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The Supreme Court Looks At Eliminating A 50-Year-Old Rule

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The Supreme Court Looks At Eliminating A 50-Year-Old Rule

The Supreme Court has steadily loosened campaign finance rules in a series of decisions ever since Chief Justice John Roberts was confirmed in 2005. They will look to go further on Tuesday, when the court hears arguments in a case challenging the 50-year-old limits placed on coordinated spending between parties and candidates.

In NRSC v. Federal Election Commission, a Republican campaign committee is challenging limits placed on how much money political parties can spend in direct coordination with candidates. Those limits, which were put in place in the Federal Election Campaign Act of 1971, were intended as a companion to other rules on how much individuals can contribute to individual campaigns, preventing deep-pocketed contributors from using donations to parties as a work-around to those limits. The current limits on how much a party can spend in coordination with a specific candidate vary, from $63,600 for most House races up to $3.9 million for Senate races in California and even more for presidential candidates.

The case stems from Vice President JD Vance’s 2022 Senate campaign in Ohio. During the primary, Vance’s fundraising lagged behind his GOP opponents and he relied on outside spending from billionaire Peter Thiel to push him over the top. He continued to struggle to raise money in the general election against Democratic Rep. Tim Ryan. (Vance eventually won.) And so, the National Republican Senatorial Committee, the chief political committee for GOP Senate candidates, and Vance brought suit to allow the party to spend unlimited sums in direct coordination with their candidate, arguing the coordination limits infringed on core First Amendment rights for political speech.

Lawyers for the NRSC argue that the limits in question block constitutionally protected political speech and do not prevent corruption or its appearance. Since “no one seriously claims that parties are trying to bribe their candidates,” the limits have been defended and upheld in the past as preventing “quid pro quo-by-circumvention,” the NRSC brief states. But this justification was ruled out-of-bounds in the court’s 2014 decision in McCutcheon v. FEC and so the party coordination limits should be struck down, the brief argues.

Indeed, preventing the circumvention of contribution limits is at the heart of the coordinated spending limits. If a political party can raise nearly $1 million from a single donor who wants to spend that on a particular candidate, the party can effectively contribute that $1 million — or more — to the candidate’s campaign by funding, for example, their advertisements as a coordinated expenditure. Since candidates are limited to raising $3,500 per election from a single donor, this would be a major way to circumvent those limits, which are at the heart of campaign finance regulation.

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Vice President JD Vance brought suit alongside the National Republican Senatorial Committee to invalidate party coordination limits in a case stemming from his 2022 Senate campaign in Ohio.

Michael Conroy via Associated Press

Each lower court that heard the case rejected the NRSC’s arguments, following the Supreme Court’s 2001 precedent in FEC v. Colorado Republican Federal Campaign Committee that upheld the limits. There, in a 5-4 decision written by then-Justice David Souter, the court ruled that “a party’s coordinated expenditures, unlike expenditures truly independent, may be restricted to minimize circumvention of contribution limits.” But the Supreme Court took up the case and now could upend campaign finance law yet again.

The court has upheld candidate contribution limits as constitutional since 1976, so it would be logical for them to prevent their circumvention — particularly as it has become easier for parties to raise the kind of large contributions that the candidate limits are meant to protect against. But that hasn’t held the court back in the past.

Since the court last heard a case challenging coordinated party spending limits, its composition has changed dramatically — and so has its campaign finance jurisprudence. In the years since 2001, the court’s conservative bloc has grown from five to six with no real moderates among them. And with the retirement of Sandra Day O’Connor in 2006, the court lost its last member with any experience running for office or working on a political campaign.

It has also issued decision after decision gutting federal and state campaign finance laws. The most prominent of these is 2010’s Citizens United v. FEC, a decision that enabled corporations, unions and nonprofits to spend unlimited sums on independent campaign expenditures. But there are more, including the McCutcheon decision that invalidated aggregate contribution limits that put a cap on how much money a single donor could contribute in total in one election cycle.

