Posts tagged as:

Crisis of 2008

Banking and finance roundup

by Walter Olson on September 21, 2014

  • SEC regs suppress small business capital formation and that’s a shame [Commissioner Daniel Gallagher via Bainbridge]
  • Federally sponsored gripe site for financial institutions not likely to end well [Hester Peirce and Vera Soliman, Mercatus via Kevin Funnell]
  • Alleged terror payments “routed through” sued bank also went through major New York banks, which shouldn’t be surprising [Fisher]
  • Did mid-level managers in securitized mortgage finance know they were in a housing bubble but cynically go ahead? Evidence against [Cheng et al., American Economic Review via MR]
  • Shareholder litigation: “New ‘loser pays’ standard could curb abusive lawsuits” [Examiner editorial] Delaware take note: corporate by-law changes that cut off fee-seeking opportunism deserve acclaim [Keith Paul Bishop via Bainbridge]
  • NYT was hot on “Goldman Sachs manipulated aluminum market” allegations but judge wasn’t [Reuters, July 2013 NYT]
  • CFPB might shrug off discrimination and retaliation charges, but many of the firms it regulates could not afford to [Hans Bader]

WSJ editorial this morning: “We hold no brief for Citi, which has been rescued three times by the feds…. [But] good luck finding a justification for [the $7 billion figure] in the settlement agreement. The number seems to have been pulled out of thin air since it’s unrelated to Citi’s mortgage-securities market share or any other metric we can see beyond having media impact.

“This week’s settlement includes $4 billion for the Treasury, roughly $500 million for the states and FDIC, and $2.5 billion for mortgage borrowers. That last category has become a fixture of recent government mortgage settlements, even though the premise of this case involves harm done to bond investors, not mortgage borrowers.” More: Bloomberg. And the settlement directs Citigroup to hire former Eric Holder associate Thomas Perrilli, now at Jenner & Block, for a monitorship that is likely to prove an extremely lucrative plum [Reynolds Holding, Alison Frankel] Also: Ira Stoll.

  • Payday lenders sue federal agencies over Operation Choke Point [Bloomberg News, Business Journals, earlier; more, Funnell]
  • Speaking of those lenders: “California Supreme Court to review ‘rent-a-tribe’ arrangement for payday lenders” [CL&P, more]
  • “If someone starts trying to blame the Global Financial Crisis on ‘de-regulation’, you can stop reading…” [Lorenzo via Arnold Kling]
  • Can we just admit that the feds’ real target in the Credit Suisse case was the bank’s customers? [ABA Journal]
  • Maryland does not approve of Bitcoin [my Free State Notes via Kevin Funnell]
  • Behind Halliburton v. Erica P. John Fund, SCOTUS’s big case on securities class actions, two lawprofs are jousting [Alison Frankel, Reuters, and there's a Cato connection; earlier]
  • For expats, FATCA raises “prospect of being discriminated against as an American for all things financial” [Peter Spiro/OJ; Sophia Yan, Money] More renounce U.S. citizenship [Yahoo] A Canada-based FATCA resource [Isaac Brock Society] Earlier here, etc.

We mentioned Philip K. Howard’s new book “The Rule of Nobody” the other day. Here’s another excerpt (which also appeared in the Wall Street Journal’s “Notable and Quotable”:

The 2009 economic stimulus package promoted by President Obama included $5 billion to weatherize some 607,000 homes—with the goals of both spurring the economy and increasing energy efficiency. But the project was required to comply with a statute called the Davis-Bacon Act (signed into law by President Hoover in 1931), which provides that construction projects with federal funding must pay workers the “prevailing wage”—basically a union perk that costs taxpayers about 20 percent more than actual labor rates. This requirement comes with a mass of red tape; bureaucrats in the Labor Department must set wages, as a matter of law, for each category of construction worker in each of three thou- sand counties in America. There was no schedule for “weatherproofers.” So the Labor Department began a slow trudge of determining how much weatherproofers should be paid in Merced County, California; Monmouth County, New Jersey; and several thousand other counties. The stimulus plan had projected that California would weatherproof twenty-five hundred homes per month. At the end of 2009, the actual total was twelve.

