Friday, June 26, 2015

Fair Housing Act Lives

The Supremes have come down with a trio of scorchers in the last two days.  In a 6-3 vote, they upheld the Affordable Care Act and at least arguably adequate health insurance for everyone (Roberts wrote the opinion and managed to stay away the "great powers" nonsense he used in his prior opinion upholding the Act.  Scalia went straight of the rails in his dissent, of course, basically repeating the Cato Institute's extreme shoveling which boils down to saying that the federal government doesn't have taxing authority in spite of the 16th Amendment and doesn't have general welfare powers in spite of the main text of the Constitution.).  Today gay rights won 5-4 (And although the dissenters claim to be all about original intent, they displayed a complete ignorance of it here.  This decision will not lead to discrimination against conservative denominations; it will end the conservative denominations' use of state authority to prevent liberal denominations from performing same-sex marriages.  And since the dissent was never taught it, I'll point out that preventing denominations from using state power to enforce their beliefs on other denominations was exactly why the Founding Fathers adopted the religion clauses in the First Amendment.  The Four Horsemen will never admit what hypocrites they are, though.).

And yesterday the Fair Housing Act was salvaged 5-4, with the same line-up.  Disparate impact can still be used to make a discrimination case.  Disparate impact means that, if you look at the figures (in this case financial assistance for affordable housing) and they show impermissible discrimination (race, religion, etc.), you can use that to show discrimination.  You don't need a smoking gun, such as an in-house memo saying, "Don't sell to minorities."  Disparate impact became a thing when I was much younger and there was obvious red-lining going on in sales and lending, but the banks, builders, and real estate companies weren't stupid enough to leave a trail.  It was happening with winks and nods, but it was definitely happening.  So statistics became the evidence to keep discrimination at bay.  The majority yesterday decided that was a good thing.  The dissent would rather make the discrimination laws a dead letter by making them unenforceable unless the discriminating party attains an "ain't gonna happen" level of stupidity.  In other words the dissent wants to make discrimination effectively legal.  And that's about all you need to know about Roberts, Scalia, Alito, and Thomas.

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Monday, June 01, 2015

But There Isn't a Problem with the Financial Sector

Dick Fuld, the financial genius whose leadership ran Lehman Brothers into the ground (Yes, I know he had plenty of help from several other financial deities, notably Goldman Sachs, but it wasn't like he was resisting their siren songs.), crawled out from under his rock last week for the Marcum Microcap Conference.  He immediately blamed the government for the financial crisis, by "forcing" lending to "unsuitable borrowers."

I'll be the first to say the government screwed up in this mess, and that it in fact made things worse by pumping up the bubble by expanding the pool of "eligible" borrowers beyond what was advisable.  But what really caused the mess, people?  Fast and loose fund raising by the banks?  Even more fast and loose lending with fraudulent appraisals and credit checks?  Definitely.  If the government was to blame, it is because it was criminally asleep at the switch in controlling all this fraud.  But the banks were the core of the problem and remain so because of people like Fuld, who remain in charge and continue to blame anyone but themselves.

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The Road Lawyer

Now for some self-promotion.  For some time I have had a more recreational blog, The Road Lawyer.  I've never really gotten it off the ground, though, since I just don't travel as much as I did 10 years ago.  In honor of the new movie, I think I'll give it another try.  Since I'm not really traveling, though, I think I'll blog about my travels in Law World, which have had plenty of twists and turns.  I might be compelled (at long last) to call out a few people and places who have been less than kind to me and mine.  We'll see how it goes.

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A Rant

First, something of a rant.  It makes me physically ill when I see the signs on buses and Trax cars saying that Utah Transit Authority has won a big, hairy award.  UTA is pathetic.  It is clown shoes marinated in weak sauce.  It is the worst transit system I have ever dealt with, which is truly damning given the years I was at the mercy of Washington State Ferries.  I'm not going into details.  Anyone who actually has to deal with this bloated, unresponsive, frankly corrupt nightmare knows what I'm talking about.

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Friday, May 01, 2015

Repair Work

Had to have the plumbing contractor out this week replacing the water drain.  Tree roots had gradually torn the tile pipes apart.  Plumber of course had to tear into the street to connect to the main line.  City had issued all required permits.  A couple of the more obnoxious, self-absorbed residents of my neighborhood still called the cops.  Twice.  For blocking emergency vehicle access.

Words of advice.  First, to my "neighbors": Things break, and when they do, they have to be fixed.  Don't call the cops; you'll just end up looking like an idiot, although you're such megalomaniacs I doubt you'd notice.  I really hate to think how you'll behave when the city needs to resurface the street.

Second, to home buyers.  Things break, and you'll end up having to do something about it.  Don't cut corners; hire professionals.  My plumber (B&E Plumbing, BTW) pulled the permits and made sure the inspector was there.  He made sure all the safety equipment was in place, which proved to be a good thing when the pit walls decided to slump (IMNSHO, the soil had not been prepped right when the street was put in.) and left part of the street hanging in midair.  A cut-rate operator would have had two men buried alive and the entire street caved in.

And another thing to home buyers: Really check the neighborhood.  Check and see how often the police have been called out and why.  A lot of call-outs doesn't necessarily mean high crime.  It may mean worse: a neighborhood of spiteful brats who believe they should be treated like Louis XIV when they are more deserving of being treated like Louis XVI.