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These campaign finance decisions have largely been based on a repeated misunderstanding of how candidates and parties use money in elections. In each case, the court’s decisions loosening campaign finance restrictions have led to massive unintended — at least according to the court’s writings — consequences, such as an increase in undisclosed campaign money and illegal foreign donations and the circumvention of party contribution limits.

There’s no reason to think that won’t happen here.

“This case needs to be looked at in the context of the court’s now-two-decade run of substituting its own judgment for that of voters and Congress on campaign finance,” said Daniel Weiner, a campaign finance law expert for the Brennan Center for Justice, a left-leaning nonprofit.

In Citizens United, then-Justice Anthony Kennedy, who wrote the majority opinion, explained his decision by stating that “independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption.” That has proved wildly inaccurate as the corruption convictions of North Carolina insurance executive Greg Lindberg and former Ohio House Speaker Larry Householder (R) and the 2015 indictment of then-Sen. Robert Menendez (D-N.J.) all involved corrupting contributions made through outside groups making independent expenditures. (Menendez was later convicted of accepting bribes and acting as a foreign agent in a separate case in 2024.)

The Supreme Court under the leadership of Chief Justice John Roberts has repeatedly loosened campaign finance restrictions — with many unintended consequences.
The Supreme Court under the leadership of Chief Justice John Roberts has repeatedly loosened campaign finance restrictions — with many unintended consequences.

Manuel Balce Ceneta via Associated Press

Kennedy also promised that, thanks to the internet and disclosure laws, corporations or others spending unlimited sums on independent expenditures could be held accountable by the public. But Citizens United enabled a radical decrease in the transparency of campaign spending as “dark money” nonprofits, which do not disclose their donors, became significant political spenders. These groups now make up a growing percentage of donors to super PACs. Though super PACs do have to disclose their donors, that does not trickle down to requiring disclosures of the donors to those donors — making the true origin of a large portion of election funding completely opaque.

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Similarly, the notion that independent expenditures are truly independent from candidates or parties has proved to be completely inaccurate. The largest-spending outside groups are those directly connected to party leaders or staffed by close aides to the candidates they support. Candidates provide information, like b-roll and directions on what messages to use in advertising for outside groups, on their websites or surreptitiously on social media. And in 2024, the FEC ruled that supposedly independent groups may directly coordinate with parties and candidates on get-out-the-vote operations. Billionaire Elon Musk went on to do exactly this with the Trump campaign and earned a plum spot in the White House for his efforts.

In the McCutcheon case, the court’s decision was largely rooted in naive expectations of how political parties would act once aggregate limits were eliminated. The aggregate contribution limits capped the total amount a donor could give in any one election, among all political parties and candidates. The intent was, like the coordinated spending limits, to prevent corruption and work-arounds of the candidate limits.

A key argument in the case was that, absent the aggregate limits, political parties could create a joint fundraising committee that linked all 50 state parties together with the national party and allowed them to easily shift money donated in one state to support a candidate elsewhere. During oral arguments, Alito called these “wild hypotheticals.”

Then-Justice Antonin Scalia wrote for the majority: “The Government provides no reason to believe that many state parties would willingly participate in a scheme to funnel money to another State’s candidates.”

But that’s exactly what happened. Beginning with Hillary Clinton’s presidential campaign in 2016, every presidential campaign has created a super joint fundraising committee that then redirects contributions made to non-swing-state parties toward state parties in swing states or back to the national party.

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While the party coordination limits seem to present less of an opportunity for the court to cause severe unintended consequences with another uninformed decision, there are a couple of things to keep in mind.

First and foremost, coordinated spending is done almost entirely in the form of advertising: The candidate designs an ad and plans when and where to run it, and the party foots the bill. But this could have unintended downstream consequences for television stations, which are required to provide candidates with the lowest unit price for campaign ads in the run-up to an election. Neither parties nor outside groups receive this benefit.

The Supreme Court will hear arguments in NRSC v. FEC on Tuesday.
The Supreme Court will hear arguments in NRSC v. FEC on Tuesday.

