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In the wake of the Enron and WorldCom accounting scandals, Congress created the Public Company Accounting Oversight Board (“PCAOB”) under the aegis of the Securities and Exchange Commission (“SEC”), with President Bush’s support. Its purpose was to replace deficient accounting industry self-regulation with effective external regulation. The choices it made in doing so engendered passionate arguments about constitutionally necessary presidential authority and separation of powers. These divided the D.C. Circuit 2-1 and will be rehearsed before the Supreme Court in the coming weeks. President Bush’s administration defended those choices; Judge Rogers, writing for the majority, found no valid constitutional objection to them (albeit not without some difficulty). On the other side, petitioners the Free Enterprise Fund and Judge Kavanaugh in dissent marshaled strong arguments that, if accepted in their entirety, would put the constitutionality of a wide range of government institutions in shadow. Starting with the constitutional text, and seeming almost to regard the cases as a nuisance to an intermediate court judge, Judge Kavanaugh’s opinion is an open invitation to the originalists on the Court. The grant of certiorari, after extensive filings venturing far more deeply into the merits of the case than, in the writer’s experience, is generally supposed to happen, suggests that the newly reconstituted Court could well prove sympathetic.


Banking and Finance Law | Law | Law and Economics | President/Executive Department


Reprinted with permission by the Vanderbilt Law Review En Banc.