bank notes on the prairies of the United States to dealing complex derivative instruments in London without any material amendments to the “bank powers clause” of the National Bank Act (“NBA”).¹⁸See infra Section I.B.1.b. The major questions doctrine threatens to interfere with this and other foundational principles of banking law, upending market expectations and increasing financial instability.¹⁹See infra Part III. This Article argues that these outcomes would do neither the public nor market participants any good.

This Article adds banking law to a growing body of major questions doctrine analysis.²⁰See, e.g., Jonas J. Monast, Major Questions About the Major Questions Doctrine, 68 Admin. L. Rev. 445, 447 (2016); Lisa Heinzerling, The Power Canons, 58 Wm. & Mary L. Rev. 1933, 1937 (2017); Blake Emerson, Administrative Answers to Major Questions: On the Democratic Legitimacy of Agency Statutory Interpretation, 102 Minn. L. Rev. 2019, 2025 (2018); Marla D. Tortorice, Nondelegation and the Major Questions Doctrine: Displacing Interpretive Power, 67 Buff. L. Rev. 1075, 1076 (2019); Alison Gocke, Chevron’s Next Chapter: A Fig Leaf for the Nondelegation Doctrine, 55 U.C. Davis L. Rev. 955, 959 (2021); Deacon & Litman, supra note 12, at 1012; Natasha Brunstein & Donald L. R. Goodson, Unheralded and Transformative: The Test for Major Questions After West Virginia, 47 Wm. & Mary Env’t L. & Pol’y Rev. 47, 49 (2022). This Article does not offer a comprehensive account of the U.S. banking and consumer financial protection laws or the nuance and complexity of administrative law. Instead, this Article uses certain longstanding and contemporary banking law authorities to illustrate the major questions doctrine’s unfitness as a tool for reviewing banking regulations. This is not meant to imply that the doctrine is appropriate in other regulatory contexts; indeed, many of its shortcomings apply to other regulatory regimes.²¹Others have critiqued the major questions doctrine’s application to agency authorities including environmental regulation, national security law, and technology policy. See Kevin O. Leske, Major Questions About the “Major Questions” Doctrine, 5 Mich. J. Env’t & Admin. L. 479, 497–99 (2016); Natasha Brunstein & Richard L. Revesz, Mangling the Major Questions Doctrine, 74 Admin L. Rev. 217, 250 (2022); Timothy Meyer & Ganesh Sitaraman, The National Security Consequences of the Major Questions Doctrine, 122 Mich. L. Rev. 55, 78 (2023); Walter G. Johnson & Lucille M. Tournas, The Major Questions Doctrine and the Threat to Regulating Emerging Technologies, 39 Santa Clara High Tech. L.J. 137, 165–80 (2023). Likewise, not all deference to banking agency interpretations, or specific agency interpretations, is necessarily desirable—agencies have often been overly permissive in their interpretations of the scope of banking activities and federal preemption. This Article nonetheless argues that, in contrast to the framework offered by the major questions doctrine, the present regulatory settlement is the product of intentional congressional decision-making and reasoned judicial restraint. Relative to the status quo, the doctrine is unworkable as a matter of administrative law and imprudent as a matter of banking law.

This Article proceeds in the following parts. Part I lays out the special nature of banking, the foundations of banking authorities, and judicial deference to banking agencies’ actions. Part II elaborates on the major questions doctrine and its emerging line of cases and applies the doctrine to banking regulation. Part III considers the consequences of the major questions doctrine, both as a general administrative law doctrine and as applied to banking regulation, before concluding that courts should decline to extend it to bank regulation.

While the major questions doctrine has to date only applied to bank regulation in limited circumstances,²²See Monast, supra note 20, at 470–71, 470 n.164 (noting that federal courts have applied the major questions doctrine to interpret the scope of National Bank Act (“NBA”) preemption and the definition of “financial institution” under the Gramm-Leach-Bliley Act). that could soon change. Claims under the doctrine could gain traction as a path to challenge bedrock principles of U.S. banking law, potentially obstructing banking agencies’ responses to the causes of SVB’s failure.²³See generally Alan Rappeport, Jim Tankersley & Lauren Hirsh, Powell and Yellen Suggest Need to Review Regulations After Bank Failures, N.Y. Times (Mar. 22, 2023), https://perma.cc/T8XT-GGQU. It could also jeopardize efforts to implement post-financial crisis capital regulations,²⁴See Regulatory Capital Rule: Large Banking Organizations and Banking Organizations With Significant Trading Activity, 88 Fed. Reg. 64028 (Sept. 18, 2023). address risks posed by cryptocurrencies,²⁵See Press Release, Bd. of Governors of the Fed. Rsrv. Sys., Fed. Deposit Ins. Corp. & Off. of the Comptroller of the Currency, Agencies Issue Joint Statement on Crypto-asset Risks to Banking Organizations (Jan. 3, 2023), https://perma.cc/3VJ6-Y6UD. and confront the financial impacts of climate change.²⁶See Principles for Climate-Related Financial Risk Management for Large Financial Institutions, 87 Fed. Reg. 75267 (Dec. 8, 2022). Merely incorporating the theory into popular discourse, accompanied by the threat of litigation, could have a chilling effect.²⁷See Mortenson & Bagley, supra note 1, at 288. Scholarship suggests that agency policymakers are generally cognizant of agency deference in the judicial review process. See Christopher J. Walker, Chevron Inside the Regulatory State: An Empirical Assessment, 83 Fordham L. Rev. 703, 722–24 (2014); Jonathan H. Choi, Legal Analysis, Policy Analysis, and the Price of Deference: An Empirical Study of Mayo and Chevron, 38 Yale J. on Regul. 818, 851–53 (2021). Banking agencies may be hesitant to test the bounds of their authority due to fear of political backlash.²⁸See e.g., J. Howard Beales, The FTC’s Use of Unfairness Authority: Its Rise, Fall, and Resurrection, 22 J. Pub. Pol’y & Mktg. 192 (2003) (documenting Congress’s response to the FTC’s use of its unfairness authority)..

The stakes are high. As the 2008 financial crisis and the 2023 banking panic demonstrate, regulatory inaction in the face of emerging financial risks has dire consequences.²⁹See infra Section III.B.1; see also Jeanna Smialek, A Big Question for the Fed: What Went Wrong With Bank Oversight?, N.Y. Times (Mar. 21, 2023), https://perma.cc/BN4M-W99J. Even the New Deal Court, when given the chance, did not invalidate the financial regulatory agencies and powers enacted in response to the Great Depression.³⁰While the Court in Jones v. SEC, 298 U.S. 1, 28 (1935), compared the SEC’s civil investigative tactics to the “intolerable abuses of the Star Chamber,” it declined to consider the argument that the Securities and Exchange Act of 1934 was unconstitutional.. It would therefore be unwise to risk a judicially created financial crisis.

I.      U.S. Banking: Private Corporations, Public Purpose, and Broad Authorities

Beginning with the formation of the First Bank of the United States, continuing in the Civil War era, and culminating in the New Deal reforms, the United States constructed a national banking system using a framework of federal licensure, strict regulation and supervision, government guarantees, and robust liquidity support. The unique structure of banking regulation is based upon the special attributes of the banking business. Recognizing the highly specialized nature of banking, courts have been loath to second-guess the judgments of expert banking agencies. These “legal and regulatory principles . . . continue to shape the operation of the U.S. financial system today.”³¹Omarova, supra note 3, at 746.

A.      The Specialness of Banking

Banking is a special kind of economic activity.³²See Fed. Rsrv. Bank Minneapolis, Are Banks Special?, in Annual Report of 1982, at 5 (1983); Thomas M. Hoenig, Financial Modernization: Implications for the Safety Net, 49 Mercer L. Rev. 787, 788 (1998); see also Robert C. Hockett & Saule T. Omarova, The Finance Franchise, 102 Cornell L. Rev. 1143, 1158 (2017). Banks use deposits, credit, payment services, and related activities to provide “liquidity” that ensures households and businesses are able to meet their financial obligations.³³See Anil K. Kashyap, Raghuram Rajan & Jeremy C. Stein, Banks as Liquidity Providers: An Explanation for the Coexistence of Lending and Deposit-Taking, 57 J. Fin. 33, 34–35 (2002); see also Nada Mora, Can Banks Provide Liquidity in a Financial Crisis?, 95 Econ. Rev. 31, 38 (2010). Recognizing that banks are not like industrial companies, banking law provides unique public supports but also subjects banks to a variety of distinctive pricing regulations, entry and growth restrictions, solvency requirements, and operational supervision.³⁴See United States v. Phila. Nat’l Bank, 374 U.S. 321, 327–30 (1963); see also Noble State Bank v. Haskell, 219 U.S. 104, 111–13 (1911). Financial markets and instruments are human-made and their scope is defined largely by federal laws and regulations.³⁵See Hockett & Omarova, supra note 32, at 1155. See generally Katharina Pistor, The Code of Capital: How the Law Creates Wealth and Inequality (2019) (describing how the law is designed toward the interests of asset holders).

1.      Banks Were Created as Public Instrumentalities

The origins of the national banking system began with the creation of the First Bank of the United States, the design of which was inspired in substantial part by the Bank of England.³⁶See Charles J. Reid, America’s First Great Constitutional Controversy: Alexander Hamilton’s Bank of the United States, 14 U. St. Thomas L.J. 105, 118–20 (2018) (citation omitted). New York’s “free banking” law served as another influence on the federal banking laws. See Bray Hammond, Free Banks and Corporations: The New York Free Banking Act of 1838, 44 J. Pol. Econ. 184, 184 (1936). Alexander Hamilton, the first Secretary of the Treasury and the Bank of the United States’ chief architect, saw banks as “nurseries of national wealth” and believed the Bank’s “intimate connexion of interest [with] the Government” positioned it to serve as an instrument of broader government policy.³⁷Reid, supra note 36, at 122­–23 (quoting U.S. Dep’t of the Treasury, Report on a National Bank, 2 Annals of Cong. 2034 (1790)).

Today, national banks are private corporations that can only operate through charters issued by banking agencies as delegated by Congress.³⁸See McCormick v. Market Bank, 165 U.S. 538, 551 (1897). These private banks were traditionally viewed as “instrumentalities of the Federal government, created for a public purpose.”³⁹Davis v. Elmira Savings Bank, 161 U.S. 275, 283 (1896); see also Farmers’ and Mechs.’ Nat’l Bank v. Dearing, 91 U.S. 29, 33 (1875) (noting that national banks are “instruments designed to be used to aid the government in the administration of an important branch of the public service”); Lev Menand, Why Supervise Banks? The Foundations of the American Monetary Settlement, 74 Vand. L. Rev. 951, 996–98 (2021). But see First Agric. Nat’l Bank of Berkshire Cnty. v. State Tax Comm’n, 392 U.S. 339, 353–56 (1968) (Marshall, J. dissenting) (arguing that banks are distinct from tax-immune federal instrumentalities because they are a privately owned corporations existing for the private profit of shareholders, perform no significant federal governmental function that is not performed equally by state-chartered banks, government officials do not run their day-to-day operation, and the Government has no “ownership interest” in a national bank). In addition to their historical role as fiscal agents entrusted with safekeeping public deposits,⁴⁰See McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316, 396–97 (1819). This view is still codified in various sections of the banking laws. National banks “designated for that purpose by the Secretary of the Treasury, shall be depositaries of public money, under such regulations as may be prescribed by the Secretary; and they may also be employed as financial agents of the Government; and they shall perform all such reasonable duties, as depositaries of public money and financial agents of the Government, as may be required of them.” 12 U.S.C. § 90. National banks may also apply to the Fed for permission to establish foreign branches “for the furtherance of the foreign commerce of the United States, and to act if required to do so as fiscal agents of the United States.” 12 U.S.C. § 601 (1948. banks serve a monetary function by creating money through their direct relationship with the central bank.⁴¹See Phila. Nat’l Bank, 374 U.S. at 326 (“[B]anks do not merely deal in, but are actually a source of, money and credit . . . .”); see also James Tobin, Financial Innovation and Deregulation in Perspective, 3 Bank of Japan Monetary & Econ. Studies 19, 19 (1985) (“[B]anks . . . are not just like other industries . . . . [t]hey are the institutions through which central bank operations of monetary control are transmitted to the economy at large.”).

The history of banking is “the long search for institutions that can ensure a ‘sound currency.’”⁴²Gary Gorton, Address at the Federal Reserve Bank of Atlanta’s 2009 Financial Markets Conference: Slapped in the Face by the Invisible Hand: Banking and the Panic of 2007, 41 (May 9, 2009). During the era of “free banking,” currency was issued by states and bank notes often traded at a discount to their face value due to uncertainty about credit quality and convertibility into government notes.⁴³Michael S. Barr, Howell E. Jackson & Margaret E. Tahyar, Financial Regulation: Law and Policy 36 (1st ed. 2016) (noting that the pre-NBA period was an “era of ‘wildcat’ banks located in remote areas to avoid redemption of banknotes for specie; ‘shinplasters,’ banknotes of dubious quality; and ‘carpetbaggers’ who came from the Northeast to the West and South to redeem banknotes”); see John Wilson Million, The Debate on the National Bank Act of 1863, 2 J. Pol. Econ. 251, 264 (1894) (“Failures were frequent; only a short time prior to this the states in the Mississippi Valley had experienced a very severe trial with ‘wild-cat’ and ‘bogus’ banks.”). The era was beset by financial instability, including two significant panics.⁴⁴See Barr, Jackson & Tahyar, supra note 43, at 36.

In 1863, the NBA established the Office of the Comptroller of the Currency (“OCC”), creating a uniform national currency. ⁴⁵See id. at 37–38. Only national banks chartered and supervised by the OCC could issue the national currency.⁴⁶See id. at 38. The creation of the OCC both ensured the stability of banking but was also a “major victory for the federal government’s control of the money supply and authority over the monetary system.”⁴⁷Id. Then-Treasury Secretary Salmon Chase described the national banking system as being built on a “foundation of national credit combined with private capital.”⁴⁸Million, supra note 43, at 264. The model of the Bank of the United States also envisioned a combination of both public and private capital. See Reid, supra note 36, at 124.

Banking is thus largely understood as a public function that Congress has delegated to private banks, subject to oversight by federal banking agencies.⁴⁹See Van Reed v. People’s Nat’l Bank, 198 U.S. 554, 557 (1905) (“National banks are quasi-public institutions . . . .”); see also Hockett & Omarova, supra note 32, at 1158 (“[Banks are] licensed private purveyor[s] of the public full faith and credit . . . .”); Menand, supra note 39, at 974–80 (discussing the “outsourcing model” of banking); Morgan Ricks, A Regulatory Design for Monetary Stability, 65 Vand. L. Rev. 1289, 1343–54 (2012) (demonstrating that banks operate under a public-private partnership model).

2.      Banking is the Lifeblood of the Economy

Banks play a “key role in the national economy” through their power to create money and credit, the proper exercise of which is “indispensable to a healthy national economy.”⁵⁰United States v. Phila. Nat’l Bank, 374 U.S. 321, 326–27 (1962). Money and credit are the “lifeblood of communities,”⁵¹H.R. Rep. No. 95-1383, at 9 (1978); see also H.R Rep. No. 84-609, at 2, (1955). and their stability preserves the proper functioning and growth of the economy.⁵²See S. Rep. No. 89-1482, at 5 (1966) (“The vital importance of sound and effective systems of banks . . . to the continued economic growth of the country is clear.”); see also S. Rep. No. 100-19, at 8 (1987) (“Our free-enterprise economy relies on banks to allocate credit to its most productive use. When bankers make good credit decisions, the entire economy benefits; when bankers make poor credit decisions, economic growth is impaired.”); S. Rep. No. 106-44, at 4, (1999) (“The pace of economic growth in this country depends in large part on the ability of the financial services industry to function efficiently.”). Conversely, breakdowns of banking and payment systems create negative externalities that harm the broader economy.⁵³See Hoenig, supra note 32, at 788; see also Steele, supra note 9, at 73–75.

But banking is unstable. Banks are more fragile than other commercial businesses, and therefore subject to runs and panics that can metastasize into financial crises.⁵⁴See Steele, supra note 9, at 82–86. As a result, banks have a “safety net” of support through public deposit insurance and central bank liquidity.⁵⁵See Hoenig, supra note 32, at 788.

Following a banking panic in 1907, triggered by trust companies that made loans and took deposits but were not regulated like banks, the Federal Reserve System was established through the Federal Reserve Act of 1913 (“FRA”).⁵⁶See Barr et al., supra note 43, at 42. The Federal Reserve (“Fed”) regulates state-chartered member banks and bank holding companies (“BHCs”).⁵⁷Edward V. Murphy, Cong. Rsch. Serv., R43087, Who Regulates Whom and How? An Overview of U.S. Financial Regulatory Policy for Banking and Securities Markets 13 (2013). A BHC is a company that owns one or more banks. See 12 U.S.C. § 1841(a)(1). The FRA was intended to address the need for both an elastic currency supply as well as a “lender of last resort” to which banks can pledge assets in exchange for liquidity.⁵⁸Barr et al., supra note 43, at 41. The Fed implements the nation’s monetary policy, executes lender-of-last-resort functions, and administers clearing and payment systems.⁵⁹See Murphy, supra note 57, at 13. The Fed has an additional implied purpose of ensuring the stability of the financial system⁶⁰See Renee Haltom & John A. Weinberg, Does the Fed Have a Financial Stability Mandate?, Fed. Rsrv. Bank Richmond Econ. Brief, June 2017, at 1, https://perma.cc/G49Z-HRYP. to support the productive functioning of industry and the economy.⁶¹See Robert L. Owen, The Federal Reserve Act: Its Origin and Principles 43–44, 99 (1919).

The Federal Deposit Insurance Corporation (“FDIC”) was conceived in the aftermath of the banking panic of 1929–1933 and the ensuing Great Depression.⁶²See Mark D. Flood, The Great Deposit Insurance Debate, 74 Fed. Rsrv. Bank St. Louis Rev. 51, 53 (1992); Banking Act of 1935, Pub. L. No. 74-305, 49 Stat. 684 (1935). Today, the FDIC supervises state-chartered banks that are not members of the Federal Reserve System, operates the Deposit Insurance Fund, and resolves troubled banks.⁶³12 U.S.C. § 1821.

The federal safety net—provided by Fed lending and FDIC insurance—limits the negative externalities from financial instability but also gives rise to moral hazard.⁶⁴See Hoenig, supra note 32, at 788. Moral hazard is “the expectation that, when faced with the prospect of either variant of a major blow to the financial system, government authorities will provide funds or guarantees to the firm to keep it functioning,” which means creditors “may not price into their credit or investment decisions the full risk associated with those decisions.” Daniel K. Tarullo, Member, Bd. of Governors of the Fed. Rsrv. Sys., Regulating Systemic Risk, Remarks at the 2011 Credit Markets Symposium 2 (Mar. 31, 2011). The safety net has expanded over time, having been used in recent decades to support a range of financial claims and protect deposits that are not subject to FDIC insurance during times of financial stress.⁶⁵See Steele, supra note 9, at 83–86; see also Press Release, Fed. Deposit Ins. Corp., Joint Statement by the Department of the Treasury, Federal Reserve, and FDIC (Mar. 12, 2023), https://perma.cc/G39K-XFBK.

3.      Banking Is Highly Regulated

Banks have a unique relationship with their regulators.⁶⁶See United States v. Phila. Nat’l Bank, 374 U.S. 321, 326 (1963). The velocity of money, financial markets, and financial instruments requires financial regulators to be nimbler and more responsive than regulators overseeing less ephemeral industries.⁶⁷See Daniel K. Tarullo, Bank Supervision and Administrative Law, 2022 Colum. Bus. L. Rev. 279, 293 (2022); Robert B. Ahdieh, Notes from the Border: Writing Across the Administrative Law/Financial Regulation Divide, 66 J. Legal Educ. 64, 71 (2016); see also David Aikman, Andrew G. Haldane, Marc Hinterschweiger & Sujit Kapadia, Rethinking Financial Stability 3 (Bank of Eng., Working Paper No. 712, 2018). Congress has recognized the special nature of banking, and the accompanying need for robust regulation to prevent its misuse.⁶⁸See, e.g., S. Rep. No. 84-1095, at 1 (1955) (“[B]ecause of the importance of the banking system to the national economy, adequate safeguards should be provided against undue concentration of control of banking activities.”).

Banks are subject to restrictions on their activities, affiliations, and conduct.⁶⁹See Phila. Nat’l Bank, 374 U.S. at 327–29. The NBA limits national banks to the “business of banking”: permissible activities identified in the “bank powers clause.”⁷⁰12 U.S.C. § 24. Provisions of the Banking Act of 1933, known as the “Glass-Steagall” Act, extended federal oversight to all commercial banks and separated commercial and investment banking.⁷¹Banking Act of 1933, 12 U.S.C. § 227. The Banking Act also added section 23A to the FRA, creating a separation between banks and their nonbank affiliates operating in a single corporate structure.⁷²See Veryl Victoria Miles, Banking Affiliate Regulation Under Section 23A of the Federal Reserve Act, 105 Banking L.J. 476, 480–81 (1988). The law gave the Fed authority to limit the interest rate banks could pay to attract time and savings deposits, and it “prohibited paying interest on demand deposits.”⁷³See Bernard Shull, The Origins of Antitrust in Banking: An Historical Perspective, 27 J. Reprints Antitrust L. & Econ. 75, 84 (1997). The Fed implemented these restrictions through its Regulation Q. See Prohibition Against Payment of Interest on Demand Deposits, 76 Fed. Reg. 42015 (July 18, 2011) (codified at 12 C.F.R. pts. 204, 217, 230). The Banking Act also established how state usury laws limiting the interest rate national and state banks charge for credit apply to both national and state-chartered banks.⁷⁴See Banking Act of 1933, Pub. L. No. 73-66, § 21, 48 Stat. 162, 189 (1933). Many states had usury caps on consumer loans. Deposit interest rate restrictions were intended to ensure that banks were guaranteed certain profit margins on their loans without needing to compete by paying higher deposit interest rates or making riskier loans. See Lawrence J. White, Antitrust and Financial Regulation in the Wake of Philadelphia National Bank: Complements, Not Substitutes, 80 Antitrust L.J. 413, 421 (2015). Underscoring the sanctity of traditional banking, the Banking Act made it a criminal offense for any institution other than a bank to take deposits.⁷⁵See Banking Act of 1933, Pub. L. No. 73-66, § 21, 48 Stat. 162, 189 (1933).

Two decades later, the Bank Holding Company Act of 1956 (“BHCA”) further tightened the restrictions on the use of banking powers.⁷⁶Bank Holding Company Act of 1956, Pub. L. No. 84-511, § 4, 70 Stat. 133, 135 (1956). The BHCA requires any BHC to limit its activities and investments to banking, managing or owning banks, or activities determined to be closely related to banking.⁷⁷Id. It also kept depository and commercial lending institutions from conducting commercial activities consistent with the longstanding separation of banking and commerce.⁷⁸See Saule T. Omarova. The Merchants of Wall Street: Banking, Commerce, and Commodities, 98 Minn. L. Rev. 265, 274–75 (2013).

Unlike other administrative fields, banking agencies engage in examination and supervision of banks’ operations.⁷⁹See Noble State Bank v. Haskell, 219 U.S. 104, 112 (1911). The supervisory process is “often more informal, ad hoc, and hidden from public view” than formal regulation,⁸⁰Metzger, supra note 1, at 130; see Tarullo, supra note 67, at 281 (“Supervision is an iterative process of communication between banks and supervisors.”). including through its use of supervisory and interpretive letters, agency guidance, and other communications.⁸¹See Tarullo, supra note 67, at 349–63. Supervision allows regulators to communicate that certain practices are disfavored in a more timely and individualized way than broad-based regulations. Supervision is exempt—sometimes expressly, at other times by custom with Congress’s implicit blessing—from regulatory procedural requirements.⁸²See Menand, supra note 39, at 1007–13.

