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July 2010 Archives

July 6, 2010

Business Expertise and the Supreme Court--Skeel

Jeff Rosen proposed in this op-ed in the New York Times Sunday that Elena Kagan should strive to do justice to the seat she will be inheriting, which was held by Louis Brandeis in the mid twentieth century.  For Rosen, this means developing a progressive jurisprudence on business and economic issues.

One question Rosen didn’t consider is this: if business and financial issues are so important in our era, why don’t the Supreme Court short lists ever seem to include business or financial experts?  Brandeis himself came to the Court with both private (that is, business and commercial) and public law credentials.  Others—most notably, William Douglas, a corporate bankruptcy scholar (heaven forbid!), who joined the Court in 1939—had even more business law expertise. Why isn’t President Obama—any more than President Bush before him—tapping into this kind of expertise?
One answer, I think, is that the networks that lead to the Supreme Court tend to be thin on business and financial experts. Perhaps because of the role the Supreme Court played on Civil Rights issues in the second half of the 20th Century, the very best students—the ones who are angling for clerkships with Supreme Court justices—often seem to focus heavily on Constitutional and administrative law. These students, many of whom go on to prominent teaching or legal careers, are the ones who are most likely to emerge as possible Supreme Court Justices two or three decades later.
Whatever the reason, I think we are entering a period—much like the 1930s and 1940s—when business and financial expertise are going to be crucially important on the Supreme Court.  Just imagine all of the judicial challenges to the new financial reform legislation if, as seems all but certain, it is enacted.  The current Court seems far from ideal for handling these cases.
Don’t worry. I’m not campaigning for the Supreme Court myself.  There are few jobs for which I would be less qualified.  But some of my best friends might make very good Supreme Court justices.

July 8, 2010

Christian Legal Society v. Martinez--Skeel

I was boarding a plane to Israel a few hours after the Supreme Court handed down its decision in CLS v. Martinez last week, so I was a bit behind the curve in reading it. In a 5-4 decision written by Justice Ginsburg, the Court upheld Hastings Law School’s decision to ban CLS from law school recognition because it requires its members and officers to sign a Statement of Faith that includes a provision affirming that sex should only occur in a marriage between a man and a woman.  Relying heavily on a stipulation between the parties stating that Hastings’ policy required student groups to accept “all comers,” Ginsburg held that the policy did not violate the CLS groups’ free speech rights (it wasn’t viewpoint discrimination) or association rights (it withheld recognition and the benefits that come with it but did not coerce CLS to change its policy).

Although the Christian blog posts I’ve seen (including some by Constitutional law scholars who know vastly more about these issues than I do) have argued that a “take all comers” rule is inherently discriminatory, I don’t see the argument. If you agree that this is Hastings’ policy—and the stipulation does seem to say this—I think Justice Ginsburg is right. Such a policy strikes me as a bad idea, but lots of groups would be affected by a policy that didn’t allow them to police their membership, not just CLS.
A more serious complaint about the decision, it seems to me, is that it’s likely to lead to a lot more litigation, as groups like CLS contend that the policy isn’t being handled in an even-handed fashion. Justice Kennedy’s concurrence—the 5th vote in the case—makes clear that he would vote the other way if it were shown that the policy was really a pretext for excluding CLS.
My other concern is a more practical one. It seems to me that CLS, and evangelicals generally, should be careful about just what we fight for. Arguing that law school groups should be able to place limitations—such as a belief in Jesus Christ as our savior— on who can be a leader without sacrificing law school recognition strikes me as defensible. But I’m less certain about insisting on these strictures for ordinary members, at least of this kind of group. After all, a key purpose of CLS and other on-campus evangelical groups is evangelism. It may be that such a group could make a more winsome case for Christ if it maintained clear requirements for the leaders but were more flexible about who can participate in other capacities. If, on the other hand, the group concludes that the strictures need to apply to everyone, perhaps it shouldn’t be asking for law school recognition.

July 13, 2010

More on Business Expertise and the Supreme Court--Skeel

As I was imagining possible candidates for the Supreme Court with business expertise, my initial thoughts were about my colleagues in legal academia. But it occurs to me that an even better place to look might be the business world itself. Three lawyers who have great credentials and are currently general counsel at major corporations are: David Leitch, general counsel of Ford, the one major carmaker that wasn’t bailed out, and a friend from law school days; Michael Luttig, a former federal appeals judge and currently general counsel at Boeing; and Larry Thompson, a former Deputy Attorney General under President Bush and currently general counsel at PepsiCo. All three are Republicans, but I bet there are at least one or two out there on the Democratic side as well.

July 15, 2010

The New Financial Reforms--Skeel

With the Senate vote today, it’s all over but the signing. 