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Banking and finance roundup

by Walter Olson on December 20, 2013

  • Presumed-reliance (“fraud on the market”) theories, which SCOTUS is likely to reconsider in Halliburton, aren’t just confined to securities litigation, but crop up in various other areas of litigation including third-party payer drug suits [Beck, Drug and Device Law; more background]
  • Why restrict alienability?, pt. CLXXI: Neil Sobol, “Protecting Consumers from Zombie-Debt Collectors” [NMLR/SSRN]
  • Will Congress step in to curtail fad for eminent domain municipal seizure of mortgages? [Kevin Funnell, earlier here and here]
  • More commentary on J.P. Morgan settlement [Daniel Fisher, Michael Greve, earlier here, here, and here]
  • Judge Jed Rakoff: Why have no high level execs been prosecuted over financial crisis? [Columbia Law School Blue Sky Blog]
  • Treasury Department’s Financial Stability Oversight Council (FSOC) turns its sights to investment advisers. The logic being…? [Louise Bennetts, Cato/PJ Media]
  • Property-casualty insurer association challenges new HUD disparate-impact rules [Cook County Record]

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December 18 roundup

by Walter Olson on December 18, 2013

  • California judge tells three large companies to pay $1 billion to counties under highly novel nuisance theory of lead paint mostly sold long ago [Business Week, The Recorder, Legal NewsLine, IB Times]
  • Coincidence? California given number one “Judicial Hellhole” ranking in U.S. Chamber report, followed by Louisiana, NYC, West Virginia, Illinois’ Metro-East and South Florida [report in PDF; Daniel Fisher/Forbes (& thanks for mention of Overlawyered), Legal NewsLine]
  • Frivolous ethics charge filed by Rep. Louise Slaughter, Common Cause and Alliance for Justice against Judge Diane Sykes over Federalist Society appearance is quickly dismissed [Jonathan Adler]
  • On heels of San Antonio Four: “Texas pair released after serving 21 years for ‘satanic abuse'” [Guardian, Scott Greenfield]
  • White House delayed onerous regulations till after election; Washington Post indignant about the delay, not the regs [WaPo, Thomas Firey/Cato]
  • “GM vs Bankruptcy – How Autoworkers Became More Equal Than Others” [James Sherk, Bloomberg]
  • According to one study, North America’s economically freest state isn’t a state, but a Canadian province [Dan Mitchell]
  • “If you thought it wasn’t possible to lower the bar for lawyer advertising, of all things, you were wrong.” [Lowering the Bar, first and second round]

MantisKevin Funnell, on “The Long-Range Consequences Of Adopting The Mating Habits Of A Praying Mantis,” quotes Matthew L. Brown in Boston Business Journal on the consequences of slamming the institution that agreed to help rescue WaMu and Bear Stearns, and is now paying for their sins: “It’ll be a long time, indeed, before a big bank answers the federal help line.” Related: Daniel Fisher, Forbes.

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“A new analysis from the Brookings Institution’s Ted Gayer and Emily Parker found that the program was fairly inefficient as economic stimulus and mostly pulled forward auto sales that would have happened anyway. It also cut greenhouse-gas emissions a bit — the equivalent of taking up to 5 million cars off the road for a year — but at a steep cost. … ‘In the event of a future economic recession,’ they conclude, ‘we would not recommend repeating the [Cash for Clunkers] program.'” [Brad Plumer, Washington Post; earlier]

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A natural experiment: Virginia law allows foreclosures to happen rapidly, Maryland law delays them. Which state has bounced back more smartly from the housing crash? [Michael Schearer, earlier]

My new Cato post has a suggestion for Time magazine: how about prosecuting only the executives who’ve actually committed crimes? (& Kenneth Silber, RealClearPolitics “Best of the Blogs”). Related: Politico.