Supervision is the “most effective weapon of federal regulation of banking,” allowing banking agencies to “maintain virtually a day-to-day surveillance of the American banking system.”⁸³United States v. Phila. Nat’l Bank, 374 U.S. 321, 329 (1963). A bank that belongs to the Federal Reserve System cannot change the “general character of its business or in the scope of the corporate powers it exercises” without its supervisor’s approval.⁸⁴12 C.F.R. § 208.3(d)(2); see also Bd. of Governors of the Fed. Rsrv. Sys., Guidance Regarding Significant Changes in the General Character of a State Member Bank’s Business and Compliance with Regulation H, SR 02-9 (Mar. 20, 2002). Information gleaned through supervision, known as “supervisory experience,” can also inform agency regulations.⁸⁵See, e.g., Transactions Between Member Banks and Their Affiliates, 67 Fed. Reg. 76560, 76584 (Dec. 12, 2002) (codified at 12 C.F.R. pt 223) (noting the Fed’s Regulation W’s treatment of bank affiliate transfers is “consistent with the Board’s supervisory experience”); Definitions of ‘‘Predominantly Engaged In Financial Activities’’ and ‘‘Significant’’ Nonbank Financial Company and Bank Holding Company, 78 Fed. Reg. 20756, 20774 (Apr. 5, 2013) (codified at 12 C.F.R. pt. 242) (noting that in establishing a $50 billion threshold for large Bank Holding Companies (“BHCs”), the Fed “considered its supervisory experience with bank holding companies”); Margin and Capital Requirements for Covered Swap Entities, 85 Fed. Reg. 39754, 39760 (July 1, 2020) (codified at 12 C.F.R. pts. 45, 237, 249, 624, 1221) (noting that “supervisory experience . . . has raised two interrelated concerns at the institution-specific level and the systemic level about the utility of initial margin to address exposures arising from inter-affiliate swap transactions”). Enforcement actions can reinforce supervision, helping to ensure that “recommendations by the agencies concerning banking practices tend to be followed by bankers without the necessity of formal compliance proceedings.”⁸⁶Phila. Nat’l Bank, 374 U.S. at 330.

U.S. banking law “vests substantive control over the allocation of risks and returns in financial markets in private actors operating on a micro-level and assigns the responsibility for ensuring financial stability to public actors operating on a macro-level.”⁸⁷Omarova, supra note 3, at 749. Banking agencies have broad powers to enforce statutory limits on the banking franchise and constrain financial institutions’ behavior to ensure the solvency of individual institutions and safeguard the stability of the financial system.⁸⁸See Noble State Bank v. Haskell, 219 U.S. 104, 112 (1911). Bank regulation prevents abuse of banks’ special powers and the potential resulting public harms.⁸⁹See Steele, supra note 9, at 70–75. Banks’ close regulation and government backing has allowed bank products to enjoy exemptions from legal protections that otherwise apply to riskier products.⁹⁰See Marine Bank v. Weaver, 455 U.S. 551, 559 (1982) (“It is unnecessary to subject issuers of bank certificates of deposit to liability under the antifraud provisions of the federal securities laws since the holders of bank certificates of deposit are abundantly protected under the federal banking laws.”); see also Legal Certainty for Bank Products Act of 2000, Pub L. No. 106-554, tit. IV, §§ 401-408, 114 Stat. 2763A–457 (2000) (codified at 7 U.S.C. § 27 et seq.) (exempting certain “identified banking products” from the jurisdiction of the Commodity Futures Trading Commission). Finally, it also generally reinforces the public’s confidence in the banking system.⁹¹See McCormick v. Market Bank, 165 U.S. 538, 552 (1897) (noting an “important object of Congress” in establishing the NBA’s chartering provisions was to “create and maintain public confidence in the new system of national banks”).

4.      Bank Runs Have Well-Understood Dynamics

The experiences of recurring banking panics have informed the evolution of bank regulation.⁹²See Daniel K. Tarullo, Member, Bd. of Governors Fed. Rsrv. Sys., Remarks at the Distinguished Jurist Lecture at the University of Pennsylvania Law School: Financial Stability Regulation 1 (Oct. 10, 2012). Despite the introductions of new technologies, products, and services, banking panics in 1929, 2008, and 2023 share many attributes.⁹³See id.; see also Fin. Crisis Inquiry Comm’n, Financial Crisis Inquiry Report 367 (2011) (noting that in 2008, Wachovia Bank experienced a “‘silent run’ by uninsured depositors and unsecured creditors sitting in front of their computers, rather than by depositors standing in lines outside bank doors”); Emily Flitter & Rob Copeland, Silicon Valley Bank Fails After Run on Deposits, N.Y. Times (Mar. 10, 2023), https://perma.cc/8VPU-H2HJ. Bank runs and systemic shocks occur through leverage and liquidity mismatches, creditor and depositor withdrawals, and defaults and asset fire sales.⁹⁴See generally Douglas W. Diamond & Philip H. Dybvig, Bank Runs, Deposit Insurance, and Liquidity, 91 J. Pol. Econ. 401 (1983); Daniel K. Tarullo, Member, Bd. of Governors of the Fed. Rsrv. Sys., Remarks at the Brookings Institution: Thinking Critically About Nonbank Financial Intermediation 3 (Nov. 17, 2015). Banking reforms have focused on increasing institutional resilience and providing for more robust government oversight.⁹⁵See Morgan Ricks, Regulating Money Creation After the Crisis, 1 Harv. Bus. L. Rev. 75, 115 (2011). Compare S. Rep. No. 73-77, at 11 (1933) (noting the responses to the banking panic included strengthening bank capital and closer and stronger supervision) with S. Rep. No. 111-176, at 3 (2010) (noting the need for “more stringent capital and liquidity standards for large and complex financial firms”). While Congress has adjusted aspects of the foundational banking statutes over time to address emerging issues, these reforms generally built upon the longstanding regulatory architecture.

In the lead-up to the 2008 financial crisis, banking laws were administratively and legislatively eroded in order to respond to the “continued decline of the franchise value of traditional depository institutions.”⁹⁶Daniel K. Tarullo, Financial Regulation: Still Unsettled a Decade After the Crisis, 33 J. Econ. Persps. 61, 62–63 (2019); see also Am. Bankers Ass’n v. SEC, 804 F.2d 739, 740–42 (1986) (describing the OCC’s interpretations of the Glass-Steagall Act to allow national banks to engage in a variety of securities activities); Arthur E. Wilmarth, Jr., The Road to Repeal of the Glass-Steagall Act, 17 Wake Forest J. Bus. & Intell. Prop. L. 441, 445–46 (2017). The Gramm-Leach-Bliley Act (“GLBA”) authorized BHCs to engage in a broad range of financial activities, such as securities underwriting and dealing, and engaging in the business of insurance, as well as some nonfinancial commercial activities.⁹⁷See Steele, supra note 9, at 75–76. The crisis that resulted involved a combustible mixture of large BHCs, lightly regulated nonbank financial companies, complex and unregulated financial instruments, and broad-based use of the federal safety net to support financial institutions and markets.⁹⁸See id. at 83–86.

The legislative response—the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”)—was hailed as the “most comprehensive set of reforms to our financial system since the Great Depression.”⁹⁹U.S. Dep’t of the Treasury, The Dodd-Frank Act: Reforming Wall Street and Protecting Main Street (2017) (on file with author). The Dodd-Frank Act invoked the New Deal as its inspiration, and, consistent with prior legislative reforms, conferred enhanced regulatory authority on the banking agencies.¹⁰⁰See Omarova, supra note 3, at 754; see also Graham S. Steele, The Tailors of Wall Street, 93 U. Colo. L. Rev. 993, 1000 (2022); Tarullo, supra note 94, at 63, 70; Sen. Jeff Merkley & Sen. Carl Levin, The Dodd-Frank Act Restrictions on Proprietary Trading and Conflicts of Interest: New Tools to Address Evolving Threats, 48 Harv. J. Legis. 515, 538–39 (2011) (framing the so-called “Volcker Rule” provision as the modern successor to Glass-Steagall). The law sought to address the inadequate regulation and supervision of the largest banking organizations that became “Too Big to Fail” when financial panic ensued.¹⁰¹See U.S. Dep’t of the Treasury, Financial Regulatory Reform: A New Foundation 19 (2009). The Dodd-Frank Act also addressed the failures, near-failures, and bailouts of under-regulated nonbank financial companies engaging in bank-like activities, including the investment banks Bear Stearns and Lehman Brothers and the insurance company American International Group (“AIG”).¹⁰²See S. Rep. No. 111-176, at 40–42 (2010). The Financial Stability Oversight Council (“FSOC”) was created to “monitor emerging risks to U.S. financial stability [and] recommend heightened prudential standards for large, interconnected financial companies.”¹⁰³Id. at 2. The ten voting members of the Financial Stability Oversight Council (“FSOC”) include the Treasury Secretary, who serves as its chairperson and the heads of other federal financial regulatory agencies. Id. at 47.

To address the “prevalence of unsound lending practices, including predatory lending tactics, most often in the subprime market,”¹⁰⁴Id. at 43. the Dodd-Frank Act created the Consumer Financial Protection Bureau (“CFPB”), an agency with a mission to “protect consumers from the reckless financial practices that had caused the then-ongoing economic collapse.”¹⁰⁵Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183, 2244 (2020) (Kagan, J., dissenting). The CFPB’s purpose is to “implement and . . . enforce Federal consumer financial law consistently for the purpose of ensuring that all consumers have access to markets for consumer financial products and services and that markets for consumer financial products and services are fair, transparent, and competitive.”¹⁰⁶12 U.S.C. § 5511(a).

The Dodd-Frank Act’s approach to financial stability expanded upon traditional BHC regulation as the “core element in its new architecture of systemic risk regulation.”¹⁰⁷Saule T. Omarova & Margaret E. Tahyar, That Which We Call a Bank: Revisiting the History of Bank Holding Company Regulation in the United States, 31 Rev. of Banking & Fin. L. 113, 114 (2012). It also built on section 23A’s restrictions on bank transactions with affiliates by extending these restrictions to securities lending and derivatives transactions. See Steele, supra note 100, at 1022–23, 1023 n.37. Its consumer financial protections reorganized and supplemented existing authorities. While the Dodd-Frank Act changed how regulators approached their responsibilities, it reaffirmed longstanding statutory frameworks governing bank regulation.¹⁰⁸See Omarova & Tahyar, supra note 107, at 114 (noting in the Dodd-Frank Act, “Congress reaffirmed the central importance of the BHC construct in the regulatory paradigm.”).

When the banking system experienced instability in 2023, the dynamics and responses were similar, if not identical in some instances, to past episodes. The depositor runs were addressed by backstopping all depositors in failed institutions, and the banking system was provided liquidity support through an emergency Fed lending facility.¹⁰⁹See Press Release, supra note 65. Subsequent regulatory reform proposals focused on improving the substance of existing BHC regulations.¹¹⁰See Recent Bank Failures and the Federal Regulatory Response: Hearing Before the S. Comm. on Banking, Hous. & Urb. Affs., 118th Cong. 21 (2023) (statement of Martin J. Gruenberg, Chairman, Fed. Deposit Ins. Corp.) (“The prudential regulation of [banks with assets of $100 billion or more] merits additional attention, particularly with respect to capital, liquidity, and interest rate risk.”).

B.      Banking Agency Authorities and Judicial Deference

In crafting the banking laws, Congress has recognized the special nature of banking. Courts have appreciated that banking is often highly technical and deferred to banking agencies’ expertise. As a result, banking regulators have been delegated significant authority and enjoyed substantial deference.

1.      Congress Has Delegated Significant Authority to Banking Agencies

Congress has given bank regulators significant discretion to interpret broad statutory terms. Using their authority, banking agencies restrict companies from operating in financial markets absent a demonstration that they can operate in a safe and sound manner. Banks can only engage in activities that are consistent with traditional banking norms, do not threaten financial stability, and are not harmful to consumers, investors, and the public.

a.      Safety and Soundness

Because instability is a recurring theme of banking, ¹¹¹See Fahey v. Mallonee, 332 U.S. 245, 250 (1947). ensuring that banks possess sound finances and risk management is a central goal of banking law and policy.¹¹²See H. Rep. No. 95-1383, at 9 (1978) (“[T]he public’s need for laws to assure a safe, sound, and responsive financial system is obvious.”). The Federal Deposit Insurance Act (“FDIA”) authorizes banking agencies to establish standards, by regulation or guidance, for “unsafe and unsound” practices.¹¹³12 U.S.C. § 1831p–1(b); Standards for Safety and Soundness, 60 Fed. Reg. 35674 (July 10, 1995) (codified at 12 C.F.R. pts. 30, 208, 263, 303, 308, 364, 570). They also have discretion to determine when a bank’s failure to meet minimum capital standards constitutes an unsafe and unsound practice. See 12 U.S.C. § 3907(b)(1). It also requires any bank or BHC to cease and desist its engagement in unsafe or unsound practices.¹¹⁴See 12 U.S.C. §§ 1818(b)(1), (b)(3). The FDIC has the “formidable power” to revoke a bank’s deposit insurance for engaging in unsafe and unsound practices,¹¹⁵United States v. Phila. Nat’l Bank, 374 U.S. 321, 329–30 (1963); see also 12 U.S.C. § 1818(a). and it can remove and bar officers and directors from participating in the affairs of a bank.¹¹⁶See 12 U.S.C. § 1818(e)(1). The ability to conduct activities in a “safe and sound manner” is intimately linked to whether an activity is permissible for a bank to conduct.¹¹⁷Chief Counsel’s Interpretation Clarifying: (1) Authority of a Bank to Engage in Certain Cryptocurrency Activities; and (2) Authority of the OCC to Charter a National Trust Bank, Off. of the Comptroller of the Currency Interpretive Letter, No. 1179 at 2–3 (Nov. 18, 2021).

Safety and soundness authority encompasses a broad range of practices.¹¹⁸See Tarullo, supra note 67, at 281 (highlighting that safety and soundness authority “can include just about anything a bank is doing that may materially affect its financial soundness”). Safety and soundness provides a basis for agencies to issue capital and solvency rules.¹¹⁹See Regulatory Capital Rules: Regulatory Capital, Implementation of Basel III, Capital Adequacy, Transition Provisions, Prompt Corrective Action, Standardized Approach for Risk-Weighted Assets, Market Discipline and Disclosure Requirements, Advanced Approaches Risk-Based Capital Rule, and Market Risk Capital Rule, 78 Fed. Reg. 62018, 62026 (Oct. 11, 2013) (codified at 12 C.F.R. pts. 218, 217, 225). Agencies have scrutinized a variety of banks’ and BHCs’ activities on the basis of safety and soundness authority, including engaging in fraudulent foreign exchange trading,¹²⁰See Written Agreement Between HSBC Holdings PLC and Federal Reserve Board of Governors, Docket Nos. 17-010-B-FB, -B-HC, -CMP-FB, -CMP-HC at 2–4 (Sept. 29, 2017). lacking adequate money laundering and sanctions compliance,¹²¹See Written Agreement Between HSBC Holdings PLC and Federal Reserve Board of Governors, Docket Nos. 12-062-CMP-FB, -CMP-HC at 3 (Dec. 11, 2012). and offering payday-type consumer loans.¹²²See Guidance on Supervisory Concerns and Expectations Regarding Deposit Advance Products, 78 Fed. Reg. 70552 (Nov. 26, 2013). Safety and soundness is also used to enforce prohibitions against unfair, deceptive, and abusive practices against consumers under section 5 of the Federal Trade Commission Act (“FTC Act”).¹²³See id. at 70555.

Safety and soundness authority provides regulators with powerful remedies. In 2018, the Fed used its safety and soundness authority to take an enforcement action and impose a cap on Wells Fargo’s asset growth for opening unauthorized customer deposit accounts.¹²⁴See Written Agreement Between Wells Fargo & Co. and Federal Reserve Board of Governors, Docket No. 18-007-B-HC (Feb. 2, 2018). Safety and soundness authority can be used to “place limitations on the activities or functions of an insured depository institution or any institution-affiliated party.” 12 U.S.C. § 1818(b)(7). Section 5 of the BHCA authorizes the Fed to require a BHC to divest of any subsidiary that “constitutes a serious risk to the financial safety, soundness, or stability” of a bank. ¹²⁵12 U.S.C. § 1844(e). At times, Congress has cabined the scope of unsafe and unsound practices that are subject to specific remedies,¹²⁶12 U.S.C. § 1818(e)(1)(C) (defining the range of unsafe and unsound activities that can result in removal and debarment such as those that involve personal dishonesty or demonstrate willful or continuing disregard for the safety or soundness of a bank); see also S. Rep. No. 89-1482, at 8 (1966) (explaining that because “‘[u]nsafe’ and ‘unsound’ have no definite or fixed meaning” and “the power to suspend or remove an officer or director of a bank . . . is an extraordinary power,” Congress limited the violations subject to removal). but in most cases it has not.

While the determination that an activity or practice is considered unsafe or unsound has significant implications, it is largely left to the discretion of banking regulators. The term is broad on its face, but it is “widely used in the regulatory statutes and in case law, and one of the purposes of the banking acts is clearly to commit the progressive definition and eradication of such practices to the expertise of the appropriate regulatory agencies.”¹²⁷Groos Nat’l Bank v. Comptroller of the Currency, 573 F.2d 889, 897 (5th Cir. 1978).

b.      Permissible Activities

Banking agencies also determine the scope of permissible banking activities.¹²⁸See Vullo v. Off. of the Comptroller of the Currency, 378 F. Supp. 3d 271, 297–98 (S.D.N.Y. 2019) (“[T]he determination of the outer limit of the phrase ‘business of banking’ embodies a longstanding ambiguity, as evidenced by the century and a half of case law . . . struggling to define it.”), rev’d sub nom. Lacewell v. Off. of the Comptroller of the Currency, 999 F.3d 130 (2d Cir. 2021). For more comprehensive discussions of these developments, see Edward L. Symons Jr., The “Business of Banking” in Historical Perspective, 51 Geo. Wash. L. Rev. 676 (1983). See also Arthur E. Wilmarth Jr., Taming the Megabanks: Why We Need a New Glass-Steagall Act 158–69 (2020); Lev Menand & Morgan Ricks, Federal Corporate Law and the Business of Banking, 88 U. Chi. L. Rev. 1361, 1398–1406 (2021).. The NBA’s bank powers clause “has remained essentially unchanged since 1864, is well based historically, and well understood by bankers as a statement of the core of bank activities.”¹²⁹Symons, supra note 128, at 714. The “business of banking” encompasses any activity that is “convenient or useful in connection with the performance of one of the bank’s established activities pursuant to its express powers under the National Bank Act.”¹³⁰Arnold Tours, Inc. v. Camp, 472 F.2d 427, 431–32 (1st Cir. 1972). It includes activities beyond those expressly enumerated in the bank powers clause, meaning that the OCC has discretion to interpret its meaning within “reasonable bounds.”¹³¹NationsBank of N.C., N.A. v. Variable Annuity Life Ins. Co., 513 U.S. 251, 258 n.2 (1995). The OCC has used its interpretive authority under the NBA to permit banks to engage in a range of derivative products;¹³²See generally Saule T. Omarova, The Quiet Metamorphosis: How Derivatives Changed the “Business of Banking,” 63 U. Miami L. Rev. 1041 (2009) (detailing the OCC’s interpretation of the National Bank Act of 1863 in the context of bank derivatives). standby letters of credit;¹³³See Kenneth C. Kettering, Securitization and its Discontents: The Dynamics of Financial Product Development, 29 Cardozo L. Rev. 1553, 1666–71 (2008). mortgage-backed securities;¹³⁴See Sec. Indus. Ass’n v. Clarke, 885 F.2d 1034, 1045, 1052 (2d Cir. 1989). and stock index futures.¹³⁵See Inv. Co. Inst. v. Ludwig, 884 F. Supp. 4, 5 (D.D.C. 1995). More recently, the OCC created a novel financial technology, or “fintech,” bank charter that does not accept deposits.¹³⁶See Vullo v. Off. of the Comptroller of the Currency, 378 F. Supp. 3d 271, 279 (S.D.N.Y. 2019). The State of New York challenged the OCC’s interpretation, with the district court holding that the NBA is “unambiguous,” that the OCC’s interpretation that the NBA did not require a national bank to hold deposits contradicted the NBA’s plain language, history, and legislative context and therefore exceeded its authority, notwithstanding the OCC’s contention that its interpretation was entitled to Chevron deference. See id. at 298. The U.S. Court of Appeals for the Second Circuit reversed and dismissed the case on standing and ripeness grounds. See Lacewell v. Off. of the Comptroller of the Currency, 999 F.3d 130, 150 (2d Cir. 2021).

The Fed administers the BHCA and determines the range of permissible BHC activities and acquisitions¹³⁷See Bd. of Governors of the Fed. Rsrv. Sys. v. MCorp Fin., Inc., 502 U.S. 32, 37 (1991). over which it has broad interpretive authority.¹³⁸See Bd. of Governors of the Fed. Rsrv. Sys. v. Inv. Co. Inst., 450 U.S. 46, 56–57, 57 n.23 (1981). Among other restrictions, the BHCA limits BHCs to activities, that are either “financial in nature,” “so closely related to banking . . . as to be a proper incident thereto,” or “complementary to a financial activity.”¹³⁹See 12 U.S.C. § 1843(k)(1), (4)(F). The Fed has defined what it means to be “primarily engaged” in securities activities, thereby disqualifying officers of securities firms from serving as bank directors.¹⁴⁰Bd. of Governors of the Fed. Rsrv. Sys. v. Agnew, 329 U.S. 441, 443 (1947). The Fed later interpreted this language to allow BHCs’ nonbank affiliates to earn up to twenty-five percent of their revenue from securities activities.¹⁴¹See Wilmarth, supra note 96, at 472–73. It also determined that the limitation in section 20 of the Glass-Steagall Act, prohibiting banks from affiliating with any entity “engaged principally” in the underwriting and distribution of securities, permitted banks to affiliate with retail securities brokerages.¹⁴²Sec. Indus. Ass’n v. Bd. of Governors of the Fed. Rsrv. Sys. (Bankers Trust I), 468 U.S. 207, 219, 221 (1984).

Under its relevant authorities, the Fed has allowed BHCs to deal in municipal bonds, mortgage-backed securities, and commercial paper.¹⁴³See Sec. Indus. Ass’n v. Bd. of Governors of the Fed. Rsrv. Sys., 839 F.2d 47, 50–51 (2nd Cir. 1988). It has also allowed BHCs to provide data processing services, data transmission services, and computer software and hardware.¹⁴⁴See 12 C.F.R. §§ 225.28(b)(14), 225.123(e). Following the passage of the GLBA, weakening many of the Glass-Steagall Act restrictions, the Fed issued orders permitting BHCs to engage in a range of “complementary” nonfinancial activities.¹⁴⁵See 89 Fed. Rsrv. Bull. 497, 508–09 (2003). This includes trading oil, natural gas, and agricultural products, and “energy tolling” arrangements, meaning long-term energy supply contracts with large-scale commercial and industrial energy users. See Order Approving Notice to Engage in Activities Complementary to a Financial Activity, 94 Fed. Rsrv. Bull. C31, C60–61 (2008).

c.      Financial Stability

While the New Deal banking laws incorporated financial stability concerns,¹⁴⁶See Tarullo, supra note 92, at 1. explicit financial stability authority is a more recent development. The Dodd-Frank Act’s financial stability provisions are motivated by a desire that agencies possess comprehensive and flexible authorities to keep pace with the rapidly evolving financial marketplace.¹⁴⁷See S. Rep. No. 111-176, at 40 (2010). These tools are intended to be forward looking, requiring agencies to anticipate the possible sources of risk to the stability of the financial system and craft rules that mitigate the potential consequences of destabilizing events.¹⁴⁸See id. at 2–3.

