A billionaire benefactor of Supreme Court Justice Samuel Alito has a significant financial stake in companies supervised by the Consumer Financial Protection Bureau, as the watchdog faces the crosshairs of an upcoming case before the high court, The New Republic has learned.
Paul Singer, a controversial money manager and longtime GOP megadonor, has a hedge fund that holds at least a $90 million stake in financial companies that would stand to benefit were the court to rule against the CFPB in the pending case, captioned Consumer Financial Protection Bureau v. Community Financial Services Association of America.
In the case, a group of lenders, upset at a 2017 CFPB ruling that prevented them from making a third attempt to withdraw funds from borrowers’ bank accounts, sued the bureau, challenging the constitutionality of how it is funded. The district court rebuffed that claim, but the Fifth Circuit Court of Appeals reversed the district court. The Supreme Court announced in February that it would hear the case. Consumer advocates worry that an adverse decision could essentially destroy the CFPB.
Singer has been financially tied to Alito previously. In 2008, he hopped a ride on Singer’s private jet en route to a luxury fishing trip the associate justice took to Alaska. ProPublica broke the story, in June reporting that the bill for Alito’s private jet flights may have exceeded $100,000 one way. After that 2008 trip, according to ProPublica, Singer’s hedge fund, Elliott Management, came before the high court in at least 10 cases, including a 2014 case in which the court’s 7–1 ruling led to a $2.4 billion settlement for the hedge fund. Alito did not recuse himself.*
Elliott Management is a complex web of holdings and investments, such as Fidelity National Information Services, or FIS, a multibillion-dollar bank fintech servicing firm that offers “an ecosystem of lending and payment solutions” used by at least 70 financial institutions. Elliott disclosed owning $59.7 million in FIS. More than 5,100 complaints have been logged against FIS so far via CFPB’s consumer complaints database. That database also shows that FIS did provide a timely response to CFPB complaints a vast majority of the time.
Still, Singer’s hedge fund has been critical of the CFPB and of the Dodd-Frank bill, which created the bureau and which was passed in 2010, during the Obama administration. “The financial system needs to be freed from the dysfunctional dictates of this ineffective law and properly and efficiently regulated instead,” Elliott Management wrote in a letter to investors in 2017. The letter, like the case now heading to the court, called for the CFPB to cease being funded by the Federal Reserve and instead be funded by Congress.
Advocates say the revelations about Singer and Alito warrant a recusal by the justice on the CFPB case. “Should Justice Alito preside over this case despite his clear conflicts of interest, it would add to the worsening Supreme Court corruption crisis and underscore the urgent need for ethics reform,” said Liz Zelnick, director of the economic security and corporate power program at Accountable.us. “Justice Alito enjoyed untold amounts of luxury and largesse from a billionaire hedge fund manager whose business interests would benefit if the Supreme Court allows for the worst rollback of consumer protections in U.S. history.”
After the ProPublica story, the Senate Judiciary Committee sent letters to Singer, Clarence Thomas benefactor Harlan Crow, and right-wing legal insider Leonard Leo requesting more information about gifts to justices. Committee Chairman Dick Durbin told The New Republic on Tuesday that no response had been received. “No updates at this point,” said Durbin. “We’re sending letters.”
For his part, Alito remains defiant over the notion that the legislative branch exists as a check and balance on his power as a Supreme Court justice. “I know this is a controversial view, but I’m willing to say it. No provision in the Constitution gives them the authority to regulate the Supreme Court—period,” Alito said in a recent interview with The Wall Street Journal.
Meanwhile, the American public’s faith in the high court continues to plummet to an all-time low. In July, a poll by Navigator, a progressive messaging and polling firm, asked respondents which terms best describe the Supreme Court. The top two terms Americans chose were “corrupt” and “unaccountable.” Rates of disillusionment increase among younger respondents, with three in five Americans under age 35 choosing “corrupt.”
The overturning of Roe v. Wade last year upended the high court’s public reputation as a staid but deliberative body where nonpartisan judges confirmed to lifetime appointments by the Senate did their best to interpret the law with neither political interference nor personal corruption. The Dobbs decision overturning Roe, which was led—and some believe, leaked—by Alito was so widely unpopular that there could be no going back. “This is a crisis of legitimacy for the Senate, for the court, and for democracy,” said Alexandria Ocasio-Cortez after the Roe decision leaked last May.
In 2010, Dodd-Frank created the CFPB as a means to protect consumers from the predatory lending practices that bilked them out of billions and helped fuel a global financial meltdown. The bureau claims to have since won $17.5 billion in relief for American consumers, often in the form of remedial payments to those harmed by financial service providers who violate consumer protection laws.
Much of the CFPB’s focus has been on helping consumers most vulnerable to the excesses of malfeasance by the financial industry, such as poor Americans and communities of color. The clapback from activist conservative judges and the financial service industry has been constant and severe. As a result, the CFPB has historically been more aggressive in pursuing relief for American consumers than federal regulators before it like the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation.
“I’m the lurking presence,” said Singer of his approach to investing, in a 2016 interview. The same can be said of the CFPB—a presence lurking over the excesses of Singer’s industry on behalf of ordinary taxpayers; an activist bureau authorized to claw back money from powerful financial institutions for aggrieved American consumers. Thanks to ProPublica’s dogged investigation into wanton corruption by the justices, Singer’s presence now lurks over the CFPB case before the high court as well.
* This article originally did not specify the precise travel expense furnished by Singer. It also identified a court settlement as an award.