J. Scott Applewhite via Associated Press

If parties can suddenly subsidize candidate ads, television stations could be put under financial strain as they lose money that they previously received from higher charges on party advertising. This is an argument made by lawyers for the Democratic National Committee, who have entered the case to defend the limits.

“Broadcasters across the country will face significant increases in advertisements that purport to qualify for lowest unit rates, thereby inflicting a substantial financial strain upon them,” the DNC’s brief states.

This is likely to lead broadcasters to challenge rules that interpret coordinated spending as coming from the candidate and therefore receiving the lowest unit rate, according to Marc Elias, the lead lawyer for the DNC.

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“This will have commercial impacts outside of the campaign finance world,” Elias said.

And then there are the unintended consequences that may flow within the campaign finance world.

By eliminating the aggregate limits, the McCutcheon decision opened the door for parties to collect massive contributions from single donors through super joint fundraising committees. In 2024, the maximum contribution to Vice President Kamala Harris’ joint fundraising committee was $929,600 for a single donor. Most of that money wound up with the Democratic National Committee or its state parties, which then circumvented contribution limits by routing that money to swing state committees.

If the court does end the coordinated spending limits, it will lead to a mass circumvention of the candidate limits — just as the McCutcheon decision did for party limits. And, as the unintended consequences of McCutcheon now flow into the NRSC case, so too would the circumvention of candidate limits lead toward their ultimate elimination.

There may be reasonable policy reasons to support ending or raising the coordinated spending limits, as the Brennan Center’s Weiner has advocated. In a world where single billionaires like Musk can spend unlimited amounts to directly coordinate with candidates through super PACs, it would be better for political parties, which are rooted in mass democracy and governance, to be on an equal, if not supreme, footing.

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But that should be done by Congress, Weiner argues, not the Supreme Court — which time and time again has shown it does not understand how political campaigns work.

“The ultimate question is who should decide,” Weiner said. “I think it should be Congress that decides. We think of that as a fundamental principle. This is not something within the constitutional competence or, frankly, the expertise of the Supreme Court to make this call.”

Finance

Lawmakers target ‘free money’ home equity finance model

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Lawmakers target ‘free money’ home equity finance model

Key points:

  • Pennsylvania lawmakers are considering a bill that would classify home equity investments (HEIs) and shared equity contracts as residential mortgages.
  • Industry leaders have mobilized through a newly formed trade group to influence how HEIs are regulated.
  • The outcome could reshape underwriting standards, return structures and capital markets strategy for HEI providers.

A fast-growing home equity financing model that promises homeowners cash without monthly payments is facing mounting scrutiny from state lawmakers — and the industry behind it is mobilizing to shape the outcome.

In Pennsylvania, House Bill 2120 would classify shared equity contracts — often marketed as home equity investments (HEIs), shared appreciation agreements or home equity agreements — as residential mortgages under state law.

While the proposal is still in committee, the debate unfolding in Harrisburg reflects a broader national effort to determine whether these products are truly a new category of equity-based investment — or if they function as mortgages and belong under existing consumer lending laws.

A classification fight over home equity capture

HB 2120 would amend Pennsylvania’s Loan Interest and Protection Law by explicitly including shared appreciation agreements in the residential mortgage definition. If passed, shared equity contracts would be subject to the same interest caps, licensing standards and consumer protections that apply to traditional mortgage lending.

The legislation was introduced by Rep. Arvind Venkat after constituent Wendy Gilch — a fellow with the consumer watchdog Consumer Policy Center — brought concerns to his office. Gilch has since worked with Venkat as a partner in shaping the proposal.

Gilch initially began examining the products after seeing advertisements describe them as offering cash with “no debt,” “no interest” and “no monthly payments.”

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“It sounds like free money,” she said. “But in many cases, you’re giving up a growing share of your home’s equity over time.”

Breaking down the debate

Shared equity providers (SEPs) argue that their products are not loans. Instead of charging interest or requiring monthly payments, companies provide homeowners with a lump sum in exchange for a share of the home’s future appreciation, which is typically repaid when the home is sold or refinanced.