Section 165 of the Dodd-Frank Act requiring “enhanced prudential standards” for the largest BHCs ties the Fed’s BHC regulations to the goal of financial stability.¹⁴⁹12 U.S.C. § 5365. Section 165 authorizes the Fed to establish such standards to “prevent or mitigate risks to the financial stability of the United States that could arise from the material financial distress or failure, or ongoing activities, of large, interconnected financial institutions.”¹⁵⁰12 U.S.C. § 5365(a)(1). The Dodd-Frank Act’s drafters believed that “because of the Federal Reserve’s expertise and its other unique functions, it should play an expanded role in maintaining financial stability.”¹⁵¹S. Rep. No. 111-176, at 28 (2010). This authority provides the Fed with significant interpretive discretion. In addition to certain specifically enumerated measures, the Fed can impose any prudential standards that it “determines are appropriate.”¹⁵²12 U.S.C. § 5365(b)(1)(B)(iv). More recently, the Fed has read into the statute extralegal mandates like efficiency maximization.¹⁵³See Steele, supra note 100, at 1001–02, 1012–21, 1033–36. While Congress enacted legislation in 2018 narrowing the applicability of section 165,¹⁵⁴See id. at 1012–14. it preserved financial stability and safety and soundness powers by including a savings clause stating that “nothing . . . shall be construed to limit” the Fed’s authority under section 165 and all three banking agencies’ safety and soundness authorities.¹⁵⁵Economic Growth, Regulatory Relief, and Consumer Protection Act, Pub. L. No. 115-174, § 401(b), 132 Stat. 1296, 1357–58 (2018) (codified as amended at 12 U.S.C. § 5365 note).

The FSOC can designate a nonbank financial company to be supervised by the Fed and subjected to section 165 enhanced prudential standards if the “material financial distress at the U.S. nonbank financial company, or the nature, scope, size, scale, concentration, interconnectedness, or mix of the activities of the U.S. nonbank financial company, could pose a threat to the financial stability of the United States.” ¹⁵⁶12 U.S.C. § 5323(a)(1). While there are currently no financial companies designated by the FSOC, four companies were previously designated: the captive financing corporation GE Capital and insurers AIG, Prudential, and MetLife. See Jeremy C. Kress, The Last SIFI, 71 Stan. L. Rev. Online 171, 171–72; (2018). MetLife sued to challenge the basis of its designation, while FSOC members voted to de-designate GE Capital, AIG and Prudential. Id. at 173–74. The FSOC can also recommend that financial regulators apply new or heightened standards and safeguards for financial activities or practices that could create or increase risks of significant liquidity, credit, or other problems spreading throughout the financial system.¹⁵⁷See 12 U.S.C. § 5330(a). After the FSOC’s recommendation, the primary regulator responsible for overseeing the activity must either implement the standards or explain why it has declined to do so.¹⁵⁸See 12 U.S.C. § 5330(c)(2). This authority has been used once, in 2012, when the SEC was unable to reach consensus for money market mutual fund (“MMF”) reforms. See Press Release, Mary Schapiro, Chairman, Securities and Exchange Commission, Statement of SEC Chairman Mary L. Schapiro on Money Market Fund Reform (Aug. 22, 2012), https://perma.cc/6ZY6-26RS. The FSOC proposed a series of MMF reforms, including a floating net asset value (“NAV”) and stable NAV alternatives with buffers and additional liquidity and disclosure requirements. See Proposed Recommendations Regarding Money Market Mutual Fund Reform, 77 Fed. Reg. 69455, 69456 (Nov. 19, 2012). In response, the SEC implemented less ambitious measures, alternatively requiring institutional MMFs to adopt a floating NAV or imposing a liquidity fee on, or halting, redemptions if a MMF’s weekly liquid assets fall below certain thresholds. See Money Market Fund Reform; Amendments to Form PF, 79 Fed. Reg. 47736 (Aug. 14, 2014).

In prescribing the FSOC’s authorities, the Dodd-Frank Act does not define “financial stability,”¹⁵⁹See Tarullo, supra note 92, at 3–9. but offers some relevant criteria.¹⁶⁰Contra The Federalist Society [Panel Discussion], Financial Regulation: The Apotheosis of the Administrative State, 25 Conn. Ins. L.J. 1, 10 (2018) (arguing the Dodd-Frank Act “contains no standards that restrict the discretion of the FSOC . . . no definition of material financial distress, no definition of activities, no definition of threat, or what was meant by ‘the financial stability of the United States’”). Nonbank financial companies “could pose a threat to . . . financial stability,” based upon a set of factors,¹⁶¹12 U.S.C. § 5323(a)(1). including the fragility of a company’s business model and its importance as a source of liquidity and credit to households, corporations, and financial markets and companies.¹⁶²12 U.S.C. § 5323(a)(2). In addition, the law defines activities that should be regulated “for financial stability purposes” as those which “could create or increase the risk of significant liquidity, credit, or other problems spreading” among financial markets or low-income, minority, or underserved communities.¹⁶³12 U.S.C. § 5330(a). As courts have recognized, the meaning of these terms is open to FSOC’s interpretation.¹⁶⁴See MetLife Inc. v. Fin. Stability Oversight Council, 177 F. Supp. 3d 219, 227 (D.D.C. 2016) (“The phrase ‘could pose a threat to the financial stability of the United States’ is open to numerous interpretations.”). The FSOC has codified its interpretation of the Dodd-Frank Act at 12 C.F.R. § 1310.

d.      Consumer Protection

Consumer protection laws provide agencies with substantial latitude to limit the costs to consumers resulting from excessive rates, fees, and other terms. The CFPB may issue rules, orders, and guidance implementing the federal consumer financial laws and perform “such support activities as may be necessary or useful to facilitate” the CFPB’s other functions.¹⁶⁵12 U.S.C. § 5511; see also 12 U.S.C. § 5512(b)(1). The CFPB also has authority to grant itself jurisdiction over categories of consumer financial companies by identifying “larger participant[s]” that it would then examine and regulate.¹⁶⁶12 U.S.C. § 5514(a)(1).

One of the motivations behind the CFPB’s creation was the failure of “highly targeted” consumer protection statutes.¹⁶⁷Oren Bar-Gill & Elizabeth Warren, Making Credit Safer, 157 U. Pa. L. Rev. 1, 84–85 (2008). The CFPB was given authority to prevent “unfair, deceptive, or abusive act[s] or practice[s]” (“UDAAPs”) in any financial product or service.¹⁶⁸12 U.S.C. § 5531(a). The CFPB’s UDAAP authority built upon existing authorities, while recognizing that agencies required a “more flexible standard” than the traditionally “restrictive” unfairness authority. ¹⁶⁹See Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183, 2237–39 (2020) (Kagan, J., dissenting). The CFPB can declare UDAAPs with respect to the offering of, or transactions involving, consumer financial products or services through enforcement actions or ex ante rulemaking.¹⁷⁰12 U.S.C. § 5531. The CFPB has issued interpretations of consumer lending practices and delineated scenarios wherein payday-type loans may constitute UDAAPs.¹⁷¹See 12 C.F.R. §§ 1041.3, 1041.7.

Under the Trump administration, the CFPB issued a policy statement defining “abusive acts or practices.”¹⁷²See Statement of Policy Regarding Prohibition on Abusive Acts or Practices, 85 Fed. Reg. 6733 (Feb. 6, 2020). Arguing—inaccurately—that the Dodd-Frank Act was the first statute to prohibit abusiveness,¹⁷³See id. at 6733; see also Improving Federal Consumer Protection in Financial Services: Hearing Before the H. Comm. on Fin. Serv., 110th Cong. 16 (2007) (statement of Sheila C. Bair, Chairman, Fed. Deposit Ins. Corp.). Unfair or deceptive acts and practices date back to the FTC Act, see Beales, supra note 28, at 192, to which the Dodd-Frank Act added abusiveness. See S. Rep. No. 111-176, at 172 (2010). The concept of abusive financial products was not novel when it was codified in the Dodd-Frank Act. The abusive nature of certain consumer financial products was cited in the Home Ownership and Equity Protection Act and the Fair Debt Collection Practices Act. See S. Rep. No. 111-176, at 15, 19 (2010). The Dodd-Frank Act codified specific criteria for determining when a product constitutes an abusive act or practice. See 12 U.S.C. § 5531(d)(2) (defining an act or practice as abusive if it “takes unreasonable advantage of . . . the inability of the consumer to protect the interests of the consumer in selecting or using a consumer financial product or service”). the statement attempted to utilize this purported novelty to justify departing from the enumerated statutory criteria and narrowing its applicability.¹⁷⁴See Statement of Policy Regarding Prohibition on Abusive Acts or Practices, 85 Fed. Reg. 6733, 6736 (Feb. 6, 2020) (creating a new factor in the abusiveness test that a practice is only abusive if the CFPB “concludes that the harms to consumers from the conduct outweigh its benefits to consumers”). The CFPB justified this interpretation by looking to the text of a different statute—the FTC Act—and its interpretation of a different term—unfairness. See id. at 6736 n.27. As the CFPB later noted, this was an atextual reading of the Dodd-Frank Act. See Statement of Policy Regarding Prohibition on Abusive Acts or Practices; Rescission, 86 Fed. Reg. 14808, 14809 (Mar. 19, 2021). The CFPB rescinded this interpretation in 2021 and expressed its intent to “exercise the full scope of its supervisory and enforcement authority to identify and remediate abusive acts or practices.”¹⁷⁵Statement of Policy Regarding Prohibition on Abusive Acts or Practices; Rescission, 86 Fed. Reg. at 14809.

The CFPB subsequently issued a policy statement delineating the framework that it intended to apply when assessing abusiveness, supported by examples of enforcement actions brought under its abusiveness authority.¹⁷⁶See Consumer Fin. Prot. Bureau, Policy Statement on Abusive Acts or Practices 3 (Apr. 3, 2023). The CFPB defined the conditions of abusive acts or practices as those where a provider either obscures important features of a consumer financial product or service, or leverages gaps in understanding, unequal bargaining power, or consumer reliance to take an unreasonable advantage of a consumer.¹⁷⁷Id. at 4. Thus, the CFPB has the flexibility to interpret its UDAAP authority in a manner that is expansive but consistent with its mission.

Congress has also delegated the authority to determine whether consumer fees are “reasonable and proportional”; for example, in the Credit CARD Act of 2009 governing credit card penalty fees.¹⁷⁸See Credit Card Accountability Responsibility and Disclosure Act of 2009, Pub. L. No. 111–24, § 102(b)(1), 123 Stat. 1734, 1740 (2009) (codified at 15 U.S.C. § 1665d). The law establishes a set of factors to consider, including the cost to the lender, the conduct of the consumer, as well as any other factor that the agency “may deem necessary or appropriate.”¹⁷⁹15 U.S.C. § 1665d(c). It also allows for the establishment of a safe harbor fee amount that is presumed to be reasonable and proportional.¹⁸⁰See 15 U.S.C. § 1665d(e); see also Truth in Lending, 75 Fed. Reg. 37526, 37527 (June 29, 2010) (codified at 12 C.F.R. pt. 226). The original safe harbor was $25 for the first violation, $35 for any subsequent violation, and up to 3% of the delinquent balance, with the amounts adjusted for inflation. Id.; see also 12 C.F.R. § 1026.52(b)(1)(ii). This authority was transferred to the CFPB,¹⁸¹See Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, § 1011, 124 Stat. 1376, 1974 (2010) (codified at 12 U.S.C. § 5494). which is reviewing the safe harbor to ensure that it comports with the intent of the CARD Act.¹⁸²See Credit Card Late Fees and Late Payments, 87 Fed. Reg. 38679 (June 29, 2022) (codified at 12 C.F.R. pt. 1026).

2.      Courts Have Deferred to Banking Agencies’ Interpretations

While banking agencies’ decisions are not infallible, and courts have limited administrative overreach, banking agencies have wide latitude to interpret the authorities delegated by Congress. Before the Chevron doctrine, courts had “long recognized that considerable weight should be accorded to an executive department’s construction of a statutory scheme it is entrusted to administer,”¹⁸³Chevron U.S.A., Inc. v. Nat. Res. Def. Council, 467 U.S. 837, 844 (1984); see also Emerson, supra note 20, at 2029–32. including banking regulators.

In Board of Governors v. Agnew,¹⁸⁴329 U.S. 441 (1947). the Supreme Court recognized that the financial system is a “highly specialized and technical one, requiring expert and coordinated management in all its phases.”¹⁸⁵Id. at 450 (Rutledge, J., concurring). As a result, banking agencies’ “specialized experience gives them an advantage judges cannot possibly have, not only in dealing with the problems raised for their discretion by the system’s working, but also in ascertaining the meaning Congress had in mind in prescribing the standards by which they should administer it.”¹⁸⁶Id.; see also SEC v. Chenery Corp., 332 U.S. 194, 209 (1947) (Jackson, J., dissenting) (noting that the SEC’s interpretation of the Public Utility Holding Company Act is an “area where administrative judgments are entitled to the greatest amount of weight by appellate courts” as the “product of administrative experience, appreciation of the complexities of the problem, realization of the statutory policies, and responsible treatment of the uncontested facts” which made it the “type of judgment which administrative agencies are best equipped to make”). The Court upheld the Fed’s interpretation that a bank had violated the prohibition against being “primarily engaged” in securities underwriting contained in section 32 of the Glass-Steagall Act, and that the prohibition did not require securities underwriting to constitute a majority of the bank’s activity.¹⁸⁷Agnew, 329 U.S. at 448–49.

Likewise, in Fahey v. Mallonee,¹⁸⁸332 U.S. 245 (1947). the Court upheld the Federal Home Loan Bank Board’s authority to appoint a conservator for savings and loan companies.¹⁸⁹Id. at 258. The Court acknowledged that banking is “one of the longest regulated and most closely supervised of public callings.”¹⁹⁰Id. at 250. Where the “accumulated experience of supervisors” has resulted in regulations that guide supervisory actions regarding well-defined practices, agency action may be permissible where other actions might not have been otherwise.¹⁹¹Id. The Court further noted that chartered banks upon which Congress has conferred the “right to conduct a public banking business on certain limitations” are constrained in their ability to challenge such “limitations intended for public protection.”¹⁹²Id. at 256.

Finally, in Investment Co. Institute v. Camp,¹⁹³401 U.S. 617 (1971). (“Camp”) the Court stated that, in conducting judicial review, “courts should give great weight to any reasonable construction of a regulatory statute adopted by the agency charged with the enforcement of that statute.”¹⁹⁴Id. at 626–27. This decision was “influenced by the principle that courts should defer to an agency’s construction of its own statutory mandate, particularly when that construction accords with well-established congressional goals.”¹⁹⁵Bd. of Governors of the Fed. Rsrv. Sys. v. First Lincolnwood Corp., 439 U.S. 234, 251 (1978) (citation omitted); see also Bd. of Governors v. Inv. Co. Inst., 450 U.S. 46, 56 (holding that the Fed’s “determinations of what activities are ‘closely related’ to banking [is] entitled to the greatest deference”). The Chevron Court would later cite Camp as an example of its tradition of deferring to regulators’ interpretations of the statutes that they administer.¹⁹⁶See Chevron U.S.A., Inc. v. Nat. Res. Def. Council, 467 U.S. 837, 844 & n.14 (1984). This is the rule where a single agency is responsible for administering a statute. See id. at 884. Where multiple agencies are responsible, an agency’s interpretation is not entitled to deference, see DeNaples v. Off. of the Comptroller of the Currency, 706 F.3d 481, 487 (D.C. Cir. 2013), but agencies’ joint interpretations of jointly administered statutes are entitled to deference. See Loan Syndications & Trading Ass’n v. SEC, 882 F.3d 220, 222 (D.C. Cir. 2018).

In 1984, the Supreme Court decided the foundational administrative law case Chevron U.S.A., Inc. v. Natural Resources Defense Council.¹⁹⁷467 U.S. 837 (1984). Under the Chevron doctrine, where a statute is “silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.”¹⁹⁸Id. at 843. When Congress is silent on an issue, it has implicitly delegated to an agency the responsibility to interpret the law by regulation.¹⁹⁹See id. at 843–44. Such agency interpretations “are given controlling weight unless they are arbitrary, capricious, or manifestly contrary to the statute.”²⁰⁰Id. at 844. Thus, a court “may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency.”²⁰¹Id. Note, however, that the Supreme Court recently granted cert in a case to consider whether or not to overrule or narrow Chevron. See Loper Bright Enters., Inc. v. Raimondo, 45 F.4th 359, 365 (D.C. Cir. 2022), cert. granted, 143 S. Ct. 2429 (2023) (mem.).

Agencies are not just required to explain new rules; they must also supply a “reasoned analysis” when rescinding existing rules.²⁰²Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 42 (1983). The Court later adopted a “step zero” to the two-step Chevron test, requiring a threshold determination that “Congress delegated authority to the agency generally to make rules carrying the force of law, and that the agency interpretation claiming deference was promulgated in the exercise of that authority.”²⁰³United States v. Mead Corp., 533 U.S. 218, 226–27 (2001). More recently, the Court has also deferred to agencies’ interpretations of the scope of their own jurisdiction.²⁰⁴See City of Arlington v. FCC, 569 U.S. 290, 296–305 (2013).

Courts’ deference to banking agencies’ expert interpretations and judgments has been reinforced time and again. In NationsBank of North Carolina, National Assoc. v. Variable Annuity Life Insurance Co.²⁰⁵513 U.S. 251 (1995). (“VALIC”), the Court held that the OCC’s interpretations of the NBA are generally entitled to deference—extending Chevron deference to the Comptroller’s opinion letters, not merely formal rulemakings.²⁰⁶Id. at 257–58. In VALIC, the Court upheld the OCC’s decision that annuities were permissible investment products consistent with the business of banking.²⁰⁷See id. at 264. The Court, in Securities Industry Assoc. v. Board of Governors of the Federal Reserve System,²⁰⁸468 U.S. 207 (1984). similarly stated that “Congress has committed to the [Fed] the primary responsibility for administering” the BHCA and is therefore “entitled to the greatest deference.”²⁰⁹Id. at 215–16 (citing Bd. of Governors of the Fed. Rsrv. Sys. v. Inv. Co. Inst., 450 U.S. 46, 56 (1981)).

Federal courts of appeal have held that the Fed’s interpretation of ambiguous provisions of the Glass-Steagall Act should be upheld where the Fed’s interpretation of the law is reasonable.²¹⁰See Sec. Indus. Ass’n v. Bd. of Governors of the Fed. Rsrv. Sys., 839 F.2d 47, 52 (2d Cir. 1988); see also David Zaring, Rule by Reasonableness, 63 Admin. L. Rev. 525, 543–49 (2011). Courts have deferred to the Fed’s interpretation that the BHCA permits BHCs to engage in some investment advisory services on the theory that they are “so closely related to banking or managing or controlling banks as to be a proper incident thereto.”²¹¹Bd. of Governors of the Fed. Rsrv. Sys. v. Inv. Co. Inst., 450 U.S. 46, 48, 54–55 (quoting Bank Holding Company Act of 1956, Pub. L. No. 511-240, 70 Stat. 133 (codified as amended at 12 U.S.C. § 1843(c)(8) (1976))). The Court also accepted the Fed’s interpretation that securities brokerage is an activity that is “closely related” to banking.²¹²Bankers Trust I, 468 U.S. at 216 (quoting 12 U.S.C. § 1843(c)(8)). Finally, the Court has deferred, under Chevron, to the FDIC’s determination that standby letters of credit are not “deposits” subject to an insurance payout in the event that a bank is placed in receivership.²¹³FDIC v. Phila. Gear Corp., 476 U.S. 426, 439–40 (1986) (quoting 12 U.S.C. § 1813(l)(1) (1982)).

Courts have not always accepted expansive interpretations of banking powers. The Court in Camp rejected the OCC’s regulation permitting banks to sponsor collective investment funds on the grounds that it violated the Glass-Steagall Act.²¹⁴Inv. Co. Inst. v. Camp, 401 U.S. 617, 639 (1971). The Court also overturned a Fed decision permitting banks to underwrite certain short-term commercial paper under the rationale that it was “more functionally similar to” a short-term loan, notwithstanding sections 16 and 21 of the Glass-Steagall Act.²¹⁵Bankers Trust I, 468 U.S. at 141, 148, 160. But the “substantial deference” afforded to banking agencies has been observed even when the Court has reversed the Fed’s interpretations, which has largely only occurred when its reasoning consisted of “post hoc rationalizations.”²¹⁶Id. at 142–44.

Courts have at times rejected agencies’ attempts to limit banks’ and BHCs’ activities and affiliations. The Supreme Court rejected the Fed’s attempt to regulate certain nonbank financial companies as “functionally equivalent” to banks by interpreting the BHCA to apply to their loan- and deposit-like activities.²¹⁷Bd. of Governors of the Fed. Rsrv. Sys. v. Dimension Fin. Corp., 474 U.S. 361, 373–75 (1986). Applying Chevron deference, the Court held that the Fed’s interpretation was inconsistent with the text of the statute and that looking to the “plain” purpose of the law could not supersede the meaning of the text.²¹⁸Id. The role of these activities in recent banking panics is discussed more below.²¹⁹See infra notes 359–361 and accompanying text.

Courts have routinely deferred to banking agencies’ determinations of the scope of unsafe and unsound acts and practices. Courts have held that the structure of the FDIA “evinces a clear intention that this regulatory process is not to be disturbed by untimely judicial intervention, at least where there is no ‘clear departure from statutory authority.’”²²⁰Groos Nat’l Bank v. Comptroller of the Currency, 573 F.2d 889, 895 (1978) (quoting Manges v. Camp, 474 F.2d 97, 99 (5th Cir. 1973)). Reviewing courts have also validated agencies’ use of their authorities to provide for “reasonable and proportional” fee limits.²²¹See 15 U.S.C. § 1693o–2(a)(2) (amending the Electronic Funds Transfer Act to require merchant interchange fees on debit card transactions be “reasonable and proportional to the cost incurred by the issuer with respect to the transaction”); see also NACS v. Bd. of Governors of the Fed. Rsrv. Sys., 746 F.3d 474, 488–89, 496 (D.C. Cir. 2014) (upholding the Fed’s interpretation of “reasonable and proportional” debit card interchange costs after applying Chevron). Finally, some banking authorities are committed to the agencies’ discretion and therefore beyond the scope of judicial review.²²²See, e.g., Adams v. Nagle 303 U.S. 532, 540–41 (1938) (holding that the Comptroller of the Currency’s determination that it is necessary to assess stockholders of a national bank is not reviewable); see also Raichle v. Fed. Rsrv. Bank of N.Y., 34 F.2d 910, 915 (2d Cir. 1929) (holding that the Fed’s determination of discount rates is not subject to review); FDIC v. Bank of Coushatta, 930 F.2d 1122, 1129 (5th Cir. 1991) (holding that the FDIC’s issuance of capital directives is committed to agency discretion).

As these examples illustrate, there is a clear “trend of deference to the agency’s interpretation” of banking statutes stretching back at least five decades.²²³Heidi Mandanis Schooner, The Role of Rival Litigation in Wilmarth’s New Glass-Steagall, 93 U. Colo. L. Rev. 961, 969 (2022).

II.      Applying Major Questions to Banking: Narrowing Public Authority and Expanding Private Influence

The recent emergence of the major questions doctrine threatens the New Deal regulatory settlement. The Supreme Court has relied on the doctrine to invalidate agency actions from eviction restrictions to public health measures and environment regulations.²²⁴See Deacon & Litman, supra note 12, at 13–22 (detailing the Supreme Court’s recent applications of the major questions doctrine). Yet material aspects of the doctrine are ill suited for the U.S. banking system due to the unique role of finance within the economy and bank regulators’ responsibilities to safeguard this system.

