Supreme Court Rulings Will Change the Regulatory Landscape — to a Degree

Karen Solomon’s commentary was included in an American Banker article covering the Supreme Court’s overturning of the Chevron doctrine in the Loper Bright and Relentless cases and its impact on the banking industry. Karen points out that despite the overturning of the Chevron doctrine, she does not expect it to have an outsized impact on bank regulation. 

"Loper Bright expressly does not overrule prior cases decided under the Chevron framework," Karen said. "The immediate effect of the Loper Bright and Relentless rulings on prudential banking regulation therefore is likely to be limited because the decisions do not disturb existing case law that relies on Chevron." 

Karen adds that the Supreme Court has still allowed for some reliance on agencies' judgment by preserving the use of Skidmore deference — which allows courts to weigh agency interpretations without those interpretations being binding. "If the agency supports its regulation by carefully explaining the facts that led it to regulate in a particular way, the court could accept that explanation as a reason to uphold the agency's regulation," she explains. 

"The agencies will need to prepare detailed, carefully reasoned records of their decision making so that their conclusions will be persuasive under the Skidmore standard," she said. "Interagency negotiations could be even more protracted than they are now, and individual agencies may add layers of internal review to their decision making in an effort to protect against reversal of their decisions in court."

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