Posts Tagged ‘Delaware’

Banking and finance roundup

  • Critics say by naming payment processors in massive enforcement action over debt collection practices, CFPB is implementing its own version of Operation Choke Point [Kent Hoover/Business Journals; Barbara Mishkin, Ballard Spahr; Iain Murray, CEI]
  • Green sprout in Amish country: “Bank of Bird-in-Hand is the only new bank to open in the U.S. since 2010, when the Dodd-Frank law was passed” [WSJ via Tyler Cowen; Kevin Funnell on smothering of new (de novo) bank formation; Ira Stoll (auto-plays ad) on growth of non-bank lenders]
  • “Quicken Loans Sues DOJ; Claims ‘Political Agenda’ Driving Pressure to Settle” [W$J; J.C. Reindl, Detroit Free Press]
  • Shocker: after years of Sen. Warren’s tongue-lashings, some banks consider not giving to Democrats. Is that even legal? [Reuters] “Elizabeth Warren’s Extraordinarily Bad Idea For A Financial Transactions Tax” [Tim Worstall]
  • Still raging on: Delaware debate about fee-shifting corporate bylaws as deterrent to low-value shareholder litigation [Prof. Bainbridge first, second, third posts]
  • “How a Business Owner Becomes Criminally Liable for How Customers Spend ATM Withdrawals” [Elizabeth Nolan Brown, Reason]
  • New York financial regulator pushes to install government monitors at firms where no misconduct has been legally established [Robert Anello, Forbes]

Banking and finance roundup

  • Administration has abused the law in mortgage lender settlements [House Judiciary hearing: Paul Larkin, Ted Frank testimony]
  • Department of Justice official says banks may need to go much farther in informing authorities of customers who may be up to no good than just sending Suspicious Activity Reports (SARs) [Kevin Funnell] Interpol Red Notices, which among other effects cut off banking access, are open to geopolitical manipulation [Ted Bromund, Weekly Standard]
  • No, Operation Choke Point hasn’t gone away, not in the slightest [Funnell, Jared Meyer/Economics21]
  • What Elizabeth Warren has done to Michael Greve’s mortgage refinance application isn’t pretty [Liberty and Law]
  • Battle over loser-pays clauses in corporate governance rages on in Delaware [Reuters]
  • “The U.S. government’s stupid tax war on expatriates” [Brett Arends, earlier on FATCA]
  • Dodd-Frank: “Wall St. attacked, Main St. wounded” [Iain Murray]

Banking and finance roundup

For real liability reform, try freedom of contract

Six months ago the Delaware Supreme Court upheld the right of an enterprise to include a loser-pays provision in its bylaws, specifying that losing shareholder-litigants would have to contribute reasonable legal fees to compensate what would otherwise be loss to other owners. Since then there’s been a concerted campaign to overturn the ruling, either in the Delaware legislature or if necessary elsewhere. But as I argue in a new Cato post, allowing scope for freedom of contract of this sort is one of the best and most promising ways to avert an ever-rising toll of litigation. Contractually specified alternatives to courtroom wrangling have played a vital role, and are under attack for that very reason, in curbing litigation areas like workplace and consumer arbitration, shrinkwrap and click-through disclaimers of liability, and risk disclaimers at ballparks and elsewhere. (& Stephen Bainbridge).

To the extent America has made progress in recent years in rolling back the extreme litigiousness of earlier years, one main reason has been the courts’ increased willingness to respect the libertarian and classical liberal principle of freedom of contract. Most legal disputes arise between parties with prior dealings, and if they have been left free in those dealings to specify who bears the risks when things go wrong, the result will often be to cut off the need for expensive and open-ended litigation afterward.

More on the Delaware bylaw controversy: D & O Diary (scroll), Andrew Trask on state of the merger class action, WSJ Law Blog first and second, Daniel Fisher, and ABA Journal in June, Alison Frankel/Reuters (forum selection bylaws).

Dr. White Coat on the pink-panties case

The Emergency Physicians Monthly columnist, often linked in this space, on a case noted in our open thread last week:

From comments at Overlawyered.com …

Employee of a surgicenter goes to facility for a colonoscopy. When he wakes up, he was wearing pink underwear. As a result, he suffered extreme emotional distress, humiliation, loss of wages and loss of earning capacity. He is now suing.

While I probably would have laughed off a prank like this, I can understand why some people would have been upset. But suffering a loss of earning capacity from being dressed in pink panties as a prank? I’d like to see how that happened.

Delaware: “Punkin Chunkin canceled for this year”

The ballistic pumpkin-launching event, featured on the Discovery Channel, and “held for years on a succession of rural Sussex County farm fields, was to have moved to the same grounds that host Firefly this year. After a volunteer filed a personal injury lawsuit in 2013 over an ATV accident at the 2011 Chunk, the farmer hosting it in Sussex County said he wouldn’t let it return to his property.” Organizers have now resigned themselves to skipping 2014, and hope to hold the event in Dover next year. [Wilmington News-Journal]

Banking and finance roundup

  • 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]

Delaware: “Man sues pizzeria for thwarting robbery”

Nigel Sykes, currently serving a 15-year sentence, is suing employees of Seasons Pizza in Newport, Del. who allegedly tackled him as he was robbing the pizzeria at gunpoint. His suit, filed without a lawyer, asks in excess of $260,000, saying employees of the dining establishment beat him up and poured hot soup on him. “While U.S. District Judge Sue L. Robinson tossed out several of Sykes’ claims, she allowed the case to move forward against the pizza employees, two arresting officers and Seasons.” Sykes, whom police linked to a series of robberies at a bank and various retail establishments, had filed an earlier suit with different factual allegations which was dismissed on procedural grounds. He has also claimed that he should be allowed to take back his plea in the criminal case, arguing in a motion, “I’m not good at making good choices.” [Sean O’Sullivan, Wilmington News Journal]

“[FERC has] specialized in retroactive punishments for conduct that was legal at the time….”

“…Most companies roll over.” [Tim Lynch, Cato; WSJ; related on Federal Energy Regulatory Commission enforcement]

On this coming Monday, May 19, the Cato Institute is hosting a lunch on the subject of “Mugged by the State: When Regulators and Prosecutors Bully Citizens,” featuring Kevin Gates, Vice President, Powhatan Energy Fund; William Hurwitz, M.D., Pain Treatment Specialist; Lawrence Lewis, Engineer and Building Manager; and William Yeatman, Senior Fellow, Competitive Enterprise Institute; moderated by Tim Lynch, Director, Project on Criminal Justice, Cato Institute. You can watch live online at http://www.cato.org/live.

More: Cato podcast, brothers’ website, Philly.com (with an additional story of a man resisting the Delaware insurance commission after it took over his nightclub insurer). And: WSJ via John Cochrane on another FERC case.