A.      The Evolving Major Questions Doctrine

The major questions doctrine stands for the proposition that, when “an agency claims to discover in a long-extant statute an unheralded power to regulate ‘a significant portion of the American economy,’’” courts should “expect Congress to speak clearly if it wishes to assign to an agency decisions of vast ‘economic and political significance.’”²²⁵Util. Air Regul. Grp. v. EPA, 573 U.S. 302, 324 (2014) (quoting FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 159–60 (2000)). The major questions doctrine is described by some proponents as a “clear statement rule”—that “absent a clear statement otherwise, Congress means for its laws to operate in congruence with the Constitution rather than test its bounds.”²²⁶West Virginia v. EPA, 142 S. Ct. 2587, 2616 (2022) (Gorsuch, J., concurring). But see Biden v. Nebraska, 143 S. Ct. 2355, 2336 (2023) (Barrett, J., concurring) (rejecting the argument that the major questions doctrine is a “clear statement” rule). While proponents trace the doctrine back to Article I of the Constitution, in their telling it first came into operation more than a century later and rose to prominence during the New Deal.²²⁷See West Virginia, 142 S. Ct. at 2617–19 (Gorsuch, J., concurring). Prior to the last decade, however, principles like those under the major questions doctrine had been used in only a handful of cases²²⁸See Brunstein & Revesz, supra note 21, at 219 (noting that the Supreme Court had invoked the major questions doctrine “in only five cases before the end of the Trump Administration”). invalidating agency actions regulating telecommunications,²²⁹See MCI Telecomms. Corp. v. AT&T Co., 512 U.S. 218, 234 (1994). tobacco,²³⁰See FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 133 (2000). drugs used in assisted suicide,²³¹See Gonzales v. Oregon, 546 U.S. 243, 275 (2006). and the environment.²³²See Whitman v. American Trucking Ass’ns, 531 U.S. 457, 468 (2001). But see Massachusetts v. EPA, 549 U.S. 497, 533–36 (2007) (rejecting the EPA’s argument, based on the major questions doctrine, that it did not have authority to regulate greenhouse gas emissions from motor vehicles).

The major questions doctrine applies where an agency “interprets a long-extant statute to permit it to regulate in an area of vast economic and political significance.”²³³Heinzerling, supra note 20, at 1946. Under the doctrine, courts should “in the absence of clear congressional authorization, greet its announcement with a measure of skepticism.”²³⁴Id. at 1946. An agency’s interpretation of a statute that has been codified for a long time and not used in a particular manner is suspect. At the same time, recently enacted statutes that take new approaches also appear to be suspect. Thus, “[n]either very old, nor very new, statutes are safe.”²³⁵Id. at 1961.

The doctrine also posits that courts do not owe an agency deference where the agency is addressing an issue of great economic and political significance and “the agency is not an expert in the matter.”²³⁶Id. at 1956. The Court can determine whether a particular agency issuing a specific regulation instinctively “raise[s] an eyebrow.”²³⁷West Virginia v. EPA, 142 S. Ct. 2587, 2616 (2022). Alternatively, proponents have described this test as evaluating whether or not an agency “regulates outside its wheelhouse.” Biden v. Nebraska, 143 S. Ct. 2355, 2382 (Barrett, J., concurring). This factor requires that “Congress must . . . not only speak clearly about its intended interpretive delegatee, but also pick the right one.”²³⁸Heinzerling, supra note 20, at 1962. Examples where the Court has held that an “agency had strayed out of its lane, to an area where it had neither expertise nor experience” include the “Attorney General making healthcare policy,”²³⁹West Virginia, 142 S. Ct. at 2636 (Kagan, J., dissenting). “the regulator of pharmaceutical concerns deciding the fate of the tobacco industry,”²⁴⁰Id. the Center for Disease Control ostensibly making housing policy,²⁴¹See Ala. Ass’n of Realtors v. Dep’t of Health & Hum. Servs., 141 S. Ct. 2485, 2488–89 (2021). and the Internal Revenue Service (“IRS”) administering health insurance policy.²⁴²See King v. Burwell, 576 U.S. 473, 486 (2015).

1.      Major Questions Cases

In most recent cases, the major questions doctrine analysis has resulted in regulations being overturned. In Utility Air Regulatory Group v. EPA,²⁴³573 U.S. 302 (2014). the Court heard a challenge to the Environmental Protection Agency’s (“EPA”) interpretation that greenhouse gas emissions could be considered pollutants under the Clean Air Act for the purposes of certain business permitting requirements applicable to significant emitters.²⁴⁴Id. at 314. The Court invalidated the rule, holding that it exceeded the EPA’s authority.²⁴⁵Id. at 333. Among the Court’s justifications was the rule’s applicability to millions of small businesses, “including retail stores, offices, apartment buildings, shopping centers, schools, and churches.”²⁴⁶Id. at 328.

In King v. Burwell,²⁴⁷576 U.S. 473 (2015). the Court considered whether state-established health insurance exchanges were eligible for federal tax credits under the 2010 Patient Protection and Affordable Health Care Act (“Affordable Care Act”).²⁴⁸Id. at 478–79. Because the IRS administered the tax credits, but lacked expertise in health policy, and because the IRS’s decision involved billions of dollars in tax credits and affected millions of health insurance consumers, the Court declined to apply Chevron.²⁴⁹Id. at 485–86. It also implied that the interpretation was a major question, stating that eligibility for the Affordable Care Act’s tax credits was “a question of deep ‘economic and political significance.’”²⁵⁰Id. at 486. The Court nonetheless upheld the tax credit scheme as consistent with the overall statutory structure.²⁵¹See id. at 498.

There were few significant cases implicating the major questions doctrine until the COVID-19 pandemic and accompanying federal government actions responding to the public health crisis. In Alabama Realtors v. HHS,²⁵²141 S. Ct. 2485 (2021) (per curiam). the Court held that the Department of Health and Human Services (“HHS”) lacked authority to use the Public Health Service Act to impose a nationwide eviction moratorium.²⁵³See 141 S. Ct. at 2488–89 (2021). The opinion was issued per curiam, on the Court’s emergency docket. See id. at 2485. The Court determined that the eviction moratorium implicated the major questions doctrine.²⁵⁴See id. at 2489. It based its conclusion upon the moratorium’s: (1) geographic reach and scope of individuals covered; (2) estimated potential economic injury to landlords; and (3) interference with private contractual landlord-tenant relationships.²⁵⁵See id.

In National Federation of Independent Business v. OSHA,²⁵⁶142 S. Ct. 661 (2022) (per curiam). the Court invalidated the Occupational Safety and Health Administration’s (“OSHA”) COVID-19 workplace vaccination and testing standards as a violation of the major questions doctrine.²⁵⁷See 142 S. Ct. at 665. This opinion was also issued per curiam, on the Court’s emergency docket. It reasoned that a global pandemic was not the type of workplace-specific hazard contemplated by OSHA’s authorizing statutes.²⁵⁸See id. at 665–66. Factors in the Court’s analysis included: (1) the number of workers covered by the rule; (2) the costs to states and employers; (3) the nature of the global pandemic; and (4) the fact that OHSA had never issued an order of this nature before.²⁵⁹See id. On the latter point, it is worth noting that the Occupational Safety and Health Administration was created in 1970, fifty years after the influenza pandemic of 1918. See id. at 670; see also Nat’l Archives, The Deadly Virus: The Influenza Epidemic of 1918, https://perma.cc/PD7S-7VW8.

In West Virginia v. EPA, the Court used the doctrine to invalidate the EPA’s Clean Power Plan rule regulating power plants’ carbon emissions under the Clean Air Act.²⁶⁰See 142 S. Ct. 2587, 2614–16 (2022). The Court noted that the rule’s system of emissions reductions had never been used before.²⁶¹See id. at 2610. It also argued that the EPA lacked sufficient expertise to make determinations regarding carbon emissions and concluded that imposing restrictions on power plant emissions involved “basic and consequential tradeoffs . . . that Congress would likely have intended for itself.”²⁶²Id. at 2612–13. The Court argued that the reviewing court can simply intuit whether a particular agency issuing a particular regulation “raise[s] an eyebrow.”²⁶³Id. at 2613. It also likened the emissions reduction scheme to other policy measures, such as a cap-and-trade system or a carbon tax, that Congress has as yet declined to enact, suggesting that the EPA was attempting a backdoor method of enacting these proposals without appropriate congressional delegation.²⁶⁴See id. at 2614.

Most recently, in Biden v. Nebraska,²⁶⁵143 S. Ct. 2355 (2023). the Court invalidated the Department of Education’s program to forgive up to a certain amount of federal student loan balances for each borrower under the Higher Education Relief Opportunities for Students Act (“HEROES” Act).²⁶⁶See id. at 2364–65, 2375. The Court rested its reasoning on three of the four factors under the major questions doctrine.²⁶⁷See id. at 2372–73 (finding first that “‘no regulation premised on’ the HEROES Act ‘has even begun to approach the size or scope’ of the secretary’s program,” second, that the “‘economic and political significance’ of the Secretary’s action is staggering,” and third, that the Secretary’s assertion “has ‘conveniently enabled him to enact a program’ that Congress has chosen not to enact itself” (citations omitted). The Court first noted that the Secretary of Education had never before asserted that the HEROES Act contained authority of the specific nature being exercised under the forgiveness program.²⁶⁸Id. at 2372. The Court also found that the program was one of “staggering” economic and political significance, due to the program’s projected potential cost of between $469 billion and $519 billion and the fact that the program “raises questions that are personal and emotionally charged, hitting fundamental issues about the structure of the economy.”²⁶⁹Id. at 2373–74 (quoting Jeff Stein, Biden Student Debt Plan Fuels Broader Debate Over Forgiving Borrowers, Wash. Post (Aug. 31, 2022), https://perma.cc/FC98-ZV2M). The Court’s ruling extended the application of the doctrine beyond agency regulations, to include agency decisions regarding benefits provision.²⁷⁰See id. at 2374–75.

2.      Related Doctrines and Analyses

The major questions doctrine now sits within a broader ecosystem of administrative doctrines and modes of analysis—some recent and others more established. While Chevron cases and major questions cases do not perfectly overlap, they are related in the sense that major questions circumvents Chevron’s respect for agency expertise.²⁷¹See Tortorice, supra note 20, at 1130. The major questions doctrine weakens the Chevron framework by establishing situations where agencies are not entitled to deference in their interpretations—and even questioning whether they possess the authority to act in the first place.²⁷²See Gocke, supra note 20, at 978–79; see also Emerson, supra note 20, at 2036. In these instances, the major questions doctrine operates as a step zero analysis, replacing the Mead test.²⁷³See Gocke, supra note 20, at 978. Courts’ application of the major questions doctrine is not always limited to step zero, and in different cases it can occur at different steps of the Chevron analysis.²⁷⁴See id. at 975–76; see also Tortorice, supra note 20, at 1104; Michael Coenen & Seth Davis, Minor Courts, Major Questions, 70 Vand. L. Rev. 777, 787, 790 (2017). The common theme is that the major questions doctrine operates as an exception to Chevron and its progeny, but only for the most consequential exercises of agency power.²⁷⁵Justice Kagan’s dissent in West Virginia v. EPA argues that the current iteration of the major questions doctrine is invented out of whole cloth through a misreading of the Court’s analysis in prior cases, where it was used as a tool to evaluate whether Chevron deference was appropriate. See 142 S. Ct. 2587, 2634–35 (2022) (Kagan, J., dissenting). It places a heightened burden of specificity upon Congress when so-called major questions are involved.²⁷⁶See Biden v. Nebraska, 143 S. Ct. 2355, 2385 (2023) (Kagan, J., dissenting) (“[T]he Court applies heightened-specificity requirements, thwarting Congress’s efforts to ensure adequate responses to unforeseen events.”); see also Deacon & Litman, supra note12, at 39. But see Biden, 143 S. Ct. at 2378 (Barrett, J., concurring) (“[The] ‘clear statement’ version of the major questions doctrine ‘loads the dice’ so that a plausible antidelegation interpretation wins even if the agency’s interpretation is better. While one could walk away from our major questions cases with this impression, I do not read them this way.”).

The major questions doctrine evokes the separate, but “closely related,” nondelegation doctrine.²⁷⁷Nat. Fed’n Indep. Bus. v. OSHA, 142 S. Ct. 661, 668 (2022) (Gorsuch, J., concurring). According to the nondelegation doctrine, the separation of powers restricts Congress’s ability to delegate its legislative authority to executive branch entities and a clear Congressional statement of authority is required for certain administrative actions.²⁷⁸See id. at 668–69. Under nondelegation, Congress must establish an “intelligible principle” to which the agency must adhere. J.W. Hampton, Jr., & Co. v. United States, 276 U.S. 394, 409 (1928). It is “constitutionally sufficient if Congress clearly delineates the general policy, the public agency which is to apply it, and the boundaries of this delegated authority.” Am. Power & Light Co. v. SEC, 329 U.S. 90, 105 (1946).

As with the major questions doctrine, the connection between the nondelegation doctrine and the Constitution is contested, the doctrine was not applied by the Supreme Court until more than a century after the nation’s founding, and it did not rise to prominence until the New Deal era. See Mortenson & Bagley, supra note 1, at 282–85; see also Eric A. Posner & Adrian Vermeule, Interring the Nondelegation Doctrine, 69 U. Chi. L. Rev. 1721, 1722 (2002). Some have challenged the historical account that the nondelegation doctrine was a meaningful check on executive authority during the New Deal period. See id. at 1741–43; see also Whittington & Iuliano, supra note 5, at 417–21. The major questions doctrine raises nondelegation concerns, but the doctrines theoretically serve different functions. The ostensible purpose of the nondelegation doctrine is to “ensure[] democratic accountability by preventing Congress from intentionally delegating its legislative powers to unelected officials.”²⁷⁹Nat. Fed’n Indep. Bus., 142 S. Ct. at 669 (Gorsuch, J., concurring). The major questions doctrine in theory only prevents unintentional delegation.²⁸⁰See id. Whether the major questions doctrine is actually limited to unintentional delegations in practice is discussed further below. See infra Section III.A. Nonetheless, both doctrines are hostile to Chevron deference.²⁸¹See Tortorice, supra note 20, at 1086. Nondelegation arguments are directly rooted in the Constitution and the separation of powers,²⁸²See id. at 1085. For a refutation of the idea that the nondelegation doctrine is rooted in the Constitution, see Mortenson & Bagley, supra note 1. while the major questions doctrine builds on nondelegation principles and applies them as a matter of statutory interpretation.²⁸³See Biden v. Nebraska, 143 S. Ct. 2355, 2380 (Barrett, J., concurring) (“Crucially, treating the Constitution’s structure as part of the context in which a delegation occurs is not the same as using a clear-statement rule to over enforce Article I’s non-delegation principle (which, again, is the rationale behind the substantive-canon view of the major questions doctrine).”); see also Emerson, supra note 20, at 2024. In contrast to the major questions doctrine, which has been used in recent years to overturn several agency actions, the nondelegation doctrine has only been used to strike down two laws, both of which occurred in 1935.²⁸⁴See Tortorice, supra note 20, at 1088. While the Court recently heard a nondelegation doctrine challenge, it upheld the law in question over the dissent of a three-member conservative bloc. See Gundy v. United States, 139 S. Ct. 2116 (2019). Like other major questions cases, financial industries, such as cryptocurrencies, have argued that banking agencies’ actions violate the nondelegation doctrine.²⁸⁵See David H. Thompson, John D. Ohlendorf, Harold S. Reeves & Joseph O. Masterman, Cooper & Kirk, Operation Choke Point 2.0: The Federal Bank Regulators Come for Crypto 27 (2023), https://perma.cc/J5K3-PSQX.

The major questions doctrine also incorporates antinovelty principles. Antinovelty is the view that “legislative novelty is a mark against a law’s constitutionality.”²⁸⁶Leah M. Litman, Debunking Antinovelty, 66 Duke L.J. 1407, 1415 (2017). The Supreme Court has used antinovelty to invalidate aspects of financial regulatory agencies’ structures that it deemed too innovative, including the Public Company Accounting Oversight Board,²⁸⁷See Free Enter. Fund v. Pub. Co. Acct. Oversight Bd., 561 U.S. 477, 496–98 (2010. CFPB,²⁸⁸See Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183, 2192 (2020) (holding the CFPB director’s removal protections unconstitutional); see also Consumer Fin. Prot. Bureau v. All Am. Check Cashing, Inc., 33 F.4th 218, 241 (5th Cir. 2022) (holding the CFPB’s funding structure unconstitutional). and Federal Housing Finance Agency.²⁸⁹See Collins v. Yellen, 141 S. Ct. 1761, 1783–84 (2020). While antinovelty initially stood as its own, purportedly constitutional, principle, over time it has been incorporated, sub rosa, into aspects of the major questions doctrine through some of the constitutive factors of the doctrine’s analysis.²⁹⁰See Deacon & Litman, supra note 12, at 49. Like the major questions doctrine, the Court’s decisions have not applied antinovelty consistently—it has served as either a factor in determining a statute’s constitutionality or as a presumption of unconstitutionality. See Litman, supra note 286, at 1423–24; see also id. at 1482–87 (describing administrability concerns with antinovelty). Also similar to both the nondelegation and major questions doctrines, the constitutional foundations of antinovelty are debatable. See id. at 1455–59. Similar to its relationship with the nondelegation doctrine, the major questions doctrine adopts antinovelty precepts as statutory, rather than constitutional, principles. The major questions doctrine is also distinguishable in its application to agencies’ substantive actions, in contrast to antinovelty’s focus on administrative design.

Finally, the major questions doctrine incorporates a form of cost-benefit analysis (“CBA”), specifically in its assessment of “economic importance.” The judicially manufactured principle for applying CBA, as articulated in Michigan v. EPA,²⁹¹Michigan v. EPA, 576 U.S. 743 (2015). is that “an agency may not, unless Congress signals otherwise, impose regulatory costs without taking those costs into account.”²⁹²Heinzerling, supra note 20, at 1963; see Michigan, 576 U.S. at 752–53. The financial industry has argued that CBA should apply to financial regulations, even for statutes that do not explicitly require it.²⁹³See Arnold & Porter Kaye Scholer LLP, Comment Letter on Proposed Rulemaking Regarding Resolution-Related Resource Requirements for Large Banking Organizations 7 (Jan. 21, 2023) [hereinafter Arnold & Porter Letter], https://perma.cc/N64B-72UU (arguing that the principles of cost-benefit analysis (“CBA”) are “not tied to the particular statute or facts at issue in Michigan v. EPA; the Court suggested that an agency’s interpretation of any ambiguous statutory mandate must take cost into account to be reasonable under Chevron”). Similar to major questions cases, courts have applied CBA when financial agencies exercise their general statutory authority rather than specific legal mandates.²⁹⁴See John C. Coates IV, Cost-Benefit Analysis of Financial Regulation: Case Studies and Implications, 124 Yale L.J. 882, 916 (2015). Also like major questions cases, financial agencies have been subject to increasingly stringent court-imposed CBA requirements in recent years.²⁹⁵See Chamber of Com. of the U.S. v. SEC, 412 F.3d 133, 144 (D.C. Cir. 2005) (requiring the SEC to consider the cost of rules issued under the Investment Company Act); see also Bus. Roundtable v. SEC, 647 F.3d 1144, 1154–55 (D.C. Cir. 2011) (holding that the SEC failed to adequately assess the economic effects of its rule governing proxy voting under the Securities Exchange Act Rule 14a-11); MetLife Inc. v. Fin. Stability Oversight Council, 177 F. Supp. 3d 219, 239 (D.D.C. 2016) (holding that the FSOC is required to consider the costs of its determinations under the Dodd-Frank Act). For example, the U.S. District Court for the District of Columbia has argued that FSOC should have considered the cost of regulation as part of its attempted designation of MetLife for enhanced supervision.²⁹⁶See MetLife, 177 F. Supp. 3d, at 241. MetLife challenged the FSOC’s designation, which the court then overturned.²⁹⁷See id. at 242. The court extended the logic of  Michigan v. EPA to the FSOC’s authority to determine that a nonbank financial company poses a risk to financial stability.²⁹⁸See id. at 239–42. Specifically, the district court read the FSOC’s ability to consider “any other risk-related factors” that it “deems appropriate” as a form of an implicit CBA requirement. See id. at 225; see also 12 U.S.C. § 5323(a)(2)(K); Heinzerling, supra note 20, at 1940–41. As discussed below, CBA is often inappropriate for bank regulation. It fails to capture the real-world implications of effective financial regulation, and conversely of deregulation.²⁹⁹See Coates, supra note 294, at 894–95. It prioritizes private costs over public benefits and undervalues societal benefits that are difficult to quantify.³⁰⁰See Nat’l Comty. Reinvestment Coalition v. Consumer Fin. Prot. Bureau, No. 20-2074, 2022 U.S. Dist. LEXIS 174183, at *66–67 (D.D.C. Sept. 23, 2022).

The major questions doctrine has consistently hampered administrative agencies’ ability to interpret the laws that Congress has charged them with administering. This and other specific features of the major questions doctrine, as established by the recent major questions cases, present substantial challenges when applied to bank regulation.

B.      Applying Major Questions to Banking Regulation

In the wake of West Virginia v. EPA, various constituencies have argued that aspects of banking regulation trigger the major questions doctrine. The U.S. District Court for the Eastern District of Texas has ruled that the CFPB’s interpretation that its UDAAP authority applies to examining banks for fair lending violations is a major question that is beyond the CFPB’s authority.³⁰¹See Chamber of Com. of the U.S. v. Consumer Fin. Prot. Bureau, No. 22-cv-00381, 2023 U.S. Dist. LEXIS 159398, at *13, *18 (E.D. Tex. Sept. 8, 2023). Members of Congress have questioned the basis for CFPB’s authority to enact consumer protections more broadly, in light of the major questions doctrine.³⁰²See Letter from H. Comms. for Fin. Servs. & Oversight & Reform, to Rohit Chopra, Dir. Consumer Fin. Prot. Bureau (Sept. 20, 2022) https://perma.cc/2ZKG-9A7R. Business lobbying organizations and conservative think tanks have said that bank regulators’ guidance to help banks manage financial exposures to climate change may violate the doctrine.³⁰³See Chamber of Com. of the U.S., Comment Letter on Principles for Climate-Related Financial Risk Management for Large Financial Institutions 2 (Feb. 6, 2023), https://perma.cc/L5YV-RDS5; see also Heritage Found., Comment Letter on Principles for Climate-Related Financial Risk Management for Large Financial Institutions (Feb. 6, 2023) [hereinafter Heritage Foundation Letter], https://perma.cc/2UH4-7U4R. Cryptocurrency companies have claimed that the doctrine prevents financial regulators from using existing authorities to regulate their industry.³⁰⁴See Tomicah Tillemann, J.P. Schnapper-Casteras & James Rathmell, How the Supreme Court’s EPA Decision Could Shape the Future of Web3, Haun Ventures (Aug. 14, 2022), https://perma.cc/K4Y7-4532. Finally, before SVB’s failure, the banking industry signaled a potential major questions doctrine challenge to a joint Fed and FDIC proposal requiring large regional banks like SVB to issue minimum amounts of long-term debt that can be converted into equity in a resolution process.³⁰⁵See Am. Bankers Ass’n, Comment Letter on Proposed Rulemaking Regarding Resolution-Related Resource Requirements for Large Banking Organizations (Jan. 4, 2022) [hereinafter ABA Letter], https://perma.cc/P8H2-HE26; see also Capital One Fin. Corp. et al., Comment Letter on Proposed Rulemaking on Resolution-Related Resource Requirements for Large Banking Organizations 32 n.95 (Jan. 23, 2023), https://perma.cc/6EZ4-LRFH; Arnold & Porter Letter, supra note 293, at 2–5.

If courts were to adopt these arguments, they would interfere with some of the foundational bank regulatory authorities. Specifically, the major questions doctrine’s framework is a poor fit for banking because: (1) the “political significance” factor does not further the democratic legitimacy of the bank regulatory process; (2) the “economic significance” factor is incoherent as applied to the $20 trillion banking system; (3) the “novel interpretation” factor undermines the ability of bank regulators to be flexible and adapt to emerging risks; and (4) the “agency expertise” factor obscures the breadth and depth of knowledge required to oversee a banking sector that is interconnected with the entire economy.