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An accusatory film about the financial crisis glides over some inconvenient complications. [Ezra Klein, Washington Post]

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Magical thinking at the FDIC [David Skeel via Bainbridge]

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Along with its formal report, the commission probing the financial crisis of 2008 has done an online archival dump of internal company documents that some hope, and others fear, will be of great help to litigators — even perhaps a “Wikileaks for the class action bar,” which with its allies was well represented on the commission and staff. [BLT; earlier]

More: David Frum has been doing a series of blog posts on the report’s substance.

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March 27 roundup

by Walter Olson on March 27, 2009

  • Find me someone who speaks Mixtecan, fast: under new California law health insurers must provide patients with certified language interpreters [Ventura County Star]
  • “Law Prof’s Article on His Jury Experience Leads to Overturned Verdict” [ABA Journal]
  • Quick, lock up the Internet: Harvard Law’s John Palfrey wants to unleash child-endangerment suits against online providers [Citizen Media Law]
  • “Another Lesbian Visitation Case has Liberty Counsel Spouting Nonsense” [Ed Brayton; earlier Miller-Jenkins case]
  • “Jury awards need to be fair, not lucrative” [Jackie Bueno Sousa, Miami Herald]
  • Aussie strip club disagrees with exotic dancer on whether faulty pole caused her injury [Brisbane Courier-Mail]
  • Hasbro nastygram over “Little Mr. Monopoly” use [Bob Ambrogi, Ron Coleman]
  • No, “crash of ’09” doesn’t refute “capitalist system”, any more than “car wreck” refutes “auto-based travel”.

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Steve Chapman, as usual, keeps a cool head about things. And I’ve got some links at Point of Law on the remarkable House-passed proposal to slap a punitive tax on the compensation of many thousands of financial institution employees who are not even notionally to blame for the current crisis, as well as on the threats of violence to AIG employees, which are being met with complacency if not encouragement in some surprisingly respectable circles. Update: Point of Law post now considerably expanded, and with followups here and here.

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Roger Parloff at Fortune looks at the outlook for prosecutions over the financial implosion. One major source of potential criminal liability: over-rosy business statements put out by executives in hope of keeping customer/supplier confidence from tanking (cross-posted from Point of Law).

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Microblog 2008-11-25

by Walter Olson on November 25, 2008

  • Why real estate agents make you sign 1,000 silly forms [Christopher Fountain] Michigan requires acknowledgment that nearby farms “may generate noise, dust, odors” [Land Division Act h/t Sean Fosmire]
  • Albuquerque police take out want ad seeking snitches [AP]
  • “A prez must know S of S has no agenda other than his own” Chris Hitchens flays the Hillary pick [Slate]
  • Not all British nannies are charming: U.K. regulators may ban “happy hour” in bars [AP h/t Jeff Nolan]
  • As Georgia “sex offender” horror stories go, Wendy Whitaker case may outdo Genarlow Wilson’s [Below the Beltway; more on Wilson case]
  • U.K. juror polls her Facebook friends to help decide on case [AllFacebook h/t @lilyhill and @Rex7; Greenfield]
  • Looking for political conservatives on Twitter? Here’s a long list [Duane Lester, All American Blogger; and I have a comment on ways to use Twitter]
  • New page of auto-feeds from leading Canada & U.S. law & politics blogs [Wise Law Reader]
  • Bailout’s a lot bigger than you think, try $7.8 trillion with a “t” [John Carney]. Claim: with $ sunk since ’80, GM and Ford could have closed own plants and bought all shares of Honda, Toyota, Nissan and VW [David Yermack, WSJ via Cowen]. What if Citi gives up Mets naming rights? Gary’s Bail Bonds Stadium just doesn’t quite have the same ring to it [Ray Lehmann]
  • Australian class action could derail because overseas funders didn’t register as investment managers [The Australian h/t @SecuritiesD]