[Revolving Door Project research reveals that right-wing elites in
the Horatio Alger Association stand to benefit from a lawsuit
attempting to destroy the CFPB. The group has close ties to Clarence
Thomas ]
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CLARENCE THOMAS HAS YET ANOTHER HUGE CONFLICT OF INTEREST  
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Vishal Shankar
October 2, 2023
The American Prospect
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_ Revolving Door Project research reveals that right-wing elites in
the Horatio Alger Association stand to benefit from a lawsuit
attempting to destroy the CFPB. The group has close ties to Clarence
Thomas _

Associate Justice Clarence Thomas seen on October 7, 2022, J. Scott
Applewhite/AP Photo

 

On Tuesday, the Supreme Court will hear oral arguments in _Consumer
Financial Protection Bureau v. Community Financial Services
Association of America_, a lawsuit filed by predatory payday lenders
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seeking to strike down the Consumer Financial Protection Bureau’s
(CFPB) independent funding mechanism—and by extension, the Bureau
itself. The case, in which the agency is appealing a far-right Fifth
Circuit Court of Appeals ruling last October, could have catastrophic
impacts if the Roberts Court sides with the payday lender plaintiffs.
As the_ Prospect_’s David Dayen has noted, the Fifth Circuit’s
ruling “threatens the functioning of daily life
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as its radical interpretation of the Constitution’s Appropriations
Clause would gut not only the CFPB (triggering a 2008-like mortgage
market meltdown
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but also many other regulatory agencies and federal programs without
traditional appropriations—including Medicare, Social Security, and
the Federal Reserve.

An obvious backdrop to this high-stakes case is the mounting ethics
scandals of the Court’s conservative justices. Take Justice Samuel
Alito, for example. Hedge fund billionaire Paul Singer—who took
Alito on a luxury Alaska fishing trip
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at least $90 million
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in financial companies overseen by the CFPB. Alito has thus far failed
to recuse himself from the case.

The ethics conflicts are even worse for Justice Clarence Thomas, who
has also failed to recuse. According to ProPublica
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Thomas has secretly attended at least two donor events for
conservative billionaire Charles Koch’s political advocacy
organization and is seen as a “fundraising draw” for the Koch
network. Americans for Prosperity Foundation, one of the Koch
empire’s many advocacy arms, has filed an amicus brief
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in _CFPB v. CFSA _calling the Bureau a “threat [to] liberty” and
“mockery of the separation of powers.” Another anti-CFPB amicus
filer in the case is none other than John Eastman, a former Thomas law
clerk who is currently facing disbarment proceedings and a criminal
indictment for trying to help Donald Trump overturn the 2020 election
results. Eastman has previously tried to leverage his connections with
Thomas to his benefit, corresponding with Thomas’s wife Ginni (a
notably unhinged electoral-fraud conspiracy theorist) in the run-up to
the January 6, 2021, attack on the Capitol.

Even Thomas’s most well-known benefactor, Dallas-based developer
Harlan Crow, has much to gain from a favorable outcome in the _CFPB_
_v. CFSA _case. Crow and his real estate empire are among the most
prominent backers of the National Multifamily Housing Council
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landlord lobbying group that has mobilized industry opposition to the
Bureau’s scrutiny of the tenant screening industry.

On top of all these egregious violations of elementary judicial
ethics, our research revealed another ethics controversy surrounding
Thomas and _CFPB v. CFSA_ that has thus far escaped close scrutiny. It
concerns Thomas’s central role in the Horatio Alger Association, an
exclusive circle of wealthy business elites that gave Thomas lavish
undisclosed gifts
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In return, Thomas has granted the Alger Association rare annual
private use
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of the Supreme Court chambers for its new-member induction
ceremony—an event that Thomas personally hosts every year. The Alger
Association has publicly promoted the Thomas-hosted Supreme Court
ceremony in its fundraising materials, an act frowned upon by Court
officials. According to a review of the Alger Association’s members
conducted by the Revolving Door Project, at least 18 Alger members
have either previously expressed an interest in weakening the CFPB or
stand to gain from the Court gutting the Bureau. These wealthy elites
span multiple sectors overseen by the CFPB and include some of its
most prominent recurring opponents.

Thomas’s most well-known benefactor, Dallas-based developer Harlan
Crow, has much to gain from a favorable outcome in the _CFPB_ _v. CFSA
_case.

Among them is Alger Association President Gregory Abel
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Hathaway who has been named by
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Berkshire CEO Warren Buffett as his eventual successor. Abel was
inducted into the Alger Association at a Thomas-hosted Supreme Court
ceremony
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in 2018 and plays an active role in the organization’s leadership,
serving as a “class coordinator
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that provides “invaluable networking support” to Alger members.
Berkshire Hathaway, which may soon be led by Abel, would likely
welcome a weakened CFPB. In 2022, the CFPB and Department of Justice
secured a $22 million settlement
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from Berkshire subsidiary Trident Mortgage for illegally redlining
majority-minority neighborhoods in Philadelphia. This was not the
first time a Berkshire subsidiary attracted scrutiny for violating
consumer protection laws: In 2016, several Democratic lawmakers called
upon the CFPB
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to investigate Berkshire mobile home subsidiary Clayton Homes for
discriminatory lending and collection practices (the Department of
Housing and Urban Development opened a fair-housing investigation
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into the company in 2018).