The Coalition for Home Equity Partnership (CHEP) — an industry-led group founded in 2025 by Hometap, Point and Unlock — emphasizes that shared equity products have zero monthly payments or interest, no minimum income requirements and no personal liability if a home’s value declines.

Venkat, however, argues that the mechanics look familiar and argues that “transactions secured by homes should include transparency and consumer protections” — especially since, for many many Americans, their home is their most valuable asset. 

“These agreements involve appraisals, liens, closing costs and defined repayment triggers,” he said. “If it looks like a mortgage and functions like a mortgage, it should be treated like one.”

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The bill sits within Pennsylvania’s anti-usury framework, which caps returns on home-secured lending in the mid-single digits. Venkat said he’s been told by industry representatives that they require returns approaching 18-20% to make the model viable — particularly if contracts are later resold to outside investors. According to CHEP, its members provide scenario-based disclosures showing potential outcomes under varying assumptions, with the final cost depending on future home values and term length.

In a statement shared with Real Estate News, CHEP President Cliff Andrews said the group supports comprehensive regulation of shared equity products but argues that automatically classifying them as mortgages applies a framework “that was never designed for, and cannot meaningfully be applied to, equity-based financing instruments.”

As currently drafted, HB 2120 would function as a “de facto ban” on shared equity products in Pennsylvania, Andrews added.

Real Estate News also reached out to Unison, a major vendor in the space, for comment on HB 2120. Hometap and Unlock deferred to CHEP when reached for comment. 

A growing regulatory patchwork

Pennsylvania is not alone in seeking to legislate regulations around HEIs. Maryland, Illinois and Connecticut have also taken steps to clarify that certain home equity option agreements fall under mortgage lending statutes and licensing requirements.

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In Washington state, litigation over whether a shared equity contract qualified as a reverse mortgage reached the Ninth Circuit before the case was settled and the opinion vacated. Maine and Oregon have considered similar proposals, while Massachusetts has pursued enforcement action against at least one provider in connection with home equity investment practices.

Taken together, these developments suggest a state-by-state regulatory patchwork could emerge in the absence of a uniform federal framework.

The push for homeowner protections

The debate over HEIs arrives amid elevated interest rates and reduced refinancing activity — conditions that have increased demand for alternative equity-access products. 

But regulators appear increasingly focused on classification — specifically whether the absence of monthly payments and traditional interest charges changes the legal character of a contract secured by a lien on a home.

Gilch argues that classification is central to consumer clarity. “If it’s secured by your home and you have to settle up when you sell or refinance, homeowners should have the same protections they expect with any other home-based transaction,” she said.

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Lessons from prior home equity controversies

For industry leaders, the regulatory scrutiny may feel familiar. In recent years, unconventional home equity models have drawn enforcement actions and litigation once questions surfaced around contract structure, title encumbrances or consumer understanding.

MV Realty, which offered upfront payments in exchange for long-term listing agreements, faced regulatory action in multiple states over how those agreements were recorded and disclosed. EasyKnock, which structured sale-leaseback transactions aimed at unlocking home equity, abruptly shuttered operations in late 2024 following litigation and mounting regulatory pressure.

Shared equity investment contracts differ structurally from both models, but those episodes underscore a broader pattern: novel housing finance products can scale quickly in tight credit cycles. Just as quickly, these home equity models encounter regulatory intervention once policymakers begin examining how they fit within existing law — and the formation of CHEP signals that SEPs recognize the stakes.

For real estate executives and housing finance leaders, the outcome of the classification fight may prove consequential. If shared equity contracts are treated as mortgages in more states, underwriting standards, return structures and secondary market economics could shift.

If lawmakers instead carve out a distinct regulatory category, the model may retain more flexibility — but face ongoing state-by-state negotiation.

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Cornell Administrator Warren Petrofsky Named FAS Finance Dean | News | The Harvard Crimson

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Cornell Administrator Warren Petrofsky Named FAS Finance Dean | News | The Harvard Crimson

Cornell University administrator Warren Petrofsky will serve as the Faculty of Arts and Sciences’ new dean of administration and finance, charged with spearheading efforts to shore up the school’s finances as it faces a hefty budget deficit.