1.      Political Significance

Skeptics of financial regulation frequently claim that regulators’ actions lack democratic legitimacy because they resolve issues of political significance through unaccountable means.³⁰⁶See, e.g., PHH Corp. v. Consumer Fin. Prot. Bureau, 881 F.3d 75, 166 (D.C. Cir. 2018) (Kavanaugh, J., dissenting) (noting that [the CFPB has] “power that is massive in scope, concentrated in a single person, and unaccountable to the President”); Examining the Dangers of the FSOC’s Designation Process and its Impact on the U.S. Financial System: Hearing Before the H. Comm. on Fin. Servs. 113th Cong. 2 (2014) (statement of Rep. Hensarling, Chair, H. Comm. on Fin. Servs.) (describing the FSOC as “an unaccountable group of agencies that feel they don’t need to justify their actions to anyone”). The major questions doctrine is framed as a response to this overreach that promotes the will of the democratic populace against the anti-democratic instincts of policymaking elites, encourages democratic participation, and prevents special interest capture.³⁰⁷See West Virginia v. EPA, 142 S. Ct. 2587, 2617–18 (2022) (Gorsuch, J., concurring). The abstract conceptions of democracy and private economic liberty advanced by proponents of the doctrine do not square with the reality of the political economy of banking. By creating obstacles to regulating the banking system, the major questions doctrine results in counter-majoritarian outcomes and benefits entrenched interests.

a.      Financial Policymaking Involves Political Choices

The major questions doctrine rests on the flawed premise that some forms of regulation can be apolitical. This is consistent with the popular pre-2008 financial crisis misconception of finance wherein the “ostensible goal of financial regulation is often more to free the market to function properly than to constrain it.”³⁰⁸Metzger, supra note 1, at 143. This framing “has the effect of obscuring the normative and political dimensions of financial regulation behind the seeming neutrality of the market and economics” and “thereby impl[ies] that economically driven decisions are apolitical.”³⁰⁹Id. at 144. For a recent example of this framing, see Brendan Pedersen, Has the OCC Become Too Politicized?, Am. Banker (Dec. 30, 2020, 9:00 PM), https://perma.cc/S3ZN-ZZLX.

This view obscures the purpose of banking as the private administration and allocation of money and credit.³¹⁰See supra Section I.A.1. Banking policy decisions that “often appear to be convoluted and hypertechnical”³¹¹Zaring, supra note 210, at 543. have the effect of shaping the flow of money and credit, determining the structure and contour of our economy, and impacting the financial lives of millions of people. Ostensibly technocratic judgments about whether an activity constitutes the “business of banking” or is “unsafe or unsound,” or an act or practice is “unfair or abusive” have distributional consequences and result in winners and losers among competing constituencies. Banks’ misuse of their financial powers has the potential to “remold our fundamental political and social institutions.”³¹²See H.R. Rep. No. 84-609, at 2 (1955).

Banks are not powerless to influence these choices. The accumulated financial resources of large banking institutions, and the general importance of banking to the broader economy, endow banks with significant political power.³¹³See Darren Bush, Too Big to Bail: The Role of Antitrust in Distressed Industries, 77 Antitrust L.J. 277, 308 (2010). Banks can influence Congressional and agency behavior through direct lobbying or by deploying customers, or so-called “end users,” to make arguments on their behalf. See, e.g., Noam Scheiber, The Breakup, New Republic (June 17, 2010), https://perma.cc/K4CK-BZ36 (describing how banks’ nonfinancial corporate clients became the “public face of a well-financed campaign” to weaken derivatives regulations). In all these senses, most bank regulatory decisions—from the design of prudential rules to the structure of bailouts—involve inherently political choices.³¹⁴See Omarova, supra note 3, at 745–46 (“Financial arrangements are fundamentally shaped by, and in turn shape, broader economic and political structures and choices.”); see also Coates, supra note 294, at 1001; see also Metzger, supra note 1, at 146–47; see also Aikman et al., supra note 67, at 38; see also Tarullo, supra note 92, at 74.

b.      Banking Agencies Are Insulated from Regulatory Capture

Recognizing the political economy challenges of regulating the banking industry, Congress designed independent banking agencies in a manner that fuses a historical understanding of the special nature of banks with the New Deal appreciation for regulatory expertise. Congress has balanced democratic accountability with the need to “shield[] technical or expertise-based functions relating to the financial system from political pressure (or the moneyed interests that might lie behind it).”³¹⁵Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183, 2231 (2020) (Kagan, J., dissenting); see also Patricia McCoy, Constitutionalizing Financial Instability, 2020 U. Chi. L. Rev. Online 66 (2020), https://perma.cc/M29W-QLV8. Each banking agency was designed to be “insulated from short-term political pressures so that it could adopt public policies based on expertise that would yield better public policy over the long term.”³¹⁶Rachel E. Barkow, Insulating Agencies: Avoiding Capture Through Institutional Design, 89 Tex. L. Rev. 15, 20 (2010). Thus, Congress has sought to ensure that agencies “would be guided by information and not politics.”³¹⁷Id.; see also Stavros Gadinis, From Independence to Politics in Financial Regulation, 101 Cal. L. Rev. 327, 336–37 (2013).

The independence of these agencies comes from their insulation from special interest influence and short-term political incentives, ensuring that policy outcomes reflect the public interest.³¹⁸See Seila Law, 140 S. Ct. at 2231 (2020) (Kagan, J. dissenting); see also Ahdieh, supra note 67, at 69–70. Banking agencies have been insulated from direct political control because the balkanized financial regulatory structure, and the closeness of agencies’ communications with their regulated entities, can exacerbate the risks of capture.³¹⁹See Metzger, supra note 1, at 136–41; see also Bar-Gill & Warren, supra note 167, at 85. For example, the Dodd-Frank Act’s implementation process was hotly contested, with an ambitious regulatory agenda that sought to rebuild a financial oversight apparatus that atrophied over the course of decades.³²⁰See Haley Sweetland Edwards, He Who Makes the Rules, Wash. Monthly (Mar. 2, 2013), https://perma.cc/8DL9-WBQX (referring to the Dodd-Frank rulemaking process as “the seventh circle of bureaucratic hell”). Such agency rulemakings are generally dominated by the banking industry, a group known for holding sway in both the policymaking process.³²¹See Deniz Igan, Prachi Mishra & Thierry Tressel, A Fistful of Dollars: Lobbying and the Financial Crisis, 26 Nat’l Bureau Econ. Rsch. 195, 195 (2012); see also Kevin L. Young, Tim Marple & James Heilman, Beyond the Revolving Door: Advocacy Behavior and Social Distance to Financial Regulators, 19 Bus. & Pol. 327, 357 (2017). For example, 93% of agency contacts during the Dodd-Frank Act’s Volcker Rule rulemaking period came from industry trade associations or companies. See Kimberly D. Krawiec, Don’t “Screw Joe the Plummer”: The Sausage-Making of Financial Reform, 55 Ariz. L. Rev. 53, 59 (2013). Among other measures, Congress has attempted to insulate regulators from capture, and the appearance of capture, by imposing “cooling off” periods that restrict banking agency officials from working at regulated institutions for a period after leaving their agency.³²²See Financial Institutions Regulatory Act of 1978, H. Rep. No. 95-1383, at 22–23, 95th Cong. 2d Sess. (1978); see also 12 U.S.C. §§ 242, 1812(e)(1).

Ironically, the major questions doctrine gives special interests greater leverage over rulemakings. If regulated industries are unable to prevail before an agency, they can manufacture political controversy, allowing them to bring a major questions claim—overturning individual rules and, in the process, rewriting underlying statutes.³²³See Deacon & Litman, supra note 12, at 40. Indeed, the Court in Biden v. Nebraska noted what it called the “sharp debates generated by the Secretary’s extraor­dinary program.” 143 S. Ct. 2355, 2374 (2023). In another recent example of this strategy, Republican members of the House Committee on Financial Services alleged that the banking agencies’ issuance of a proposed rule to reform bank capital regulations was subject to “political motives,” sought to achieve a “partisan goal,” and was generally “plagued by politics.” Letter from H. Comms. for Fin. Servs., to Michael S. Barr, Vice Chair for Supervision, Bd. of Governors of the Fed. Rsrv. Sys., et al. (Sept. 13, 2023), https://perma.cc/N56T-B9T3. This wrenches decision-making away from agencies that are subject to a range of procedural participation requirements, including seeking public input.³²⁴See Emerson, supra note 20, at 2081–86. Rather than putting power into the hands of the people, the major questions doctrine reduces democratic participation.

c.      Banking Agencies Are Accountable to the Legislature

In order to be politically accountable, administrative agencies can either be responsive to the President or Congress.³²⁵See Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183, 2225 (2020) (Kagan, J. dissenting); see also Biden, 143 S. Ct. at 2385 (Kagan, J., dissenting). For example, in Seila Law, the Chief Justice argued that the President is politically accountable, while in Gundy Justice Gorsuch asserted that only Congress is properly accountable. See Blake Emerson, Liberty and Democracy Through the Administrative State: A Critique of the Roberts Court’s Political Theory, 73 Hastings L.J. 371, 386–87 (2022). The major questions doctrine focuses on the Executive’s relationship to Congress through the laws that Congress passes and agencies implement. Importantly, delegation by Congress to executive agencies is properly understood not as a “transfer of legislative power, but an exercise of legislative power”³²⁶Posner & Vermeule, supra note 278, at 1723. and agencies implementing their statutory responsibilities should be understood as “exercising executive power, not legislative power.”³²⁷Id. The doctrine instead inserts the judicial branch in a policymaking role that displaces both the legislative and executive branches.³²⁸See West Virginia v. EPA, 142 S. Ct. 2587, 2643­–44 (2022) (Kagan, J., dissenting); see also Biden, 143 S. Ct. at 2385–86 (Kagan, J., dissenting); Gocke, supra note 20, at 977–78; Tortorice, supra note 20, at 1119–24. It allows the judicial branch to reopen policy decisions that have been debated and settled by other branches.³²⁹See Biden, 143 S. Ct. at 2397–98 (Kagan, J., dissenting) (“[T]he Court becomes the arbiter—indeed, the maker—of national policy. . . . That is no proper role for a court. And it is a danger to a democratic order.” (citation omitted)); see also Gocke, supra note 20, at 1007.

Courts do not need to encroach upon the banking policy process in this way to preserve legislative branch oversight of the executive branch. Congress already oversees banking agencies through hearings, investigations, and, when there is sufficient political will, legislation amending agency rules. In 2018, for example, Congress amended the Dodd-Frank Act, including several provisions legislatively proscribing specific aspects of banking agency rules that it disagreed with.³³⁰Economic Growth, Regulatory Relief, and Consumer Protection Act, Pub. L. No. 115-174, §§ 214, 402–03, 132 Stat. 1296, 1321, 1360–61 (2018) (amending banking agencies’ rules regarding capital treatment for high-volatility commercial real estate projects, treatment of treasury securities and central bank reserves under the Enhanced Supplementary Leverage Ratio, and classification of municipal securities under the Liquidity Coverage Ratio). Congress can also respond to agency rules that are inconsistent with its preferences using a “legislative veto.”³³¹Daniel A. Farber, Lisa Heinzerling & Peter M. Shane, Reforming “Regulatory Reform”: A Progressive Framework for Agency Rulemaking in the Public Interest, J. Am. Const. Soc’y Issue Briefs, Oct. 2018, at 19. The Congressional Review Act³³²5 U.S.C. § 801. (“CRA”) requires agencies to submit “major” agency rules to Congress for review, which Congress can overturn through a privileged resolution subject to a simple majority vote.³³³See Farber et al., supra note 331, at 19–20. A major rule is one that the Office of Management and Budget has determined would result in an annual effect on the economy of $100 million or more, result in a major increase in costs or prices for various sector or regions of the economy, or have significant adverse effects on the ability of U.S. firms to compete with foreign enterprises. See id. at 8. This definition is problematic as applied to finance for the same reason that the major questions doctrine’s “economic significance” factor is a problem, as discussed below. See infra Section II.B.2. While the CRA was rarely used in the two decades following its passage,³³⁴See Cong. Rsch. Serv., Independence of Federal Financial Regulators: Structure, Funding, and Other Issues 24 (2017) (noting that from 1996 to 2016, only one rule was successfully overturned using the CRA process). it was resurrected during the Trump administration to overturn Obama administration rules,³³⁵See Farber et al., supra note 331, at 20. including two banking and consumer protection rules.³³⁶It has also been used to overturn regulatory guidance. See infra note 529. In 2017, a Republican Congress overturned a CFPB rule limiting financial companies’ use of mandatory pre-dispute arbitration clauses in consumer financial contracts.³³⁷See Arbitration Agreements, 82 Fed. Reg. 55500 (Nov. 22, 2017) (codified at 12 C.F.R. pt. 1040). These arbitration agreements were one example held up by the CFPB’s architects as a consumer financial contract feature that the CFPB was needed to address. See Bar-Gill & Warren, supra note 167, at 52, 78. During the Biden administration, Congress rescinded the Trump-era OCC’s “true lender” regulation allowing fintech companies to enter into partnerships with banks, thereby benefitting from the NBA’s preemption of certain state consumer protection laws.³³⁸National Banks and Federal Savings Associations as Lenders, 86 Fed. Reg. 42686 (Aug. 5, 2021) (codified at 12 C.F.R. pt. 7); see Christopher K. Odinet, Predatory Fintech and the Politics of Banking, 106 Iowa L. Rev. 1739, 1794–95 (2021) (discussing the true lender rule).

Finally, Congress can deprive agencies of interpretive deference. In 2004, the OCC issued a rule preempting national banks and their operating subsidiaries from complying with various state consumer protection laws that might otherwise have applied.³³⁹See Bank Activities and Operations; Real Estate Lending and Appraisals, 69 Fed. Reg. 1904, 1904 (Feb. 12, 2004) (codified at 12 C.F.R. pts. 7, 34). Scholars argued that, notwithstanding Supreme Court precedent affording Chevron deference to OCC interpretations, its preemption rule was not entitled to deference.³⁴⁰See Arthur E. Wilmarth Jr., The OCC’s Preemption Rules Exceed the Agency’s Authority and Present a Serious Threat to the Dual Banking System and Consumer Protection, 23 Ann. Rev. Banking & Fin. L. 225, 293–98 (2004). After the 2008 financial crisis, Congress concluded that the OCC’s preemption rule helped to impede states from enacting laws addressing predatory mortgage lending practices.³⁴¹See S. Rep. No. 111-176, at 16–17 (2010). The Dodd-Frank Act then clarified the preemption standard for national banks and their operating subsidiaries and required the OCC to consult with the CFPB when issuing preemption determinations.³⁴²See 12 U.S.C. § 25b(b). Demonstrating Congress’s ability to respond to agencies’ adherence to Supreme Court decisions, this provision both codified the preemption standard in Barnett Bank of Marion County v. Nelson, 517 U.S. 25 (1996), and the visitorial powers standards in Cuomo v. Clearing House Ass’n, 557 U.S. 519 (2009). See id. §§ 25b(b)(1)(B), (b)(i)(1). It also codified the level of deference for OCC preemption opinions at the less deferential standard established in Skidmore v. Swift & Co.³⁴³323 U.S. 134, 139–40 (1944). Compare 12 U.S.C. § 25b(b)(5)(A), with Skidmore, 323 U.S. at 140 (1944). This constituted a codification, rather than a modification, of the existing standard. See Lusnak v. Bank of Am., N.A., 883 F.3d 1185, 1192–93 (9th Cir. 2018). Under this standard, the Court of Appeals for the Ninth Circuit held that a California law requiring creditors to pay mortgage borrowers interest in their escrow accounts was not preempted by the NBA or the OCC’s 2004 preemption regulation. See id. at 1194–97. Due to a circuit split on this issue, cert petitions have been filed in two cases requesting that the Supreme Court resolve the scope of NBA preemption as it applies to state laws governing interest rates on escrow accounts. See Petition for Writ of Certiorari, Cantero v. Bank of Am. N.A., No. 21-400 (2d Cir. Dec. 9, 2022); Petition for Writ of Certiorari, Flagstar Bank v. Kivett, No. 21-15667 (9th Cir. May 17, 2022). The Supreme Court granted cert in Cantero in October 2023. 144 S. Ct. 324.

As these examples illustrate, Congress has ample tools to react when it disapproves of agency rules and does not need courts to intervene on its behalf. Further, as the Court has recognized, “congressional failure to revise or repeal the agency’s interpretation is persuasive evidence that the interpretation is the one intended by Congress.”³⁴⁴NLRB v. Bell Aerospace Co., 416 U.S. 267, 275 (1974). Yet, the major questions doctrine allows courts to ostensibly speak for Congress and limit agency power, notwithstanding the lack of any meaningful political consensus to do so expressly through legislation.

d.      Federal Banking Agencies Play an Important Role in the Dual Banking System

Recent major questions doctrine decisions have also incorporated a federalism principle into the “political significance” factor, arguing that Congress must use “exceedingly clear language” where an agency action “significantly alter[s] the balance between federal and state power.”³⁴⁵Ala. Ass’n Realtors v. Dep’t Health & Hum. Servs., 141 S. Ct. 2485, 2489 (2021) (quoting U.S. Forest Serv. v. Cowpasture River Pres. Ass’n, 140 S. Ct. 1837, 1850(2020)); see also West Virginia v. EPA, 142 S. Ct. 2587, 2604 (2022) (Gorsuch, J., concurring). This principle served as one rationale for invalidating the CFPB’s reinterpretation of its UDAAP authority.³⁴⁶See Chamber of Com. of the U.S. v. Consumer Fin. Prot. Bureau, No. 22-cv-00381, 2023 U.S. Dist. LEXIS 159398, at *14 (E.D. Tex. Sept. 8, 2023). This rationale unravels, however, when applied to the U.S. banking system, which has long maintained a dual state and federal regime.³⁴⁷See Heidi Mandanis Schooner, Recent Challenges to the Persistent Dual Banking System, 41 St. Louis U. L.J. 263 (1996).

The contours of the dual banking system have been the subject of vigorous debate and Congress has sought to carefully strike the proper balance between state and federal authority over banks. This ongoing balancing act with respect to bank powers is illustrated by the NBA preemption discussion, above. Today, state banking laws are preempted if they “prevent or significantly interfere with the national bank’s exercise of its powers.”³⁴⁸Lusnak, 883 F.3d at 1192 (quoting Barnett Bank of Marion Cnty. v. Nelson, 517 U.S. 25, 33 (1996)). The Dodd-Frank Act also codified the relationship between states and the CFPB as it relates to laws, regulations, and enforcement authorities.³⁴⁹See Pub. L. No. 111–203, tit. X, subtit. D, 124 Stat. 2012 (2010). In general, a state consumer protection law is not inconsistent with federal consumer protection law if the protection that the state law “affords to consumers is greater than the protection provided” by federal law.³⁵⁰12 U.S.C. § 5551(a)(2).

As far back as McCulloch v. Maryland,³⁵¹17 U.S (4 Wheat.) 316 (1819). the Supreme Court has “held federal law supreme over state law with respect to national banking.”³⁵²Watters v. Wachovia Nat’l Bank, 550 U.S. 1, 10 (2007). It is not clear why the general principle of federalism advocated by the major questions doctrine’s proponents should displace the more specific legal principles underlying the dual banking system. Courts unilaterally upsetting this delicate arrangement would unsettle an important foundation of banking law.

As this discussion should make clear, the major questions doctrine’s proponents have failed to meet the burden of establishing the claim that agencies are politically unaccountable.³⁵³See Posner & Vermeule, supra note 278, at 1753 (noting that “show[ing] that delegation has reduced accountability” requires proving “that the agency regulates against the interests of Congress and the public or the interest groups that have influence with Congress, and that Congress does not attempt to discipline the agency”).

2.      Economic Significance

The major questions doctrine’s “economic significance” factor fails to account for the unique scale of the financial sector and incorporates a form of CBA that overstates the costs and undervalues the benefits of financial rules. Ironically, this aspect of the doctrine potentially insulates important sectors of the economy—which arguably require more regulation based on their systemic significance—from regulation.

a.      Economic Significance Is Context-Specific

Congress and the courts have traditionally recognized that the importance of the banking sector to the economy has necessitated closer regulation and moderation than other industries.³⁵⁴See supra Section I.A.3. The size of a country’s financial sector relative to its GDP can inhibit economic growth and increase volatility, thereby leading to greater risks of financial crisis.³⁵⁵See Jean Louis Arcand, Enrico Berkes & Ugo Panizza, Too Much Finance?, 20 J. Econ. Growth 105, 107 (2015) (finding negative effects on economic growth once a country’s financial sector reaches a threshold between 80-100% of GDP). Under the major questions doctrine, however, the financial sector’s importance to the economy makes it more difficult to regulate.

Major questions cases have cited a variety of financial metrics to evaluate a policy’s economic significance. In Alabama Realtors, the Court used the $50 billion of federal rental assistance appropriated by Congress to be paid out to landlords as a “reasonable proxy of the [eviction] moratorium’s economic impact.”³⁵⁶Ala. Ass’n Realtors v. Dep’t Health & Hum. Servs., 141 S. Ct. 2485, 2489 (2021). In West Virginia v. EPA, the Court cited the likelihood that the rule “would entail billions of dollars in compliance costs (to be paid in the form of higher energy prices), require the retirement of dozens of coal-fired plants, and eliminate tens of thousands of jobs across various sectors.”³⁵⁷142 S. Ct. 2587, 2604 (2022). Justice Neil Gorsuch’s concurrence cited the fact that the “electric power sector is among the largest in the U. S. economy, with links to every other sector” as a reason to apply the major questions doctrine.³⁵⁸Id. at 2622 (Gorsuch, J., concurring) (internal quotation marks and citation omitted).

In Biden v. Nebraska, the Court cited the student loan forgiveness program’s cost to the federal budget of between $469 billion and $519 billion as evidence of its economic significance.³⁵⁹143 S. Ct. 2355, 2373 (2023). It also noted that this cost amounts to roughly one-third of the $1.7 trillion in annual federal discretionary spending and is ten times the estimated “economic impact” of the eviction moratorium.³⁶⁰Id. These amounts ultimately led the Court to conclude that “[t]here is no serious dispute that the Secretary claims the authority to exercise control over ‘a significant portion of the American economy.’”³⁶¹Id. (quoting Util. Air Regul. Grp. v. EPA, 573 U.S. 302, 324 (2014)).

