Banking on Jarkesy

The 150-year-old bank regulatory system is under threat. Following the Supreme Court’s landmark decision in Jarkesy, bankers have filed numerous lawsuits challenging the ability of the federal bank regulatory agencies to adjudicate cases in non-Article III tribunals. But unlike the agencies tasked with enforcing the securities, antitrust, and consumer protection laws, the banking regulators lack statutory authority to file cases in federal court. A decision invalidating their in-house adjudicative authority strips of them of any forum in which to file enforcement actions.

This essay argues that these lawsuits should fail. Because the Seventh Amendment jury trial right exempts “public rights,” it is inapplicable to the banking regulators’ enforcement actions that protect the services that the banking agencies themselves provide. In other words, Congress has required that the banking agencies establish numerous benefits that banks may elect to receive. And when banks fail to keep up their end of the bargain, Congress allows the agencies to adjudicate their violation in-house.