Petrofsky’s appointment, announced in a Friday email from FAS Dean Hopi E. Hoekstra to FAS affiliates, will begin April 20 — nearly a year after former FAS dean of administration and finance Scott A. Jordan stepped down. Petrofsky will replace interim dean Mary Ann Bradley, who helped shape the early stages of FAS cost-cutting initiatives.

Petrofsky currently serves as associate dean of administration at Cornell University’s College of Arts and Sciences.

As dean, he oversaw a budget cut of nearly $11 million to the institution’s College of Arts and Sciences after the federal government slashed at least $250 million in stop-work orders and frozen grants, according to the Cornell Daily Sun.

He also serves on a work group established in November 2025 to streamline the school’s administrative systems.

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Earlier, at the University of Pennsylvania, Petrofsky managed capital initiatives and organizational redesigns in a number of administrative roles.

Petrofsky is poised to lead similar efforts at the FAS, which relaunched its Resources Committee in spring 2025 and created a committee to consolidate staff positions amid massive federal funding cuts.

As part of its planning process, the committee has quietly brought on external help. Over several months, consultants from McKinsey & Company have been interviewing dozens of administrators and staff across the FAS.

Petrofsky will also likely have a hand in other cost-cutting measures across the FAS, which is facing a $365 million budget deficit. The school has already announced it will keep spending flat for the 2026 fiscal year, and it has dramatically reduced Ph.D. admissions.

In her email, Hoekstra praised Petrofsky’s performance across his career.

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“Warren has emphasized transparency, clarity in communication, and investment in staff development,” she wrote. “He approaches change with steadiness and purpose, and with deep respect for the mission that unites our faculty, researchers, staff, and students. I am confident that he will be a strong partner to me and to our community.”

—Staff writer Amann S. Mahajan can be reached at [email protected] and on Signal at amannsm.38. Follow her on X @amannmahajan.

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Where in California are people feeling the most financial distress?

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Where in California are people feeling the most financial distress?

Inland California’s relative affordability cannot always relieve financial stress.

My spreadsheet reviewed a WalletHub ranking of financial distress for the residents of 100 U.S. cities, including 17 in California. The analysis compared local credit scores, late bill payments, bankruptcy filings and online searches for debt or loans to quantify where individuals had the largest money challenges.

When California cities were divided into three geographic regions – Southern California, the Bay Area, and anything inland – the most challenges were often found far from the coast.

The average national ranking of the six inland cities was 39th worst for distress, the most troubled grade among the state’s slices.

Bakersfield received the inland region’s worst score, ranking No. 24 highest nationally for financial distress. That was followed by Sacramento (30th), San Bernardino (39th), Stockton (43rd), Fresno (45th), and Riverside (52nd).

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Southern California’s seven cities overall fared better, with an average national ranking of 56th largest financial problems.

However, Los Angeles had the state’s ugliest grade, ranking fifth-worst nationally for monetary distress. Then came San Diego at 22nd-worst, then Long Beach (48th), Irvine (70th), Anaheim (71st), Santa Ana (85th), and Chula Vista (89th).

Monetary challenges were limited in the Bay Area. Its four cities average rank was 69th worst nationally.

San Jose had the region’s most distressed finances, with a No. 50 worst ranking. That was followed by Oakland (69th), San Francisco (72nd), and Fremont (83rd).

The results remind us that inland California’s affordability – it’s home to the state’s cheapest housing, for example – doesn’t fully compensate for wages that typically decline the farther one works from the Pacific Ocean.

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A peek inside the scorecard’s grades shows where trouble exists within California.

Credit scores were the lowest inland, with little difference elsewhere. Late payments were also more common inland. Tardy bills were most difficult to find in Northern California.

Bankruptcy problems also were bubbling inland, but grew the slowest in Southern California. And worrisome online searches were more frequent inland, while varying only slightly closer to the Pacific.

Note: Across the state’s 17 cities in the study, the No. 53 average rank is a middle-of-the-pack grade on the 100-city national scale for monetary woes.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com

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