The Supreme Court Invites Bank Fraud Sophistry

The Supreme Court, in a decision that will surely be beloved of law professors, held that the bank fraud statute applicable to loan applications covers only actually false statements, not merely misleading statements. The Court got to flex its "oh look at how smart we are" muscle with clever illustrations of the difference between false and misleading statements:

If a tennis player says she “won the championship” when her opponent forfeited, her statement—even if true—might be misleading because it could lead people to think she had won a contested match. The Government also agreed at oral argument with another example: If a doctor tells a patient, “I’ve done a hundred of these surgeries,”
when 99 of those patients died, the statement—even if true—would be misleading because it might lead people to think those surgeries were successful.

And not to be outdone, Justice Alito adds in his own precocious observation in a concurrence:

After noticing that a plate of 12 fresh-baked cookies has only crumbs remaining, a mother asks her daughter, “Did you eat all the cookies?” If the child says “I ate three” when she actually had all 12, her words would be literally true in isolation but false in context. The child did eat three cookies (then nine more). In context, however, the child is implicitly saying that she ate only three cookies, and that is false.

Come on. Would common sense possibly suggest that Congress intended to allow misleading, but not literally false statements on bank loan applications? The result is absurd. Nothing in the legislative history would suggest that Congress wanted such a constrained view of the statute; indeed the legislative history isn't discussed, but there's lots of dictionary definition discussed. Apparently we are ruled by Merriam-Websters, rather than common sense. (And if that's the case, lets just have an AI judge and avoid all the SCOTUS nomination strum und drang). The Court's ruling is an invitation to the Holmesian bad man to go right up to the line of what is false. It all but invites Clintonian sophistry.

But given the Court's casuistry, let me pose my own:  if a bank's credit application included a question "Have you made any misleading statements on this application?" and the answer was false, would that trigger a violation of 18 U.S.C. § 1014?

I think the answer is yes. That suggests a simple regulatory fix to this bad decision: bank regulators should insist that bank loan applications include a declaration that the applicant has not made any misleading statements in connection with the application.