Friday, April 17, 2015

New Comments

Several new comments.  First, over at Credit Slips, I commented on how Chapter 11 is a fail train for small business reorganization because of the hammerlock lenders force on small businesses.  Next, a pair over over at Naked Capitalism.  First, a reply to Calgacus's claim that Right historically wins over Might (My experience is that Right has won a few battles, but Might keeps winning the wars.).  Then a comment on Lambert Strether's article on deflation noting the historic uses of deflation to protect the 1%.

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Wednesday, November 26, 2014

Law Professors Producing Value?

I readily admit I pay little attention to what legal academics are doing.  There are a few exceptions, and they all involve professors who actually come down from the ivory tower and rub elbows with us grubbies (the folks over at Credit Slips, for example).  A recent example is John Pottow, the bankruptcy professor at my alma mater the University of Michigan (An aside here: Christopher Brumm, senior counsel for Major League Baseball and also a UM grad, recently remarked that he regretted not having taken a bankruptcy course.  When I was at UM, there was no such animal.  Too low class.  Respectable corporations didn't discuss such things.  Now bankruptcy is just another management tool.).  About three years ago, the SCOTUS made complete hash of bankruptcy law (which it does about every time it decides a bankruptcy case) in Stern vs. Marshall, which threatened to gut the bankruptcy courts' power to rule on any issue involving state law (Frankly, this decision was just part of the right side of the Court's ongoing effort to restrict judicial powers using Scalia's curious [some might call it "cherry-picking"] approach to original intent.  Needless to say, I don't agree with this reasoning, but I'll leave it for another day, or two, or three.  It would be nice, though, to get bankruptcy courts to at least look at jurisdictional issues with regard to standing in improperly securitized mortgage cases.).  In EBIA vs. Arkison, Professor Pottow handled the appeal and got the Supremes to back away a bit from the precipice they had created.  So kudos.

Also at UM, Professor Carl Schneider has recently co-authored a book that offers hard evidence of what many of us have believed for some time: Disclosure statements don't inform anybody about anything.  Whether it's informed consent at the doctor's office, a securities prospectus, or the multiple disclosures in real estate closings, it's too much and too convoluted, and the "discloser" rushes the disclosee through at warp speed.  Professor Schneider advocates adopting real, behavioral regulations instead of pretending there is value to disclosure.  Professor Schneider also advocates that we drop the disclosures now regardless of whether the new regulations are being passed.  I'm not convinced that's a good idea, and I'm doubly not convinced any disclosures will fall by the wayside.  This is because of another campaign based on Scalia's cherry-picking, the attack on protections against adhesion contracts.  Adhesion contracts are biased contracts crammed down the throat of the weaker party by the stronger party, usually in consumer transactions.  Scalia and his camp, in true Lochner fashion, see no problem with this and routinely override efforts to balance contracts, holding that if it's in the contract and you signed it, you're bound.  Given that backdrop, I expect companies to keep "disclosing" 50 pages of agate type in five minutes and then arguing later that the buyer was fully aware of any risks.  Sorry, Carl, it's Contracttown.

Slaps on the Wrist

US, UK, and Swiss regulators have slapped fines against Chase, Citi, Bank of America, UBS, RBS, and HSBC for turning forex trading into a fraud factory for their own benefit.  The fines total US$ 4.3 billion, trumpeted as the heaviest penalties in history.  The traders involved have been shown the door, along with one of the forex chairs at the Bank of England.  And the fact that this crap is being touted as some sort of regulatory triumph shows just how messed up the system is.

First, this scam went on for years, the players were brazenly communicating their activities with each other, and no one did a thing.  Second, the forex market trades over US$ 5 trillion per day.  Even if these banks took only 0.1% commissions (HA!) and held just 10% of the market (They're well north of that.), the fines would amount to less than two weeks of commissions.  Third, once again only the little people have been punished while the players who make the policies that created these crimes remain in place.  It would be as if Donald Segretti took all the blame for Watergate and everyone else got to stay in the White House.

The game is rigged.  Makes you want to run right out and put your retirement in the market, doesn't it.

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New City Hall

So they've cleared the space for the new  Cottonwood City complex.  Right across the street from Brighton High School.  Am I the only one who thinks this is a less-than-brilliant idea?  I readily admit that the properties were eyesores (although how much of that was caused by the city's condemnation process is an open and probably damning question), but just how is Bengal Boulevard going to handle this?  It has one lane each way with a center turning lane, and that isn't enough to handle the existing morning and afternoon school traffic and the evening special event traffic.  There's also that messy double light at 2300/2325 East.  Put the city offices there, and I expect Bengal Boulevard to start resembling a Manhattan crosstown street.

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Tuesday, November 11, 2014

New Linked In Posting

Just posted on OW Bunker's bankruptcy in Denmark.  Take a look.

Monday, November 10, 2014

Told You

In a recent entry, I took issue with Edmund Phelps in the Financial Times, who opined in true, brainless, right wing fashion that what was making housing unaffordable was regulation.  I pointed out that modern land use regulations encourage affordability.  And to support my position, I need go no farther than...the Financial Times.  Kate Allen has a feature about the downsizing of housing and multi-generational housing designed to take us back to the good old days before the nuclear family.  And these new approaches to residences are being facilitated (and made affordable) by land use planning.  Put that in your pipe and smoke it, Ed.