The financial sector dwarfs these examples in its absolute size, interconnectedness, and economic importance,³⁶²See ABA Letter, supra note 305, at 8 (noting the “importance of [large banking organizations] to the provision of credit and other financial services in the economy”); see also Arnold & Porter Letter, supra note 293, at 4 (“The banking sector is undoubtedly a significant portion of the American economy.”); Coates, supra note 294, at 999-1001. suggesting that most financial regulations could trigger the major questions doctrine.³⁶³Cf. The Federalist Society, supra note 160, at 10–11 (highlighting the FSOC’s “ability to stop certain activities can apply to a whole industry, giving FSOC the authority to control whole, entire markets”). Many banking products are sizeable in absolute terms and ubiquitous in their use. U.S. BHCs hold $20 trillion in assets on their balance sheets.³⁶⁴See Steele, supra note 9, at 78–79. There are more than $18 trillion in insured deposits held by 4,796 U.S. banks.³⁶⁵See Fed. Deposit Ins. Corp., Statistics at a Glance, (Mar. 31, 2022), https://perma.cc/L756-D5LS. 1,291 U.S. banks have $200.4 trillion in notional exposure to financial derivatives.³⁶⁶See Off. of the Comptroller of the Currency, Quarterly Report on Bank Trading and Derivatives Activities 1, 10 (June 2022), https://perma.cc/DX7B-TX22. Compared to recent major questions precedents, a rule interpreting whether an activity such as dealing in derivatives constitutes “banking” under the NBA appears to be economically significant. The same logic may apply to determinations of whether an instrument qualifies as a “deposit,”³⁶⁷As others have argued, the definition of “deposit” in banking law remains somewhat ambiguous. See Morgan Ricks, Money as Infrastructure, 2018 Colum. Bus. L. Rev. 757, 809–16 (2018). regulations for BHCs issued by the Fed under the BHCA, or bank capital rules issued on the basis of safety and soundness authority.³⁶⁸See Eric J. Spitler, The Supreme Court’s Major Questions Doctrine: Implications for Responding to Financial Crises, 27 N.C. Banking Inst. 1, 52–53 (2023); see also Letter from H. Comms. for Fin. Servs., supra note 323, at 2 (describing the banking agencies’ joint Basel III Endgame regulatory capital proposed rule as “economically significant”). Indeed, the cryptocurrency industry is arguing that the major questions doctrine immunizes it from existing financial regulations on the basis of investor use and market capitalization that pales in comparison to the legacy banking system.³⁶⁹See Tillemann et al., supra note 304 (arguing that crypto regulation is a major question because 20% of Americans have invested in or used crypto and the industry has “trillions of dollars in market capitalization”); see also Jerry W. Markham, Securities and Exchange Commission vs. Kim Kardashian, Cryptocurrencies and the “Major Questions Doctrine,” 14 Wm. & Mary Bus. L. Rev. 515, 521–27, 550 (2023). Were courts to adopt this view, it could have vast implications for banking, including impeding agency efforts to revisit the system governing U.S. deposit insurance following SVB’s collapse.³⁷⁰See, e.g., Recent Bank Failures and the Federal Regulatory Response: Hearing Before the S. Comm. on Banking, Hous, & Urb. Affs., 118th Cong. 1–3 (2023) (statement of Martin J. Gruenberg, Chairman, Fed. Deposit Ins. Corp.).

The major questions doctrine could have particular impacts upon rules that target the most systemic financial institutions. The eight United States-based Global Systemically Important Banks (“GSIBs”)—holding two-thirds of the assets at all BHCs—are responsible for over $13 trillion in assets under management, hold over $123 trillion in assets under custody, and process more than $1 quadrillion in global payments annually.³⁷¹See Steele, supra note 9, at 78–79. Yet, regulating systemically important institutions or activities is economically significant almost by definition. Under this logic, an agency could have less ability to regulate a financial activity or institution as it becomes more systemic. Applying the major questions doctrine to banking regulation would hinder agencies’ ability to exercise their safety and soundness authority to impose a growth restriction upon, or require divestiture of, a GSIB like Wells Fargo for its myriad consumer protection and compliance violations. It could also nullify aspects of the enhanced prudential standards issued under section 165 of the Dodd-Frank Act, which differentiates institutions by size, subjects large BHCs to more stringent standards, and increases in stringency as an institution grows larger.³⁷²See Tarullo, supra note 96, at 64; see also 12 U.S.C. §§ 5365(a)(1)(B), (b)(3).

In addition to conflicting with the explicit congressional directive contained in section 165 of the Dodd-Frank Act, this would turn the consensus approach of progressively increasing regulation, generally and in the specific context of financial regulation, on its head.³⁷³See Daniel K. Tarullo, Member, Bd. of Governors of the Fed. Rsrv. Sys., Remarks at the Federal Reserve Bank of Chicago Bank Structure Conference: Rethinking the Aims of Prudential Regulation (May 8, 2014) (advocating for a regulatory framework that is tailored to the banking organizations’ risk profile); see also Biden v. Nebraska, 143 S. Ct. 2355, 2399 (2023) (Kagan, J., dissenting) (“Congress allows, and indeed expects, agencies to take more serious measures in response to more serious problems.”). It could also result in a disproportionate regulatory burden on smaller institutions that do not qualify as economically significant under the doctrine.³⁷⁴See generally Sean Hoskins & Marc Labonte, Cong. Rsch. Serv., R4399, An Analysis of the Regulatory Burden on Small Banks (2015) (analyzing the regulatory burden on small banks). This is analogous to allowing the Department of Energy to regulate the safety of rooftop solar panels but not nuclear power plants.

b.      Major Questions’ Cost-Benefit Analysis Is Incomplete

CBA plays an implicit role in evaluating a rule’s economic significance. A major questions doctrine’s analysis requires courts to assess the financial ramifications of an administrative action and conduct a cursory economic balancing—essentially a crude form of CBA.³⁷⁵See supra notes 291–97 and accompanying text. As with other aspects of this analysis, the major questions doctrine CBA has been applied inconsistently. See Brunstein & Revesz, supra note 21, at 235–36 (describing the “arbitrary and malleable metrics” employed by the Trump administration in arguing that major questions doctrine should apply to regulatory actions).

Like other CBAs, the major questions doctrine focuses on the costs that rules impose on private businesses. ³⁷⁶See Chamber of Com. of the U.S. v. Consumer Fin. Prot. Bureau, No. 22-cv-00381, 2023 U.S. Dist. LEXIS 159398, at *13 (E.D. Tex. Sept. 8, 2023) (finding that the CFPB’s interpretation of its UDAAP authority is a major question and is “shown by the millions of dollars per year spent by companies attempting to comply with the UDAAP rule at issue ”); see also Brunstein & Revesz, supra note 21, at 237–42 (discussing the application of regulatory costs under the major questions doctrine). In National Federation of Independent Business v. OSHA, the Court cited the “hefty fines” that OSHA could levy for violating the vaccination and testing policy.³⁷⁷Nat. Fed’n Indep. Bus. v. OSHA, 142 S. Ct. 661, 664 (2022). Similarly, Justice Gorsuch’s concurrence in West Virginia v. EPA cites regulated industries’ estimates of the costs of the EPA’s Clean Power Plan as evidence that the rule is subject to the doctrine.³⁷⁸See West Virginia v. EPA, 142 S. Ct. 2587, 2609–10 (2023) (Gorsuch, J., concurring). The fines, restitution, and other penalties that regulators routinely assess upon financial companies dwarf these figures.³⁷⁹The fines cited in National Federation of Independent Business v. OSHA were between $13,653 and $136,532. 142 S. Ct. at 664. By contrast, the six largest U.S. banks have paid more than $198 billion in fines and settlements from 430 enforcement actions between 2000–2022—an average of $431 million per action. See Better Markets, Wall Street’s Ongoing Crime Spree 5 (May 12, 2022). Indeed, Wells Fargo was recently fined $1.7 billion and ordered to pay $2 billion in restitution related to various harmful consumer practices. See Press Release, Consumer Fin. Prot. Bureau, CFPB Orders Wells Fargo to Pay $3.7 Billion for Widespread Mismanagement of Auto Loans, Mortgages, and Deposit Accounts (Dec. 20, 2022), https://perma.cc/F8C5-QSVA. Indeed, to illustrate the broad nature of the CFPB’s powers, the Court in Seila Law LLC v. Consumer Financial Protection Bureau³⁸⁰140 S. Ct. 2183 (2020). described the CFPB as possessing “the authority to bring the coercive power of the state to bear on millions of private citizens and businesses, imposing even billion-dollar penalties through administrative adjudications and civil actions.” ³⁸¹Id. at 2200–01^.

Also like the typical CBA approach, the major questions doctrine obfuscates the tangible and intangible benefits of regulation. For example, in National Federation of Independent Business v. OSHA the Court set businesses’ claims that OSHA’s rule would “force them to incur billions of dollars in unrecoverable compliance costs and will cause hundreds of thousands of employees to leave their jobs” against OHSA’s estimate that the rule would “save over 6,500 lives and prevent hundreds of thousands of hospitalizations” before concluding that it was not in a position to assess these tradeoffs.³⁸²Nat. Fed’n Indep. Bus., 142 S. Ct. at 666. Similarly, as Justice Elena Kagan noted in West Virginia v. EPA, the CBA in the Court’s analysis factored in the costs of the EPA’s greenhouse gas emissions regulation without considering any of its benefits, which were likely far greater.³⁸³See West Virginia, 142 S. Ct. at 2629–30 (Kagan, J., dissenting). In Seila Law, Justice Kagan also observed that, rather than tallying the impacts to regulated companies of the CFPB’s enforcement actions, “the more relevant factoid for those many citizens might be that the CFPB has recovered over $11 billion for banking consumers.”³⁸⁴Seila Law, 140 S. Ct. at 2239 (Kagan, J., dissenting). However, the Trump administration frequently argued that the number of beneficiaries of an action was a relevant metric in determining whether it should be classified as a Major Question. See Brunstein & Revesz, supra note 21, at 247–49.

While an evaluation of the full costs and benefits of banking regulations is a difficult undertaking involving many uncertain variables, it is clear that such regulations provide substantial benefits to the public. For example, banks charge consumers approximately $12 billion in credit card late fees annually and $15 billion in account overdraft fees.³⁸⁵See Press Release, Consumer Fin. Prot. Bureau, CFPB Initiates Review of Credit Card Company Penalty Policies Costing Consumers $12 Billion Each Year (June 22, 2022), https://perma.cc/879Y-Z9BG; see also, Press Release, Consumer Fin. Prot. Bureau, CFPB Research Shows Banks’ Deep Dependence on Overdraft Fees (Dec. 1, 2021), https://perma.cc/J6K6-9U3F. The CFPB’s regulation of these fees under its UDAAP authority or the Credit CARD Act could potentially save consumers billions of dollars annually.³⁸⁶See Press Release, Consumer Fin. Prot. Bureau, CFPB Initiates Review of Credit Card Company Penalty Policies Costing Consumers $12 Billion Each Year (June 22, 2022), https://perma.cc/879Y-Z9BG. But creating savings for consumers imposes costs for banks in the form of lost revenue.³⁸⁷Alison Bennett & Ronamil Portes, Banks Intend to ‘Close the Gap’ If CFPB Slashes Credit Card Late Fee Income, S&P Global (Feb. 21, 2023), https://perma.cc/ZDW5-TG8M. The CFPB’s ability to regulate such fees could be jeopardized if financial industry profits are the sole measure of economic significance. The same is true of capital rules that might reduce a bank’s return on shareholder equity or constrain shareholder payouts, through dividends and stock buybacks, but which provide safety and soundness and financial stability benefits.³⁸⁸See Steele, supra note 100, at 1007, 1043–44. The Biden v. Nebraska decision illustrates this problematic reasoning, framing the student loan forgiveness program’s broad consumer benefit—including “abolish[ing] $430 billion in student loans, [and] completely canceling loan balances for 20 million borrowers”—as evidence suggestive of agency overreach.³⁸⁹See Biden v. Nebraska, 143 S. Ct. 2355, 2373–74 (2023) (“Practically every student borrower benefits, regardless of circumstances.”).

Lax financial regulation may arguably increase economic growth over the short run, but it does so unsustainably, permitting the excessive buildup of risk.³⁹⁰See Cong. Budget Off., Financial Regulation and the Federal Budget 36–37, 43 (2019). Over time, this can result in catastrophic events at either an institutional or systemic level.³⁹¹See id. The costs of such events include direct costs in the form of bailouts, implicit subsidies that accompany financial rescues, and indirect costs to the broader economy imposed by financial crises.³⁹²See Jonathan R. Macey & James P. Holdcroft, Jr., Failure is an Option: An Ersatz-Antitrust Approach to Financial Regulation, 120 Yale L.J. 1368, 1414–15 (2011). While these costs can be opaque and difficult to quantify, they are nonetheless substantial, particularly in relation to the narrow costs of industry compliance.³⁹³See, e.g., Cong. Budget Off., supra note 390, at 35 (estimating that a hypothetical financial crisis would reduce U.S. GDP by $5.4 trillion over a ten-year period).

Importantly, financial crises have significant costs for households in the form of bankruptcies, foreclosures, and lost jobs and income.³⁹⁴See id. at 43. Financial crises destroy wealth and prosperity on an intergenerational scale.³⁹⁵See Emma Coleman Jordan, The Hidden Structures of Inequality: The Federal Reserve and a Cascade of Failures, 2 U. Pa. J.L. & Pub. Affs. 107, 137 (2017). According to one estimate, the 2008 financial crisis reduced economic output by seven percentage points, the equivalent of each American losing $70,000.³⁹⁶See Regis Barnichon, Christian Matthes & Alexander Ziegenbein, The Financial Crisis at 10: Will We Ever Recover?, FRBSF Econ. Letter (Aug. 13, 2018), https://perma.cc/5L9J-XNE2. These impacts are not evenly distributed. They fall the hardest on marginalized communities, such as communities of color.³⁹⁷See Jordan, supra note 395, at 109–12. Financial calamities also have negative effects on peoples’ health, safety, and wellbeing.³⁹⁸See Hilary J. Allen, A New Philosophy for Financial Stability Regulation, 45 Loy. U. Chi. L.J. 173, 194 (2013). Few financial regulations would likely fail on CBA grounds if the analysis incorporated the savings that result from protecting consumers or preventing financial crises.³⁹⁹See Steele, supra note 100, at 1043–44. For example, the Congressional Budget Office (“CBO”) model for estimating the impact of changes in financial regulatory policy combines historical estimates of: (1) the change in likelihood of bank failures and a resulting financial crisis; (2) the macroeconomic impact of the hypothetical crisis; and (3) the impact of those macroeconomic conditions on federal spending and revenues. See Cong. Budget Off., supra note 390, at 50. As a result, CBO scores deregulatory policies as increasing the federal deficit over a ten-year budget window. See id. at 47.

There are also principled reasons to be skeptical of any judicially imposed CBA requirement. When Congress wants agencies to conduct CBA, it has said so explicitly, including in specific provisions of the Dodd-Frank Act.⁴⁰⁰E.g., 12 U.S.C. § 5512(b)(2)(A)(i); see also Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, § 1100G, 124 Stat. 1376 (codified as amended in scattered sections of 12 U.S.C.). This suggests that CBA is improper where it has not been clearly required by Congress.⁴⁰¹Even where agencies are charged with considering regulatory costs, they may still enjoy discretion in how they analyze the relevant costs. See Michigan v. EPA, 576 U.S. 782, 785 (2015) (Kagan, J., dissenting) (“[W]hen Congress does not say how to take costs into account, agencies have broad discretion to make that judgment.”). Indeed, the FSOC recently declined to include CBA in its process for designating nonbank financial companies for prudential regulation and supervision where the statutory language does not require it.⁴⁰²See Guidance on Nonbank Financial Company Determinations, 88 Fed. Reg. 80110, 80121 (Nov. 17, 2023) (to be codified at 12 C.F.R. pt. 1310) (“The statute instructs the Council to focus on potential threats to financial stability, not the costs of designation to the company under review or to others . . . . Congress determined that when a nonbank financial company meets the statutory standard, designation is justified. The Council declines to second-guess that legislative judgment.”). Imposing CBA, through major questions or otherwise, has particular significance for the Dodd-Frank Act. According to one estimate, the Dodd-Frank Act uses the Michigan v. EPA-cited phrase “necessary and appropriate” or “appropriate and necessary” eighty times. See Richard L. Revesz, Cost-Benefit Analysis and the Structure of the Administrative State: The Case of Financial Services Regulation, 34 Yale J. on Regul. 545, 548 (2017). It is also not clear that courts possess the requisite expertise, data, and perspective to conduct a rigorous CBA evaluating highly technical banking regulations with complex consequences.⁴⁰³See Metzger, supra note 1, at 153–54.

3.      Novel Interpretations

Congress often wants agencies to address “new and big problems.”⁴⁰⁴West Virginia v. EPA, 142 S. Ct. 2587, 2628 (2022) (Kagan, J., dissenting). Adaptability is not just consistent with the New Deal tradition—its roots date back to the Constitution and the views of the Framers. See Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183, 2225, 2245 (2020) (Kagan, J., concurring in the judgment with respect to severability and dissenting in part). Banking is a particularly dynamic industry.⁴⁰⁵See Dan Awrey & Kathryn Judge, Why Financial Regulation Keeps Falling Short, 61 B.C. L. Rev. 2295, 2302–08 (2020); see also Coates, supra note 294, at 1002–03. Financial markets are a perpetual source of ostensible “innovations” that present risks that can easily grow to a systemic scale.⁴⁰⁶See Omarova, supra note 3, at 758; see also Bar-Gill & Warren, supra note 167, at 10. In the financial sector there is “ample historical experience of risks emerging rapidly in fast-growing sectors if left unchecked.”⁴⁰⁷See Aikman et al., supra note 67, at 39.

Financial innovation often tests the limits of banking law and regulation.⁴⁰⁸E.g., S. Rep. No. 100-19, at 2 (1987). Banks and other financial institutions have long sought to engage in the “functional amplification and replication of the core banking franchise” but “without paying the ‘franchise fees’ imposed on banks” in the form of chartering and regulation.⁴⁰⁹Hockett & Omarova, supra note 35, at 1164. Banking regulators must understand the various potential uses—and abuses—of malleable banking instruments and the fine distinctions between “innovative” risk management practices and opportunities for regulatory arbitrage.⁴¹⁰For example, the pre-financial crisis credit default swap market was purportedly a tool to help institutions hedge risk, but instead became a means for banks to take on additional risk while minimizing their regulatory capital requirements. See Chenyu Shan, Dragon Yongjun Tank, Hong Yan & Xing (Alex) Zhou, Credit Default Swaps and Bank Regulatory Capital, 25 Rev. Fin. 121, 125, 135–38 (2020).

Conversely, courts’ narrow interpretations can frustrate agency attempts to address regulatory arbitrage and produce unintended consequences. In the Board of Governors of the Federal Reserve System v. Dimension Financial Corp.⁴¹¹474 U.S. 361 (1986). case, for example, the Court rejected the Fed’s functional approach to regulating nonbanks’ issuance of deposit-equivalent instruments.⁴¹²See id. at 373–74. Later, the proliferation of various deposit substitutes, unaccompanied by commensurate banking regulation, was a contributing factor to the 2008 financial crisis.⁴¹³See John Crawford, A Better Way to Revive Glass-Steagall, 70 Stan. L. Rev. Online 1, 7–8 (2017), https://perma.cc/V3C3-HQCX. Congress attempted to address the growth of nonbank-banks in the Competitive Equality Banking Act of 1987, with limited success due to definitional issues and grandfathering provisions. See Pub. L. No. 100-86, 101 Stat. 552 (1987).

Applying the major questions doctrine’s bias against novel agency interpretations could prevent regulatory agencies from “attempting an innovative use of . . . regulatory authority, even if the statutory text itself does not prohibit or could even sustain such a reading.”⁴¹⁴Gocke, supra note 20, at 972. This aspect of the doctrine requires a level of omniscience from Congress in crafting statutory language that is unrealistic as a practical matter,⁴¹⁵See Biden v. Nebraska, 143 S. Ct. 2355, 2397 (2023) (Kagan, J., dissenting) (“The doctrine forces Congress to delegate in highly specific terms . . . . It is hard to identify and enumerate every possible application of a statute to every possible condition years in the future. So, again, Congress delegates broadly.”); see also Heinzerling, supra note 20, at 1948. and contrary to notions of effective financial regulation.

a.      Banking Activities Evolve Rapidly

Congress and the courts have, for better or worse, given banking regulators discretion to respond to a rapidly evolving industry and deferred to their expertise. When the NBA was enacted in 1863, its drafters could not have anticipated the creation of mortgage-backed securities, stock index futures, or the fintech industry. Each of these activities was novel and was not permissible for national banks to engage in until the OCC reinterpreted the meaning of the NBA.⁴¹⁶See Wilmarth, supra note 128, at 158–69; see also Menand & Ricks, supra note 128, at 1398–406.. The major questions doctrine threatens this tradition by incorporating an antinovelty presumption for assessing agency actions.

As a doctrinal matter, this posture conflicts with settled administrative law. Specifically, the Supreme Court has rejected the idea that novel interpretations of longstanding statutes are inherently suspect.⁴¹⁷See SEC v. Chenery Corp., 332 U.S. 194, 207 (1947). For example, the Court has upheld the OCC’s interpretation that the NBA preempts states from regulating national banks’ credit card late fees as interest, thereby allowing national banks to export their home state rules nationwide, in both a change in the agency’s position and a novel interpretation of the statute.⁴¹⁸See Smiley v. Citibank (S.D.), N.A., 517 U.S. 735, 737, 747 (1996). In doing so, the Court concluded that “neither antiquity nor contemporaneity with the statute is a condition of validity” and “the mere fact that an agency interpretation contradicts a prior agency position is not fatal.”⁴¹⁹Id. at 740, 742.

Interpretations that benefit the cryptocurrency industry may be particularly vulnerable to the major questions doctrine’s antinovelty principle, as it makes responses to new and emerging technologies more difficult.⁴²⁰See Johnson & Tournas, supra note 21, at 194–95. In 2020, for example, the OCC permitted banks to take custody of customers’ cryptographic keys, reasoning that this was analogous to other traditional custody activities.⁴²¹Authority of a National Bank to Provide Cryptocurrency Custody Services for Customers, Off. of the Comptroller of the Currency Interpretive Letter, No. 1170, at 6 (July 22, 2020). The OCC argued that, “as the financial markets become increasingly technological, there will likely be increasing need for banks and other service providers to leverage new technology and innovative ways to provide traditional services.”⁴²²Id. at 5. But the major questions doctrine offers regulators little leeway to make these sorts of interpretations regarding such novel activities, technologies, or financial assets.

Within the current regulatory settlement, Congress retains its prerogative to amend applicable laws to accommodate or address emerging activities and practices. Legislation can respond to regulatory developments or the evolution of markets. For example, Congress intervened when agencies attempted to regulate the derivatives markets in the early 2000s, arguably contributing to the conditions that gave rise to the 2008 financial crisis.⁴²³See Colleen M. Baker, Regulating the Invisible: The Case of Over-the-Counter Derivatives, 85 Notre Dame L. Rev. 1287, 1310–14 (2010). More recently, some members of Congress have proposed legislation to change the ways that cryptocurrency is regulated,⁴²⁴E.g., Lummis-Gillibrand Responsible Financial Innovation Act, S. 4356, 117th Cong. (as introduced to Senate, June 7, 2022). however, a legislative consensus has not yet emerged.⁴²⁵See Timothy G. Massad & Howell E. Jackson, How to Improve Regulation of Crypto Today—Without Congressional Action—and Make the Industry Pay For It 1–2 (Hutchins Ctr. Working Paper No. 79, 2022).

Not all new products, services, and technologies present as meaningfully different from their legacy analogues. New technologies may change the qualitative manner in which financial products and services are delivered, without altering the fundamental economic or legal substance of those products and services.⁴²⁶See Omarova, supra note 3, at 771–90 (discussing the characteristics of bitcoin, blockchains, and initial coin offerings). Some emerging industries may even attempt to exploit their ostensible novelty as part of a political project to avoid traditional regulatory regimes.⁴²⁷See id. at 791–92. In the absence of specifically targeted congressional action, banking laws provide banking agencies with significant discretion to determine the appropriate scope, terms, and conditions of banks’ activities and operations, including novel ones.⁴²⁸See supra Section I.B; see also Bd. of Governors of the Fed. Rsrv. Sys., SR 22-6, Engagement in Crypto-Asset-Related Activities by Federal Reserve-Supervised Banking Organizations (Aug. 16, 2022) (requiring any bank seeking to engage in crypto activities to determine that the activity is permissible for the bank to engage in, and notify the bank’s supervisor in advance).

b.      Effective Banking Regulation Addresses Emerging Risks

Applying the major questions doctrine’s antinovelty principle to bank regulation also risks invalidating important provisions in the Dodd-Frank Act establishing administrative authorities based upon the experience of the 2008 financial crisis.⁴²⁹See Jacob E. Gersen, Administrative Law Goes to Wall Street: The New Administrative Process, 65 Admin. L. Rev. 689, 691 (2013). The Dodd-Frank Act was enacted both to prevent “recurrence of the same problems” that gave rise to the crisis, but also to create a “new regulatory framework that can respond to the challenges of a 21st century marketplace.”⁴³⁰S. Rep. No. 111176, at 42 (2010). The doctrine could jeopardize the latter congressional goal.

