Second Circuit Says Deutsche Bank Must Turn Over Trump Financial Records to House Committees

Steven D. Schwinn, UIC John Marshall Law School

The Second Circuit ruled that Deutsche Bank and Capital One have to comply with subpoenas issued by the House Financial Services and Permanent Select Committee on Intelligence for financial records related to President Trump and his businesses. The court denied a preliminary injunction to halt the disclosures. While the ruling is technically preliminary, the court noted that it's effectively a ruling on the merits.

The ruling is yet another blow to President Trump and his continuing quest to keep his financial records secret. (We posted most recently here, on the Supreme Court's stay of a D.C. Circuit mandate to Mazars to release his financial records.) It's also yet another candidate for Supreme Court review.

After the Committees subpoenaed the banks, President Trump, his three oldest children, and some of their organizations sued the banks and the Committees seeking to halt the disclosure. The plaintiffs raised statutory and constitutional claims, although the court noted that President Trump specifically identified himself only as a private citizen.

The court held that the plaintiffs weren't likely to succeed on any of their claims. As to the first statutory claim, the court held that the Right to Financial Privacy Act did not prohibit the disclosures, because the RFPA doesn't apply to Congress. As to the second statutory claim, the court ruled that 26 U.S.C. Sec. 6103 and its several relevant subsections didn't bar the Committees from seeking the records from the banks.

As to the constitutional claim, the court rejected the plaintiffs' contention that the Committees exceeded their power to investigate in issuing the subpoenas. The court noted the breadth of the subpoenas, but nevertheless held that the Committees had a valid legislative purpose (not focusing on possible illegalities committed by the President, but instead "on the existence of such activity in the banking industry, the adequacy of regulation by relevant agencies, and the need for legislation") and that the "public need" to investigate for that purpose "overbalances any private rights affected." On this balancing, the court wrote,

"[T]he weight to be ascribed to" the public need for the investigations the Committees are pursuing is of the highest order. The legislative purposes of the investigations concern national security and the integrity of elections, as detailed above. By contrast, the privacy interests concern private financial documents related to businesses, possibly enhanced by the risk that disclosure might distract the President in the performance of his official duties.

The court went on to hold that the subpoenas were sufficiently tailored to the Committees' legitimate purposes.

The court identified one request, however, that "might reveal sensitive personal details having no relationship to the Committees' legislative purposes," and others "that have such an attenuated relationship to the Committees' legislative purposes that they need not be disclosed." The court remanded to the district court and specified a procedure by which the court could exclude certain "sensitive documents."

As to all other documents not identified for exclusion or possible exclusion, however, the court ordered the banks to "promptly transmit[] to the Committees in daily batches as they are assembled, beginning seven days from the date of this opinion."

The court rejected the amicus government's separation-of-powers argument, holding that this case isn't about the separation of powers (because it involves a congressional request from a third party for information of the President in his personal capacity).

Judge Livingston dissented. She agreed with the majority that the plaintiffs lacked a likelihood of success on the merits of their statutory claims. But she disagreed about how to treat the constitutional claims. She argued that the case raises serious separation-of-powers concerns, and that the current record simply isn't well enough developed to evaluate those concerns. So she argued for a full remand, "directing the district court promptly to implement a procedure by which the Plaintiffs may lodge their objections to disclosure with regard to specific portions of the assembled material and so that the Committees can clearly articulate, also with regard to specific categories of information, the legislative purpose that supports disclosure and the pertinence of such information to that purpose."