Readers have been kind enough to compliment me on a couple of recent predictions, so it’s only fair that I fess up to one I got very wrong. I said on more than one occasion that the politics of financial reform seemed different, and far less partisan, than with healthcare. In the end, they weren’t. As with healthcare, Republican objections did shape parts of the bill (the resolution regime was tweaked, for instance, and the $50 billion bailout fund was removed), but it’s Democratic legislation rather than a bi-partisan effort.
One of the most interesting decisions for President Obama is who to nominate to head up the new Bureau of Consumer Financial Protection (as the consumer regulator is now called). The obvious choice is Elizabeth Warren, who conceived the consumer regulator idea in the first place and has emerged as the nation’s most famous and effective consumer advocate. But Warren has had run-in’s in the past with several key members of the administration—she called Joe Biden out in an op-ed in the New York Times during the debates over the 2005 bankruptcy amendments, and she sharply criticized Hillary Clinton in her book The Two Income Trap. Warren also is controversial in Washington, with big fans but also big critics.
At another time, the controversy might persuade President Obama to go with someone else. But with foreclosure rates continuing to climb, I think Warren is the one. The administration still is widely viewed as having done too little to address the financial woes of ordinary Americans, and advocating their interests is precisely what Warren is famous for. The other possible choices don’t bring nearly as much to the table in this respect. Assistant Treasury Secretary Michael Barr is quite impressive, for instance, but he’s been closely associated with Tim Geithner (who’s rightly seen as close to Wall Street) throughout the crisis and reform campaign. 
As for the legislation as a whole, I do think it has a number of good provisions in it.  (I think the derivatives regulation has a lot to commend it, for instance).  But the overall thrust is to create a European style partnership between the government and the largest financial institutions, as I’ve complained about before.  I’m writing a book on the reforms on a breakneck schedule—to be finished by the end of August and published this fall—so I’ll no doubt have lots more reactions in the weeks to come.

July 16, 2010

Veritas Riff--Skeel

I’m the elder statesmen—actually, old guy would be more accurate—in a really interesting initiative called Veritas Riff that is designed to train a group of young and mid-career Christian scholars to write and speak more publicly. 

This little column describes our initial meetings in Cambridge, MA last month. A great fringe benefit of the timing and location was having the chance to catch up over dinner with Bill, his wife Ruth and their son Andy. Bill was about to start the new chemo regimen, but there was a lot of laughter nonetheless, and of course an idea or two to borrow and turn into blog posts more interesting than anything I would come up with on my own.

July 21, 2010


Steven Davidoff (aka, the Deal Professor) has an interesting post on DealBook today speculating about whether regulators will step in and take over A.I.G. now that the new financial reforms (signed today) have given them sweeping powers to "liquidate" floundering, systemically important financial institutions.  The new resolution regime automatically applies to bank holding companies with $50 billion in assets; it isn't automatic with nonbanks, but regulators can designate those that are systemically important and pull them into the framework.  Once they're designated, regulators can take them over if they're in default or in danger of default.  I doubt regulators would go that far with A.I.G.  It's a bit too late, and A.I.G. has been scaling back on its own.  But regulators do face an interesting question whether to designate A.I.G. or any other nonbanks for inclusion now that the legislation has been passed.  If they don't identify any, it will undermine the credibility of the new resolution regime, since it will suggest regulators are just going to swoop in at the last minute when a big firm runs into trouble, as they did in 2008.  But if they designate a group of nonbank financial firms for inclusion, it will mark those on the list as special (and potentially too big to fail, though the resolution regime purports to end that) and spur speculation as to why others weren't included.

My guess is that regulators will at least designate A.I.G. for inclusion in the near future.  I doubt they'll designate many others.  But they do seem to need to designate at least one to show that they're serious about implementing the new regime.

July 22, 2010

Elizabeth Warren?--Skeel

The question whether President Obama will nominate Elizabeth Warren to head up the new consumer bureau has gotten so interesting I can’t resist another post. Here are some things I suspect the President is thinking about:

Reasons to pick Warren: 1) the liberal base: liberals will be outraged if the President picks someone else, which could further deflate the enthusiasm of his base, boding ill for the November elections; 2) She’s a true consumer advocate: if he cares at all about the new agency, it will be hard to pick anyone else; 3) when push comes to shove, it won’t be easy for Democratic senators to vote “no” on someone who has defined herself as a protector of middle class Americans. (Republicans won’t be the issue. My guess is that the three who voted for the financial reforms are possible yes’s, and the others will all be no’s.)
Reasons to pick someone else: 1) picking Warren could destroy the President’s relationship with the financial services industry (a relationship that is a lot better than people tend to think); this might not matter in November, but it could be a big problem as he raises money for 2012; 2) a vote for Warren would be a very difficult vote for moderate Democrats like Ben Nelson, who’ve already taken some tough votes this year; as a result, confirmability is a genuine issue; 3) Effect on markets and lending: Warren’s signature concerns, such as clamping down on further on credit card and mortgage loans, could scare the markets and prompt banks to further tighten their lending to consumers and small businesses. 
I still think it will be Warren.  To be sure, the President has been willing to eschew the preferences of his liberal base (See: Geithner, Timothy, nomination of). But I think there’s too much pressure for Warren.  My guess is that he’ll announce the choice tomorrow (Friday) night after the stock market closes, in the hope of dampening any negative market reaction.