The idea that the CFPB should have broad authority to accomplish its consumer-protection mission was central to the CFPB’s conception.⁴³¹See Elizabeth Warren, Unsafe at Any Rate, Democracy J., Summer 2007, at 11 (advocating for the creation of an agency to protect consumers in financial markets and that the agency should have broad tools to address market failures and to “eliminate some of the most egregious tricks and traps in the credit industry”). In her 2008 article proposing the creation of a CFPB, then-Professor Elizabeth Warren noted that the “main drawback of [consumer protection] statutes is their specificity.”⁴³²Bar-Gill & Warren, supra note 167, at 84. Each existing consumer law “identifies specific problems to be addressed and identifies within the statutory framework what practices will be outlawed and what practices will not,” which “inhibits beneficial regulatory innovations.”⁴³³Id. This approach was flawed because “[l]egislation targeted to specific practices, with narrowly defined authority delegated to administrative agencies, is incapable of effectively responding to the high rate of innovation in consumer credit markets and the subtle ways in which creditors can exploit consumer misunderstanding.”⁴³⁴Id. at 99.

Congress thus created an “agency with a broad mandate [that] could develop more institutional expertise and quicker responses to new products and practices.”⁴³⁵Id. The Dodd-Frank Act’s drafters wanted the CFPB to have “enough flexibility to address future problems as they arise.”⁴³⁶S. Rep. No. 111-176, at 11 (2010). They believed that “[c]reating an agency that only had the authority to address the problems of the past, such as mortgages, would be too short-sighted.”⁴³⁷Id. The CFPB is meant to be both powerful and nimble, because “[e]xperience has shown that consumer protections must adapt to new practices and new industries.”⁴³⁸Id. Notwithstanding this clear congressional intent, courts applying the major questions doctrine to the CFPB’s UDAAP authority under the Dodd-Frank Act have chosen to disregard Congress’ explicit choice to provide the CFPB with wide regulatory latitude.⁴³⁹See Chamber of Com. of the U.S. v. Consumer Fin. Prot. Bureau, No. 22-cv-00381, 2023 U.S. Dist. LEXIS 159398, at *18 (E.D. Tex. Sept. 8, 2023) (“Although the ‘unfairness’ language in the Dodd–Frank Act or the FTC Act might be viewed broadly . . . that language has also been viewed as more narrowly limited to vindicating the sovereignty of individual consumer choice.”).

Consumer protection is not the only example of regulatory consensus changing as new practices emerge or difficult lessons are learned. A central post-crisis goal of financial stability regulation is addressing emerging risks.⁴⁴⁰See id. at 2 (explaining that one of the Dodd-Frank Act’s purposes is “establishing an early warning system to detect and address emerging threats to financial stability and the economy”); see also Graham S. Steele, Confronting the “Climate Lehman Moment”: The Case for Macroprudential Climate Regulation, 30 Cornell J.L. & Pub. Pol’y 109, 142 (2020). Predicting ex ante systemic events and their impacts requires regulators to anticipate risks and scenarios the “precise parameters of which cannot be fully known.”⁴⁴¹See Establishing a Framework for Systemic Risk Regulation: Hearing Before the S. Comm. on Banking, Hous., and Urb. Affs., 111th Cong. 75 (2009) (statement of Daniel K. Tarullo, Member, Bd. of Governors of the Fed. Rsrv. Sys.). Thus, section 165 of the Dodd-Frank Act is a broad grant of authority that provides the Fed with a great deal of discretion in its implementation.⁴⁴²See Steele, supra note 100, at 1001–02. Similarly, as the MetLife Inc. v. Financial Stability Oversight Council⁴⁴³177 F. Supp. 3d 219 (D.D.C. 2016). court recognized, the FSOC’s evaluations of potential threats to financial stability rely on “[p]redictive judgment . . . based on reasoned predictions.”⁴⁴⁴Id. at 237. The major questions doctrine makes such judgments, even ones based upon an agency’s substantial subject matter expertise, more difficult, if not impossible.

4.      Agency Expertise

The final relevant major questions doctrine factor is whether an action falls within an agency’s area of expertise. This factor leaves courts to judge the essential nature of what agencies do against the core purpose of the regulation at issue and conclude whether an agency’s action “raises an eyebrow.” This aspect of the doctrine essentially provides courts with a pretext to ignore the principle that an agency’s decision is not arbitrary and capricious where that decision is the product of the agency’s expertise.⁴⁴⁵See Motor Vehicle Mfrs. Ass’n v. State Farm Mutual Auto. Ins. Co., 463 U.S. 29, 43 (1983).

The notion of narrow regulatory expertise is contrary to the nature of banking regulation and supervision, which require agencies to evolve and adopt their expertise to address emerging—and pressing—challenges.⁴⁴⁶See Peter Conti-Brown & David A. Wishnick, Technocratic Pragmatism, Bureaucratic Expertise, and the Federal Reserve, 130 Yale L.J. 636, 679 (2021). Banking regulators must evaluate the risks of banks’ retail and business customers, the nature of complex financial products,⁴⁴⁷See Awrey & Judge, supra note 405, at 2308–11. and the broader economic environment in which banks operate.⁴⁴⁸See Steele, supra note 100, at 1037–38. Tools like lending guidance, for example, require an appreciation for the ways that nonfinancial attributes can impact borrowers’ creditworthiness.⁴⁴⁹See Interagency Guidance on Leveraged Lending, 78 Fed. Reg. 17766 (Mar. 21, 2013). Agricultural lending requires an understanding of the factors that can affect farms’ cash flows, including livestock maintenance, commodity prices, weather conditions, and agricultural policies.⁴⁵⁰See Fed. Deposit Ins. Corp., Prudent Management of Agricultural Lending During Economic Cycles, Financial Institution Letter 5-2020 (Jan. 28, 2020). Lending to oil and gas companies requires awareness of the risks of extractive industries, including the reliability of fossil fuel reserves, environmental laws and policies, and reputational dynamics associated with environmental hazards and accidents.⁴⁵¹See Off. of the Comptroller of the Currency, Oil and Gas Exploration and Production Lending, Comptroller’s Handbook, at 14–17 (2018). Assessing the risks of banks’ international lending and investments in sovereign bonds requires an understanding of how nations’ political, legal, and other institutional dynamics could impact the likelihood of repayment.⁴⁵²See Basel Comm. on Banking Supervision, Bank for Int’l Settlements, The Regulatory Treatment of Sovereign Exposures 30–31 (2017), https://perma.cc/B6GM-T9L7..

Allowing BHCs to participate in an array of financial and nonfinancial activities, as enabled by the passage of GLBA, has likewise required regulators and supervisors to develop commensurate expertise in a wide range of financial and nonfinancial activities. Section 4(k) of the BHCA allows BHCs to trade physical commodities and operate nonfinancial businesses through merchant banking investments.⁴⁵³See 12 U.S.C. §§ 1843(c), (k); see also 12 C.F.R. § 225.28 (2022); 12 C.F.R. subpt. J (2022). To oversee these activities, regulators must understand the risks inherent in banks’ ownership and operation of nonfinancial businesses, including catastrophic environmental events.⁴⁵⁴See Steele, supra note 440, at 153–54. As a result, regulators have adopted specific risk management policies related to permissible activities such as oil transport.⁴⁵⁵See id. at 154 n.225.

Policymakers responsible for preserving financial stability must also consider a broad set of economic risks.⁴⁵⁶See Craig Torres, For Fed’s Disaster Junkie, Pandemic was One of 99 Bad Scenarios, Bloomberg (Sept. 23, 2020), https://perma.cc/2ZF5-LJH3. Regulators have had to respond to the financial impacts of wars, volatile oil prices, foreign currency fluctuations, and terrorist attacks.⁴⁵⁷See Steele, supra note 100, at 1042. That is why tools like supervisory stress testing incorporate a range of hypothetical market scenarios to tests banks’ resilience under extreme conditions.⁴⁵⁸See Steele, supra note 440, at 146–47; see also Tarullo, supra note 96, at 66. Because the sources of these risks are not specified, stress testing requires supervisors to consider extreme and unlikely events in order to be useful.⁴⁵⁹See Steele, supra note 440, at 147. For example, in response to the worst global pandemic in a century, financial regulators took sweeping acts of regulatory forbearance.⁴⁶⁰See Steele, supra note 100, at 1026–31. As the financial regulatory apparatus swung into motion during the onset of COVID-19, there were rightly few voices arguing that the agencies lacked the expertise to use their authority to respond to the financial consequences of a global pandemic.⁴⁶¹E.g., Jeanna Smialek, The Financial Crisis the World Forgot, N.Y. Times (updated Mar. 17, 2021), https://perma.cc/V25X-PB4L (noting that there was “little popular outrage” over the Fed’s actions to support the U.S. financial markets in March 2020 during the early stages of the COVID-19 pandemic).

Some have nonetheless argued that banking agencies are incapable of evaluating novel technologies such as blockchain.⁴⁶²See Thompson et al., supra note 285, at 29. Supervisors have long been required to understand, however, the technology underlying banks’ operations and activities,⁴⁶³See Bd. of Governors of the Fed. Rsrv. Sys., Guidance Regarding Significant Changes in the General Character of a State Member Bank’s Business and Compliance with Regulation H, SR 02-9 (Mar. 20, 2002) (“Changes in the general character of a bank’s business would include, for example, becoming a primarily Internet-focused or Internet-only operation . . . These activities can present novel risks for banking organizations, depending on how they are conducted and managed . . . .”). from data processing services to cybersecurity and cloud computing.⁴⁶⁴See U.S. Dep’t of the Treasury, The Financial Sector’s Adoption of Cloud Services 31–37 (2023), https://perma.cc/X76N-MCA3. In addition, the logic of this argument does not cut the way that its proponents might like it to, as it could constrain agencies’ ability to expand banks’ permissible activities, including the OCC’s interpretations of the bank powers clause. The OCC has allowed banks to engage in custody of cryptocurrency assets under the NBA by extending the logic that banks are already allowed to take custody of traditional financial assets and engage in data processing.⁴⁶⁵See Authority of a National Bank to Provide Cryptocurrency Custody Services for Customers, Off. of the Comptroller of the Currency Interpretive Letter, No. 1170, at 6 (July 22, 2020). Because bank regulators are not computer scientists or engineers, however, it could be argued that they do not possess the requisite expertise to evaluate these technologies. As a result, these interpretations may run afoul of the major questions doctrine. ⁴⁶⁶West Virginia v. EPA, 142 S. Ct. 2587, 2631–32 (2022) (Kagan, J., dissenting) (arguing—rightly—that laws are on their face technology-neutral and that agencies have discretion to evaluate such things).

The major questions doctrine’s proponents have also argued banking regulators are straying beyond their mission by considering financial risks created by climate change.⁴⁶⁷See Heritage Foundation Letter, supra note 303, at 2–3; see also Letter from Sean Reyes, Att’y Gen. of Utah, et al., to Michael J. Hsu, Acting Comptroller of the Currency, Off. of the Comptroller of the Currency 5–6 (Sept. 29, 2022), https://perma.cc/5TA6-BLLM. Courts might well be tempted to extend the logic of West Virginia v. EPA to climate-related financial risk given its superficial connection to the air pollution regulation at issue in that case.⁴⁶⁸See Taryn Zucker, Lauren Lee & Evelyne Kim, West Virginia v. EPA Casts a Shadow Over SEC’s Proposed Climate-Related Disclosure Rule, Harv. L. Sch. F. on Corp. Governance (Aug. 3, 2022), https://perma.cc/P3YX-4LJW. This argument is misguided. In evaluating climate risks, financial agencies are not determining climate policies such as establishing a price on carbon or capping emissions.⁴⁶⁹See Powell, supra note 16, at 3 (stating that the Fed is “not, and will not be, a ‘climate policymaker’”). They are attempting to account for the physical and transition-related financial risks to, and emanating from, financial institutions’ balance sheets.⁴⁷⁰See Steele, supra note 440, at 114–21 (analyzing the financial risks from climate change). As the Fed’s former vice chair for supervision during the Trump administration has noted, banking regulators have traditionally ensured that supervised banks are able to “manage all material risks, whatever the source—which can include climate risk.”⁴⁷¹Randal K. Quarles, Vice Chair for Supervision, Bd. of Governors of the Fed. Rsrv. Sys., Remarks to the National Association of Insurance Commissioners International Insurance Forum 7 (May 26, 2021). The Trump administration’s FDIC chair likewise observed that bank supervisors have “long expected financial institutions to consider and appropriately address potential climate risks that could arise in their operating environment as a meaningful safety and soundness concern” including risks that might appear to lie outside a narrow conception of banking.⁴⁷²Jelena McWilliams, Chairman, Fed. Deposit Ins. Corp, Statement at the Financial Stability Oversight Council Meeting (Mar. 31, 2021).

As these examples demonstrate, evaluating the appropriate scope of a bank regulator’s expertise—and what is “outside its wheelhouse”⁴⁷³Biden v. Nebraska, 143 S. Ct. 2355, 2382 (2023) (Barrett, J., concurring).—is not simple or straightforward. Banking regulation requires wide-ranging knowledge, some elements of which may not be intuitive to judges unfamiliar with all that the job requires. It is also not clear what agencies would be better situated to assume the various responsibilities of bank regulation, including supervision of agricultural lending, oil and gas lending, and international lending activities.

III.      The Quiet Crisis of Major Questions: Unworkability, Instability, Uncertainty, and Unpredictability

Despite its many shortcomings, the major questions doctrine is becoming the preferred vehicle for challenging administrative actions. By limiting regulators’ ability to develop and use their expertise, the major questions doctrine limits Congress’s ability to provide for capacious financial regulation. While anticipating the range of prospective impacts of this nascent interpretive theory is challenging, it is nonetheless clear that courts second guessing agency expertise interferes with the essential processes of bank regulation. That, in turn, will have profound consequences for the financial system—and, by extension, the broader economy and society as a whole.

A.      The Unworkability of Major Questions

At a fundamental level, the major questions doctrine contradicts the longstanding design of banking oversight. The stated purpose of the doctrine is to prevent unintended legislative delegations where an agency attempts to “exploit some gap, ambiguity, or doubtful expression in Congress’s statutes to assume responsibilities far beyond its initial assignment.”⁴⁷⁴Nat. Fed’n Indep. Bus. v. OSHA, 142 S. Ct. 661, 669 (2022) (Gorsuch, J., concurring). In practice, however, the broad application of the doctrine also prevents intentional delegations of authority—even to agencies that possess appropriate expertise⁴⁷⁵See Biden, 143 S. Ct. at 2398 (Kagan, J., dissenting) (“[T]he authority [the HEROES Act] grants goes only to the Secretary [of Education]—the official Congress knew to hold the responsibility for administering the Government’s student-loan portfolio and programs. . . . Student loans are in the Secretary’s wheelhouse.” (citations omitted)); see also Lemley, supra note 10, at 100 (noting that the major questions doctrine “seems to be designed to allow the Court to reject significant agency actions that are within their grant of power but that the agency implements in ways the Court doesn’t like”).—especially where Congress wishes for agencies to be flexible and adaptable.⁴⁷⁶See Biden, 143 S. Ct. at 2397 (Kagan, J., dissenting) (“The new major-questions doctrine works not to better understand—but instead to trump—the scope of a legislative delegation. . . . Congress delegates to agencies often and broadly. And it usually does so for sound reasons. . . . Because times and circumstances change, and agencies are better able to keep up and respond.”). The major questions doctrine is “specially crafted to kill significant regulatory action, by requiring Congress to delegate not just clearly but also micro-specifically.”⁴⁷⁷Id. at 2400 (Kagan, J., dissenting). The goal of the doctrine is to “[p]revent agencies from doing important work, even though that is what Congress directed.”⁴⁷⁸West Virginia v. EPA, 142 S. Ct. 2587, 2641 (2022) (Kagan, J., dissenting). At the very least, it causes agencies to second-guess any potentially innovative or expansive actions.

Because banks are public instrumentalities chartered by the government to perform a quasi-public function, bank regulation implicates more significant governmental interests and diminished private liberty interests.⁴⁷⁹See Fahey v. Mallonee, 332 U.S. 245, 256 (1947) (“It would be intolerable that the Congress should endow an association with the right to conduct a public banking business on certain limitations and that the Court at the behest of those who took advantage from the privilege should remove the limitations intended for public protection. It would be difficult to imagine a more appropriate situation in which to apply the doctrine that one who utilizes an Act to gain advantages of corporate existence is estopped from questioning the validity of its vital conditions.”). Through the banking laws, Congress has repeatedly given banking regulators broad powers to define concepts like safety and soundness and clarified when deference should be afforded to agency interpretations. The major questions doctrine contradicts the foundational principle that regulators should enjoy broad authorities and courts should defer to their specialized expertise. ⁴⁸⁰See Biden, 143 S. Ct. at 2397 (Kagan, J., dissenting) (“Congress delegates to agencies often and broadly . . . . [b]ecause agencies have expertise Congress lacks.”); see also Lemley, supra note 10, at 99 (“[Chevron] deference is based on agency expertise, and it has traditionally been at its highest in complex areas where agency expertise is more important.”)^. At its most basic level, the issue being raised by those major questions doctrine proponents is whether such intentional delegations are acceptable. Given that, the nondelegation doctrine would be the more appropriate vehicle for invalidating financial regulators’ discretion. Courts have already long recognized, however, that doing so would have dramatic implications for agencies’ ability to effectively regulate the banking system.⁴⁸¹See Bd. of Governors of the Fed. Rsrv. Sys. v. Agnew, 329 U.S. 441, 449 (1947) (rejecting a nondelegation challenge to section 32 of the Glass-Steagall Act because the “limits of administrative action are sufficiently definite or ascertainable”); see also Fahey, 332 U.S. at 249–54 (rejecting a nondelegation challenge to the Federal Home Loan Bank Board’s authority to issue regulations governing the placement of savings and loans into conservatorship). Even when recent court decisions have questioned the validity of the CFPB’s structure, they have nonetheless upheld its broad UDAAP authority against a nondelegation doctrine challenge because it is “accompanied by a specific purpose, objectives, and definitions to guide the Bureau’s discretion.”⁴⁸²Cmty. Fin. Servs. Ass’n of Am., Ltd. v. Consumer Fin. Prot. Bureau, 51 F.4th 616, 635 (5th Cir. 2022). While the Court of Appeals for the Fifth Circuit was specifically addressing the CFPB’s unfairness authority, it also noted that the abusiveness authority contained specific criteria to guide the CFPB. See id. at 634 & n.7.

The major questions doctrine’s role as a “status quo ante principle,”⁴⁸³Gocke, supra note 20, at 972. designed to prevent agency action in response to significant developments, has significant implications for banking. Preserving the status quo, whether through action or inaction, is itself a policy choice. The major questions doctrine could, for example, cast doubt on precedents establishing banking regulators’ authority to define permissible activities, including the OCC’s opinion letters interpreting the “business of banking” under the NBA and the Fed’s interpretations of activities that are “closely related” or “complementary” under the BHCA.⁴⁸⁴E.g., Nationsbank of N.C., N.A. v. Variable Annuity Life Ins. Co., 513 U.S. 251, 257 (1995). If a bank were to enter into a new line of business not clearly within the “business of banking,” and regulators failed to stop them, then the agency has violated both its obligation to administer the banking laws and the status quo ante principle underlying the major questions doctrine. It would also run afoul of the Court’s administrative law precedents recognizing that there are consequences to both pro-regulatory and deregulatory decisions, and therefore both types of decisions should be subjected to commensurate scrutiny.⁴⁸⁵See Motor Vehicle Mfrs. Ass’n v. State Farm Mutual Auto. Ins. Co., 463 U.S. 29, 42 (1983). A competitor industry might well have standing to challenge such actions,⁴⁸⁶Many of the seminal bank activities cases were brought by mutual fund, insurance, and other nonbank financial companies on the theory that the injury suffered by allowing banks into nonbanking business put them within the “zone of interest.” E.g., Ass’n of Data Processing Svc. Orgs., Inc. v. Camp, 397 U.S. 150, 155­–56 (1970); see also Clarke v. Sec. Indus. Ass’n, 479 U.S. 388, 496–97 (1987). It is generally easier for business competitors to establish standing than public interest organizations challenging deregulatory actions that harm the public, but where a direct showing of injury is more attenuated. E.g., Better Markets, Inc. v. U.S. Dep’t of Just., 83 F. Supp. 3d 250, 255 (D.D.C. 2015). For a fulsome discussion of standing issues involved in private litigation challenging financial regulatory interpretations, see Schooner, supra note 223, at 975–85. but it is not clear why regulatory inaction would be either preferable or lawful where a rule affirmatively allowing the activity might otherwise be struck down.

Under the major questions doctrine, regulatory decisions are made by courts in the first instance, which lack the requisite expertise to second guess agency judgments regarding both highly technical regulatory matters and Congress’ intent when crafting U.S. banking laws.⁴⁸⁷See Bd. of Governors of the Fed. Rsrv. Sys. v. Agnew, 329 U.S. 441, 450 (1947) (Rutledge, J., concurring) (banking agencies’ “specialized experience gives them an advantage judges cannot possibly have, not only in dealing with the problems raised for their discretion by the system’s working, but also in ascertaining the meaning Congress had in mind in prescribing the standards by which they should administer it”). Relative to agency actions, imprudent judicial decisions are difficult to rectify when circumstances change or new risks emerge.⁴⁸⁸See Coenen & Davis, supra note 274, at 820. The legislative branch is the secondary option, but Congress is limited in both its technical expertise and the time available to devote to issues as specialized as banking.⁴⁸⁹See Emerson, supra note 20, at 2090. As a result of a decades-long project of institutional hollowing, there has been a decline in experienced Congressional policy staff to assist in crafting legislation. See Paul Glastris & Haley Sweetland Edwards, The Big Lobotomy, Wash. Monthly, (June 9, 2014), https://perma.cc/48LR-5FG9. The committees of the House of Representatives had fewer professional staff in 2009 than in 1994. See id. As of 2014, the bodies constructed to aid Congress in its oversight mission—the Government Accountability Office and the Congressional Research Service—were operating at about 80% of their 1979 staff capacity. See id. Congress is simply not equipped to make the sort of highly technical and consequential policy decisions typically made by agencies, particularly ones involving an industry as innovative as finance.⁴⁹⁰See Bar-Gill & Warren, supra note 167, at 85. While it has been suggested that the United States could adopt a European Union-style policymaking process, whereby regulations are submitted to the legislature for approval,⁴⁹¹See Kyle Campbell, Quarles: Supreme Court Ruling Could Lead to European-Style Approach to Bank Regulation, Am. Banker (Sept. 7, 2022, 4:03 PM), https://perma.cc/37AC-AZ55. this is unrealistic. It is true that other jurisdictions have long exercised greater direct political control over the regulatory process than in the United States,⁴⁹²See Gadinis, supra note 317, at 375–79. however, the U.S. Congress lacks the political urgency to address the myriad pressing regulatory issues of our time. The U.S. legislative process contains unique obstacles⁴⁹³See Litman, supra note 285, at 1429–33. making it slow and cumbersome to enact new statutes.⁴⁹⁴See id. Rather than facilitating robust debate and compromise through legislation, the major questions doctrine creates policy gridlock.⁴⁹⁵This dynamic has at times been held out as one of the benefits of the major questions doctrine. See West Virginia v. EPA, 142 S. Ct. 2587, 2626 (2022) (Gorsuch, J., concurring) (“[T]he Constitution does not authorize agencies to use pen-and-phone regulations as substitutes for laws passed by the people’s representatives.”).