Another Alger member whose subsidiary has run afoul of the CFPB is
John Canning
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co-founder of private equity firm Madison Dearborn Partners.
Canning’s firm announced its acquisition
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of fintech company MoneyGram in February 2022 in a $1.8 billion deal.
Two months later, the CFPB and New York attorney general sued
MoneyGram
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they labeled a “repeat offender” of consumer protection laws—for
failing to process customers’ remittance payments and disputes in a
timely manner. MoneyGram has shown little sign of mending its ways
since the acquisition was completed earlier this year. In recent court
filings, the company has openly cited
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the Fifth Circuit’s ruling against the CFPB’s funding structure in
an attempt to dismiss the Bureau’s ongoing enforcement case against
it.

Former U.S. Chamber of Commerce CEO and current board member Tom
Donohue is a strident opponent of the CFPB, dating back to before it
even existed
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He is a current Alger member whose group has filed an amicus
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supporting the payday lenders. Under Donohue, the group lobbied
against the CFPB’s creation
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in the 2010 Dodd-Frank law and consistently supported what the payday
lenders will argue on Tuesday: that the Bureau’s independent funding
mechanism should be struck down
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its annual budget should instead be approved by Congress. The latter
argument is particularly compelling for fans of deregulation, as the
House of Representatives is currently controlled by
industry-bankrolled Republicans
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who have promised to defund it. Under both Donohue and his successor
Suzanne Clark (a board member
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at CFPB repeat offender TransUnion), the Chamber of Commerce has also
opposed many of the CFPB’s consumer protection regulatory
initiatives, including efforts to rein in arbitration clauses
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and credit card junk fees
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Earlier this month, the group notched its own victory against the CFPB
when a district court judge upheld its lawsuit
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challenging the Bureau’s crackdown on discrimination
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in consumer financial markets.

Then there are the many Wall Street executives who fill out the Alger
Association’s ranks—all of whom would likely love to see the CFPB
weakened. These include current and former bankers like Bharat Masrani
of TD Bank (fined over $97 million
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by the CFPB in 2020 for illegal overdraft fees), Brian Lamb of
JPMorgan Chase (a repeat offender fined multiple times for illegal
mortgage kickbacks
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inaccurate account screening
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and illegal robo-signing
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Josue Robles of USAA (fined over $15 million
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in 2019 for mishandling fund transfers and customer accounts), and the
recently investigated
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T. Denny Sanford of First Premier Bank (which previously sued
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the CFPB for cracking down on excessive credit card fees). Many of
these banks are active members
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Consumer Bankers Association, an industry lobbying group that has
opposed
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CFPB’s crackdown on banking junk fees.

Their contempt for consumer protection is shared by other prominent
business leaders who are also in the Alger Association. David Wilson
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largest car dealerships in the country, is a member of several
industry trade groups
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that have opposed
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the CFPB’s auto lending guidance and called for changes
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its funding structure. J. Ronald Terwilliger
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chairman emeritus of Harlan Crow’s family real estate company and
has given over $16,000
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landlord lobbying group NMHC since 1989. Home Depot founder and
Republican mega-donor Bernie Marcus
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supported challenges
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to the Biden administration’s student debt relief plan and has
claimed the Dodd-Frank law
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hurts small businesses. Insider-trading
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hedge fund tycoon and president of the Alger Endowment Fund Leon
Cooperman [[link removed]],
best known for crying about Elizabeth Warren’s wealth tax
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on national television, has previously held stakes
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in a student loan servicer that was sued
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by the CFPB.

Perhaps least shy about expressing his hatred for the CFPB is Phil
Gramm [[link removed]], the
former Texas senator and co-author of the 1999 financial deregulation
law [[link removed]] that partly
repealed the Glass-Steagall Act of 1933, and helped cause the 2008
financial crisis
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Unashamed after helping blow up the global economy, Gramm (who
revolved out
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of Congress to become a banker) has testified
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before Congress criticizing the CFPB’s leadership structure and
funding mechanism. With occasional assistance from monopoly apologist
and ex-FTC commissioner Christine Wilson
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Gramm has also repeatedly
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attacked
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CFPB Director Rohit Chopra from the _Wall Street Journal_ editorial
page.

The corporate elites and right-wing ideologues who populate the Alger
Association’s membership roster clearly have a lot to gain from
gutting the CFPB. Clarence Thomas has enjoyed the comically elitist
connections and lavish undisclosed gifts of the Alger Association for
over 30 years. Are we really to believe that Thomas never once
discussed issues of financial regulation and corporate law enforcement
during decades of hobnobbing with America’s top bankers, investors,
and lenders behind closed doors? Please. The fact that Thomas did not
fully disclose his Alger activities and gifts from the very beginning,
or the other Caligula-esque largesse he has received from other
billionaire patrons—all while carefully constructing an aw-shucks
persona as a guy who prefers to hang out in Walmart parking lots in
his RV—speaks for itself.

Though we at the Revolving Door Project called for Thomas’s and
Alito’s recusal
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from this case in light of these ethics scandals, the Court’s
well-established contempt for accountability and integrity offers
little hope they will heed our advice. Should both of them persist in
hearing _CFPB v. CFSA_ on Tuesday despite their glaring conflicts of
interest, the case for their impeachment
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create an ethical majority will become even stronger.

The humorist Will Rogers once noted that “America has the best
politicians money can buy.” It appears that we have the best judges
too.

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* Clarence Thomas; Supreme Court; Consumer Financial Protection
Bureau; Harlan Crow;
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