Our current system of bank regulation exists because courts have recognized that they lack the proper expertise to evaluate fundamental policy judgments and instead defer to regulatory agencies to make informed decisions. Once courts start down the slippery slope created by a major questions doctrine analysis, they would have to devise a way to establish prudent and coherent distinctions between major and minor banking regulations. But this would be a difficult task given the lack of any broader framework under the doctrine. What are the appropriate numeric thresholds that make a banking issue economically significant? Does the major questions doctrine apply to other banking agency actions besides regulation, such as approval or denial of mergers and acquisitions or enforcement actions?⁴⁹⁶E.g., Sec. Indus. Ass’n v. Bd. of Governors of the Fed. Rsrv. Sys., 468 U.S. 207, 221 (1984) (holding the Fed’s approval of a BHC’s acquisition of a retail securities brokerage as “closely related” to the business of banking was a reasonable interpretation section 4 of the BHCA). Drawing lines between new and old laws is no simpler. The bank regulatory regime would be unwieldy if specific authorities, activities, and risks were treated with varying levels of scrutiny—for example, if agencies were entitled to deference when determining whether a practice is “unfair” but not “abusive,” or if a determination that an activity constitutes “banking” is entitled to deference but not one that implicates “financial stability.” Consistent with the broader theme of this major questions doctrine analysis, determining the scope of “major” financial questions requires policy decisions that are properly addressed by agencies, not courts.⁴⁹⁷See Blake Emerson, Major Questions and the Judicial Exercise of Legislative Power, Yale J. on Regul. Notice & Comment (Feb. 28, 2020), https://perma.cc/HE3B-7JVM.

These unworkable features of the major questions doctrine are likely to have significant implications for the conduct of bank regulation. By extension, the doctrine has the potential to impact the institutions and public that rely upon effective regulation to ensure a stable and vibrant banking system.

B.      The Unintended Consequences of Major Questions

In addition to its general unworkability as an administrative doctrine, applying the major questions doctrine specifically to bank regulation would have a range of practical—likely unintended—consequences. It would impair the functioning of the banking system by increasing the likelihood and frequency of episodes of instability and uncertainty for businesses and markets. It could also increase policy uncertainty, due to agencies’ likely reliance on bank supervisory processes that are more ad hoc and less transparent than formal rules and prospective legislative reforms that are blunter and more structural than technocratic regulation. These outcomes would likely be unwelcome for many major questions doctrine proponents and opponents alike.

1.      Major Questions Will Lead to More Financial Instability

The major questions doctrine’s interrelated factors bias agency inaction over action,⁴⁹⁸See Heinzerling, supra note 20, at 1987. creating a regulatory chilling effect. The result is deregulation through inaction. In prioritizing deregulation over regulation, the doctrine defies the Court’s longstanding recognition that deregulatory actions are as consequential as regulatory ones and should therefore be subject to equivalent scrutiny.⁴⁹⁹See Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 42 (1983). It also harkens back to the failed model of law and economics regulation that prioritized wealth maximization, transactional efficiency, and private markets over public law.⁵⁰⁰See Steele, supra note 100, at 1033–36. This style of laissez faire regulation dominated banking regulation for decades, culminating in the 2008 financial crisis.⁵⁰¹See Stephen Golub, Ayse Kaya & Michael Reay, What Were They Thinking? The Federal Reserve in the Run-up to the 2008 Financial Crisis, 22 Rev. Int. Pol. Econ. 657, 660–64 (2015).

As Justice Kagan said in West Virginia v. EPA, “The stakes here are high.”⁵⁰²West Virginia v. EPA, 142 S. Ct. 2587, 2644 (2022) (Kagan, J., dissenting). To be clear, the “stakes are high” in many administrative fields, including environmental cases, which involve the fate of a habitable planet or regulations governing standards for food, water, pharmaceuticals, consumer products, and the workplace. See Emerson, supra note 497. When financial regulators fail in, or are prevented from, doing their jobs, financial crises ensue.⁵⁰³See United States v. Phila. Nat’l Bank, 374 U.S. 321, 327 (1963) (“[T]he proper discharge of these functions is indispensable to a healthy national economy, as the role of bank failures in depression periods attests.”); see also S. Rep. No. 111-176, at 15–17, 166 (2010) (describing prudential banking agencies’ consumer financial protection regulatory failures preceding the GFC); Steele, supra note 440, at 154–55. Crises have devastating impacts on people and communities—they exacerbate economic and racial inequality and increase social and political instability.⁵⁰⁴See supra notes 355–358 and accompanying text; see also Manuel Funke, Moritz Schularick & Christoph Trebesch, Going to Extremes: Politics After Financial Crises, 1870–2014, 88 Euro. Econ. Rev. 227 (2016).

Many of the nation’s financial regulatory agencies exist as a result of Congress responding to financial crises by creating robust and independent agencies.⁵⁰⁵See McCoy, supra note 315, at 69–70. Preventing financial regulators from innovating, particularly in response to potential threats to financial stability, would sow the seeds of the next financial crisis. As with the “quiet crisis” decried by President Roosevelt, this crisis would be judicially created.

2.      Major Questions Will Lead to More Market Uncertainty

According to conventional wisdom, the efficient operation of financial markets requires a degree of certainty.⁵⁰⁶See Brief of the Clearing House Association et al. as Amici Curiae Supporting Petitioner at 16, Madden v. Midland Funding LLC, 579 U.S. 927 (2016) (No. 15-610) [hereinafter Clearing House Brief]. Financial agencies provide legal certainty to industry participants through the regulations and guidance that establish the parameters of compliance.⁵⁰⁷See Emerson, supra note 323, at 419–21. By reopening previously settled regulatory policies, the major questions doctrine disrupts market participants’ expectations, ⁵⁰⁸See Brunstein & Revesz, supra note 21, at 219; see also Heinzerling, supra note 20, at 1982–85. introducing uncertainty into the banking system.

To the extent that the major questions doctrine could apply to agency guidance, it would deprive agencies of an important tool used to provide supervised institutions with views on supervisory matters in a transparent and consistent manner.⁵⁰⁹See Role of Supervisory Guidance, 86 Fed. Reg. 18173, 18173 (Apr. 8, 2021) (codified at 12 C.F.R. pt. 262). While this development would likely please some critics of these decisions,⁵¹⁰E.g., Menand & Ricks, supra note 128, at 1398–1406, 1414–17. the resulting uncertainty could inhibit private sector innovation. For example, the doctrine could be used to cabin the OCC’s interpretive authority to define permissible banking activities under the NBA, effectively returning to a previous “narrow view” of the “business of banking.”⁵¹¹See Symons, supra note 128, at 678-80. This is particularly true in the fields of fintech and cryptocurrency that lack sufficient basis in past agency decisions⁵¹²Cf. Lacewell v. Off. of the Comptroller of the Currency, 999 F.3d 130, 138–39 (2d Cir. 2020). and potentially lie outside the scope of financial regulators’ core expertise. In this sense, it is ironic that cryptocurrency industry advocates are calling for the major questions doctrine to be applied to financial regulation,⁵¹³E.g., Brief for the Blockchain Association as Amicus Curiae Supporting Defendants, SEC v. Wahi, No. 22-cv-01009 (W.D. Wash. Feb. 13, 2023); see also Thompson et al., supra note 285, at 35 (“[The] decision to restrict the use of blockchain technology by private companies . . . is the sort of major policy decision that the elected representatives of the people assembled in Congress must make.”). as it would hinder the broad adoption of these products and services by regulated financial institutions.

The major questions doctrine also raises issues of consistency and predictability. The doctrinal analysis relies on multiple factors, the relative weights of which are unclear, with many remaining open questions about its application.⁵¹⁴See Biden v. Nebraska, 143 S. Ct. 2355, 2384 (2023) (Barrett, J., concurring) (“[T]he doctrine is not an on-off switch that flips when a critical mass of factors is present . . . .”); see also Coenen & Davis, supra note 274, at 799 (noting that to develop a consistent application of the major questions doctrine, the Court “would need to identify factors of relevance to the variable of majorness, explain how to evaluate those factors in a given case, develop a mechanism for weighing those factors against one another, define a threshold point at which the weighing process supports a conclusion of majorness or nonmajorness, and so forth”). The doctrine effectively delegates policymaking to hundreds of federal judges with a broad spectrum of views and varying degrees of familiarity with the underlying subject matter. Because the major questions doctrine has not been applied uniformly to date⁵¹⁵See West Virginia v. EPA, 142 S. Ct. 2587, 2620 n.3 (2022) (Gorsuch, J., concurring) (noting that the major questions doctrine has at times been applied “more like an ambiguity canon”); see also Gocke, supra note 20, at 967; Tortorice, supra note 20, at 1104.—each factor is “suggestive”⁵¹⁶West Virginia, 142 S. Ct. at 2622 (Gorsuch, J., concurring).—it relies upon judges’ subjective views of its vague parameters.⁵¹⁷See U.S. Telecom Ass’n v. FCC, 855 F.3d 381, 423 (D.C. Cir. 2017) (Kavanaugh, J., dissenting) (“To be sure, determining whether a rule constitutes a major rule sometimes has a bit of a ‘know it when you see it’ quality.”); see also Heinzerling, supra note 20, at 1986–90; Gocke, supra note 20, at 1007. For market participants, anticipating and reconciling the disparate views of the federal judiciary would lead to inconsistent outcomes that would cloud expectations, at least until a case reaches the Supreme Court.⁵¹⁸See Brief for the Mortgage Bankers Association et al. as Amici Curiae Supporting Neither Party at 16, Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183 (2020) [hereinafter Mortgage Bankers Ass’n Brief].

Using the major questions doctrine to weaken agency deference could also increase the partisanship of judicial review of agency actions. Independent financial agencies exist in part because “political manipulation could wreak havoc on business and the financial system.”⁵¹⁹McCoy, supra note 315, at 71. The use of Chevron deference furthers this goal by reducing partisan outcomes in statutory interpretation cases.⁵²⁰See Kent Barnett, Christina L. Boyd & Christopher J. Walker, Administrative Law’s Political Dynamics, 71 Vand. L. Rev. 1463, 1468 (2018).

Banking industry associations have argued that uncertainty can reduce access to and increase the cost of credit.⁵²¹See Clearing House Brief, supra note 506, at 21–22; see also Mortgage Bankers Ass’n Brief, supra note 518, at 17–19. It wastes the resources that institutions spend to comply with existing rules and leads to additional costs in order to comply with the new, judicially created ones.⁵²²See Mortgage Bankers Ass’n Brief, supra note 518, at 17, 20. It can even impact the safety and soundness of banks and other financial institutions and threaten the stability of the financial system.⁵²³See Clearing House Brief, supra note 506, at 21; see also Mortgage Bankers Ass’n Brief, supra note 518, at 13; id. at 21 (invalidating the CFPB’s past actions “would run counter to Congress’s stated purpose in the Dodd-Frank Act of promoting financial stability, and therefore should be avoided”).

Uncertainty interferes with the operation of a financial sector that is critical to a well-functioning economy, potentially grinding financial activity to a halt.⁵²⁴See Mortgage Bankers Ass’n Brief, supra note 518, at 10–13, 15–17. All of these outcomes conflict with the major questions doctrine’s purported goal of ensuring greater clarity and certainty in administrative decision-making.⁵²⁵See Kisor v. Wilkie, 139 S. Ct. 2400, 2437–38 (2019) (Gorsuch, J., concurring); see also Emerson, supra note 325, at 392–94. This dynamic helps to explain the recent recognition among some businesses of the stability provided by various forms of regulation.⁵²⁶See J.S. Nelson, The Growth in Business Support for Regulation, Regul. Rev. (Apr. 19, 2023), https://perma.cc/9W38-FBYP.

3.      Major Questions Will Encourage Regulation by Supervision

While the major questions doctrine would significantly curtail banking regulators’ authority, they would not be entirely powerless. By stymying financial rulemaking, the doctrine could force regulators to utilize other available tools, including the supervisory process.

Supervision is the primary means through which the banking agencies enforce their safety and soundness authority,⁵²⁷See Menand, supra note 39, at 953–55. and the CFPB identifies UDAAPs.⁵²⁸See Consumer Fin. Prot. Bureau, Examination Manual, Unfair, Deceptive, or Abusive Acts or Practices (2022). Supervision is more institution-specific, but also less transparent, predictable, and reviewable than rulemaking.⁵²⁹See Metzger, supra note 1, at 140. Agencies have already begun narrowing the role of supervisory guidance. See Role of Supervisory Guidance, 86 Fed. Reg. 18173, 18173 (Apr. 8, 2021) (codified at 12 C.F.R. pt. 262). The Government Accountability Office has determined that guidance is subject to Congressional Review Act review, resulting in the 2018 repeal of the CFPB’s guidance on indirect automotive financing. See Letter from Susan Pollig, Gen. Counsel, Gov’t Accountability Off., to Sen. Patrick J. Toomey, Chairman, Subcomm. on Fin. Insts. & Consumer Prot. (Oct. 19, 2017), https://perma.cc/9RLB-LNFY; see also Joint Resolution of May 21, 2018, Pub. L. No. 115–172, 132 Stat. 1290 (2018). Agencies could bypass courts’ major questions doctrine review of their regulations by making greater use of their examination, supervision, and enforcement powers.

By foreclosing regulation as an option in most circumstances, the major questions doctrine could lead to actions that would normally be handled through public rulemaking, and applied industry-wide, instead being imposed through private supervisory actions taken on an individualized basis and subject to limited judicial review.⁵³⁰The Court has acknowledged that agencies “must retain power to deal with . . . problems on a case-to-case basis if the administrative process is to be effective” and thus there is a “very definite place for the case-by-case evolution of statutory standards.” SEC v. Chenery Corp., 332 U.S. 194, 203 (1947). While there have been recent attempts to use legal challenges to make supervision into a rote administrative process, analogous to that which applies to regulation, such efforts are unlikely to succeed. See Tarullo, supra note 67, at 283–85. Supervisory activities can then be reinforced by enforcement actions brought by agencies against institutions on a case-by-case basis—an approach that is sometimes referred to as conducting “regulation by enforcement.”⁵³¹See Chris Brummer, Yesha Yadav & David T. Zaring, Regulation by Enforcement, S. Cal. L. Rev. (forthcoming), https://perma.cc/H8XC-HKZQ. Whether or not it is desirable as a policy matter, the Court has recognized that the “choice made between proceeding by general rule or by individual, ad hoc litigation is one that lies primarily in the informed discretion of the administrative agency.” Chenery Corp., 332 U.S. at 203. Again, it is ironic that the adoption of the major questions doctrine could result in procedural outcomes, and a new financial regulatory settlement, that undermine some of the doctrine’s stated goals of increased transparency, predictability, and accountability.

4.      Major Questions Could Lead to More Structural Reforms

The major questions doctrine shifts policy decision–making away from technocrats at administrative agencies to politicians in the legislature. While, as noted above, this is largely a recipe for inaction, such an approach carries some policy risk for industry participants. Namely, the pace of regulation may decline under the major questions doctrine, but the nature of the policies that are enacted could become more volatile.

Rather than fine-tuning regulatory dials and creating complex administrative schema, legislators may enact more sweeping and structural reforms. In this scenario, the regulatory pendulum would be slower moving, but swing more widely. This would introduce an additional form of policy uncertainty, another unwelcome outcome for market participants.

Scholars have argued that legislative financial reforms are born out of forcing events—either a crisis or scandal—combined with moments of political exigency.⁵³²See Roberta Romano, The Sarbanes-Oxley Act and the Making of Quack Corporate Governance, 114 Yale L.J. 1521, 1523–26 (2005) (discussing the political environment in which the Sarbanes-Oxley Act was enacted). But see Peter Conti-Brown & Michael Ohlrogge, Financial Crises and Legislation, 4 J. Fin. Crises 1, 5 (2022) (finding “roughly 84% of all U.S. securities legislation was passed in the immediate aftermath of equity crises” while “only 36% of U.S. banking legislation was passed in the aftermath of banking crises” suggesting “that the crisis-legislation hypothesis fits well for securities legislation but much more poorly for banking legislation”). The Dodd-Frank Act legislative process provides one such example. The most meaningful structural reform, a provision pushing complex derivatives outside of the federal safety net, was included at the behest of a Senate committee chair was facing a competitive primary campaign in which she was being criticized for being too politically moderate and sympathetic to the banking industry.⁵³³See Arthur E. Wilmarth, Jr., The Dodd-Frank Act: A Flawed and Inadequate Response to the Too-Big-to-Fail Problem, 89 Or. L. Rev. 951, 1030–34 (2011) (discussing the legislative history of the “Lincoln Amendment”). Similarly, the Obama administration adopted the Volcker Rule’s structural prohibition against banking entities engaging in proprietary trading in response to the 2010 special election victory of a Republican Senate candidate in the heavily Democratic state of Massachusetts.⁵³⁴See id. at 1025–30 (discussing the legislative history of the Volcker Rule). As these examples highlight, while members of Congress lack the expertise and resources of financial regulators, they may at times adopt populist, anti-Wall Street proposals in response to financial crises or scandals.⁵³⁵See Federico Favaretto & Donato Masciandaro, Populism, Financial Crises and Banking Policies: Economics and Psychology, 69 Scottish J. Pol. Econ. 441, 442 (2021).

Extending the major questions doctrine to banking regulation could also lead to legislative reforms that take aim at the courts themselves. To address perceived judicial overreach, Congress could begin imposing more explicit statutory standards of deference,⁵³⁶See Wilmarth, supra note 340, at 293 (advocating legislation repealing Chevron deference for regulators’ interpretation of permissible activities, subjecting them to de novo review); see also Menand & Ricks, supra note 128, at 1401–06 (arguing the NBA is Federal corporate law, and therefore the OCC’s interpretations should be construed in favor of the public and against the corporation). as it did as with the OCC’s preemption authority, or Congress could codify a general standard of review like the one established in Camp and its progeny.⁵³⁷See supra notes 193–195, 341–343 and accompanying text. Either approach would cabin courts’ future role in statutory judicial review.

Conclusion

The major questions doctrine employs simplistic ideas about democratic norms, selective measures of economic costs, flimsy representations about historical tradition, and anachronistic notions of expertise to unsettle once-settled expectations regarding agencies’ powers. As this Article has argued, the factors that comprise the major questions doctrine analysis are ill suited for the banking system. Congress has recognized the importance of banking within our economy, crafted banking statutes containing broad authority for regulators in recognition of their wide-ranging expertise, and repeatedly ratified this arrangement. Courts have generally followed Congress’s lead and deferred to financial regulators’ expertise. So long as regulators operate within their statutory mandates, courts should not view financial policy decisions as major questions.⁵³⁸While banking agencies enjoy significant deference, there are clearly times when their actions can exceed any reasonable reading of their authorities. One example is the OCC’s proposed “Fair Access” rule. Based upon the provision of the NBA establishing the OCC’s purpose, this proposal was a response to banks from making business decisions not to finance certain oil and gas drilling projects by effectively requiring them to fund such projects. See Fair Access to Financial Services, 85 Fed. Reg. 75261, 75263 (Nov. 25, 2020) (codified at 12 C.F.R. pt. 55); see also 12 U.S.C. § 1(a). The final “Fair Access” proposal was never transmitted to the Federal Register, and thus never took effect. See Press Release, Off. of the Comptroller of the Currency, OCC Puts Hold on Fair Access Rule (Jan. 28, 2021), https://perma.cc/S3M4-C3PB. While OCC claimed that its interpretation was entitled to Chevron deference, see Fair Access to Financial Services, 85 Fed. Reg. at 75264 n.18, traditional judicial review of the OCC’s action would likely have resulted in its being struck down for a variety of reasons, including as a rule that was arbitrary and capricious under the Administrative Procedure Act. See Graham S. Steele, Comment Letter on Fair Access to Financial Services (Jan. 4, 2021), https://perma.cc/SCD4-ZBTV (arguing that the proposed rule rested on a dubious legal foundation, was based upon a false premise regarding the basis for banks’ credit decisions, and was vaguely worded and risked significant unintended consequences); see also Tarullo, supra note 67, at 394 (describing the rule as an attempt to “bootstrap a general statutory charge [to] the Comptroller . . . into supervisory guidance pushing banks to lend to specific borrowers or industries”).

In another example of an action that exceeded the OCC’s statutory authority, in June 2020, the then-Acting Comptroller warned local elected officials that public health measures responding to the COVID-19 pandemic could “threaten the stability and orderly functioning of the financial system” because work-from-home policies could increase vandalism and looting of commercial properties and masking policies could increase the likelihood of bank robberies. See Letter from Brian Brooks, Acting Comptroller of the Currency, to Bryan K. Barnett, Mayor of Rochester Hills, Mich., and Tom Cochrane, CEO & Exec. Dir., U.S. Conf. of Mayors (June 1, 2020), https://perma.cc/24SM-2F2C. Both of these risks were highly attenuated from the OCC’s mission and responsibilities, and this guidance was generally ignored by local officials and regulated institutions.

Extending the major questions doctrine to banking regulation poses a threat to the legitimacy of the judicial branch. The public’s confidence in the courts is low,⁵³⁹E.g., Press Release, Marquette Univ., New Marquette Law School Poll Finds National Approval of U.S. Supreme Court’s Work Continues to be Lower Than in 2020 (Sept. 21, 2022), https://perma.cc/8TLY-C279 (finding 40% of adults approve of the job the U.S. Supreme Court is doing, while 60% disapprove). and the current Supreme Court has developed an especially pro-business reputation.⁵⁴⁰See, e.g., Lee Epstein & Mitu Gulati, A Century of Business in the Supreme Court, 1920–2020, 107 Minn. L. Rev. Headnotes 49 (2022) (analyzing how business friendly the Supreme Court has been over the past century). Financial deregulation is similarly unpopular.⁵⁴¹See Steele, supra note 100, at 1044; see also Metzger, supra note 1, at 152. The combination of these dynamics suggests that the judicial branch would risk further damaging its credibility by injecting itself into technical, but nonetheless high stakes, financial policy decisions. ⁵⁴²Cf. Biden v. Nebraska, 143 S. Ct. 2355, 2399–2400 (2023) (Kagan, J., dissenting) (“[The Court] makes itself the decisionmaker on, of all things, federal student-loan policy. And then, perchance, it wonders why it has only compounded the ‘sharp debates’ in the country?”)^.

The major questions doctrine poses a significant reputational risk to the judiciary. Any court that contemplates striking down a financial regulation could later have its decision cited as a proximate cause of a damaging event, from an individual bank failure to a financial crisis. That is why, throughout their reviews of banking law and policy, courts have repeatedly declined to second guess legislative decisions or interfere in agency policymaking, particularly where elected legislators have also declined to do so.⁵⁴³Cf. King v. Burwell, 576 U.S. 473, 498 (2015) (“In a democracy, the power to make the law rests with those chosen by the people . . . . in every case we must respect the role of the Legisla­ture, and take care not to undo what it has done.” (citation omitted)).

In these ways, expanding the doctrine and ignoring the public interest could further erode the Court’s credibility and provoke political backlash like that experienced during the New Deal and other historical periods.⁵⁴⁴See Lemley, supra note 10, at 117–18. Continuing to recognize the limits of their financial acumen, and respecting the expertise of regulatory agencies, benefits judges by deferring the responsibility for high-stakes financial policy decisions to regulators who are better equipped to assume that responsibility and are more politically accountable.⁵⁴⁵See Biden, 143 S. Ct. at 2397 (Kagan, J., dissenting) (“But this Court? It is, by design, as detached as possible from the body politic. That is why the Court is supposed to stick to its business—to decide only cases and controversies, and to stay away from making this Nation’s policy about subjects like student-loan relief.” (citation omitted)); see also id. at 2399 (“Maybe Congress was wrong to give the Secretary so much discretion; or maybe he, and the President he serves, did not make good use of it. But if so, there are political remedies—accountability for all the actors, up to the President, who the public thinks have made mistakes. So a political controversy is resolved by political means, as our Constitution requires.”); see also Coenen & Davis, supra note 274, at 819–20. Today’s Court should take a lesson from the New Deal era Court, which exercised restraint in the face of the prospect of political blowback from its decisions,⁵⁴⁶See Ginsburg & Menashi, supra note8, at 257–58. and refrain from applying the major questions doctrine to banking.