- High cross-border remittance costs for globally mobile workers slow ascent from poverty, and know-your-customer and money-laundering regulations have made things worse [Money and Banking]
- “The Supreme Court should find ALJs to be ‘officers of the United States’ and thus make them subject to presidential appointment and removal.” [Ilya Shapiro on Cato merits amicus filing in Lucia v. Securities and Exchange Commission]
- “Settlement of Lawyer-Driven ‘Merger Tax’ Litigation Stumbles in New York” [Greg Herbers, WLF]
- “Financial Regulation: The Apotheosis of the Administrative State?” 2017 National Lawyers Convention Federalist Society panel with Richard Epstein, Hal Scott, Peter Wallison, and Arthur Wilmarth, moderated by Judge Carlos Bea;
- With advances in Oregon and even California, deregulation of commercial insurance lines is having a moment [Ray Lehmann, Insurance Journal; Lehmann’s 2017 Insurance Regulation Report Card for R Street Institute] Perennially troubled Massachusetts, on the other hand, continues slide in same survey [Agency Checklists]
- Tech companies have been experimenting with old and lawful device of dual class stock and SEC shouldn’t be allowed to use raised eyebrow power to stop that [Bainbridge, WLF]
- SCOTUS by 9-0, Ginsburg writing, agrees with Cato amicus (and disagrees with Sen. Grassley amicus) that Dodd-Frank doesn’t cover “whistleblowers” who never told the SEC [Digital Realty Trust v. Somers: Ilya Shapiro/Harvard Law Review, Joel Nolette/Least Dangerous Blog, earlier]
- Claim: “rolling back bank regulations is a good way to trigger a financial meltdown.” How much truth in that? [George Selgin, Cato]
- Crosstown hypocrisy: a closer look at the cities who tell judges and bond investors as needed that their infrastructure will or won’t face future destruction owing to climate change [Dan Walters, CalMatters; Jay Newman, Wall Street Journal, earlier]
- Mortgage systems in Canada, Germany appear to operate with less risk and lower default rates. Would Americans accept the trade-offs? [Arnold Kling]
- Tag-along private suits following regulatory action, familiar in US courts, now crop up in Australia [Kevin LaCroix]
- Regrettable Lovenheim ruling turned liberal shareholder groups into boardroom players [Prof. Bainbridge] The law of corporate social responsibility and shareholder accountability [same]
- New research suggests “SEC rule intended to prevent conflicts of interest among staff has actually had the perverse effect of causing staff to profit from their knowledge as insiders of the SEC” [Thaya Brook Knight, Cato]
- “Federal Prohibition Left California Cannabis Farmers Without Insurance or Banks When Wildfires Struck” [Christian Britschgi]
- “Is Dodd-Frank/SOX reform dead?” [Stephen Bainbridge]
- Trial lawyers and CFPB did little to correct Wells Fargo fake-account scandal [Ted Frank WSJ letter]
- Study finds that more-cumbersome judicial foreclosure methods tend to correlate with tougher lending standards especially for poor; should constriction of home credit for poorer households be interpreted as a good? [Brian Feinstein, Chicago via CL&P]
- A different way to encourage more prudent home lending practice, scale back FDIC coverage [Scott Sumner]
From reader Matt S., on a phenomenon people have been musing about for years:
No, if you think about it, it’s fairly easy to understand that one..
They have to have the braille on walk up ATM and it’s just easier to have one set of buttons on a given ATM model that can be installed anywhere, than to manufacture two different sets of controls for any one model, one for walk up installations and one for drive through installations.
Once you have to have braille on some ATMs, basic economics says that it will be more cost efficient to have it on all ATMs.
It’s part of a lively reader discussion of accessibility rules.
- “The Rise of Financial Regulation by Settlement” [Matthew C. Turk, Columbia Law School Blue Sky Blog]
- Before buying into the idea that fractional reserve banking has some sort of fraudulent roots, consider the common law concepts of detinue, bailment, and debt [George Selgin, Cato]
- Cato files brief urging Supreme Court to clarify constitutional status of SEC’s use of in-house administrative law judges [Thaya Brook Knight on Lucia v. SEC]
- Between FATCA and the Patriot Act, American extraterritorial banking rules keep wreaking havoc on other countries [Ernesto Londoño, New York Times on Uruguay legal marijuana businesses]
- “Congress Can Rescind the CFPB’s Gift to Trial Lawyers” [Ted Frank, WSJ]
- “Absent Reform, Little Relief in Sight from Chronic “Merger Tax” Class-Action Litigation” [Anthony Rickey, WLF]
A victory worth cheering for due process and property rights: the U.S. House has unanimously approved a bill that would curb IRS seizure of bank accounts premised on the owners’ having engaged in a pattern of deposits or withdrawals below the $10,000 reporting threshold (“structuring forfeiture”). The measure would 1) codify a recent IRS practice of not keeping money if no underlying illegality were found such as tax evasion or income from unlawful sources; 2) assure account holders a quick hearing after a seizure, a process that can now drag out for long periods. [Institute for Justice press release; Michael Cohn, Accounting Today] The Treasury inspector general found that “in a whopping 91 percent of sampled cases, the laws were being used to forfeit assets from individuals and businesses found to have obtained their income legally.” [Michael Haugen, The Hill, April]
I’ve been writing on this issue for years. The bill, co-sponsored by Reps. Peter Roskam (R-IL) and Joseph Crowley (D-NY), is called the Clyde-Hirsch-Sowers RESPECT Act; I’ve written about the structuring case of Maryland farmer Randy Sowers here and here.
The Department of Justice has confirmed that it is putting an official end to Operation Choke Point, the under-the-radar initiative by Obama financial regulators to discourage banks from doing business with certain disfavored businesses such as payday lenders and gun dealers. I’ve written a piece for the Washington Examiner on it, excerpt:
The fate of Choke Point should serve as a warning that it’s dangerous to allow those in power to flag legal-but-suspect domestic businesses for shaming and commercial ostracism — especially if the process is covert, and especially if the result is to cut off the outcasts from access to the basics of economic life.
At the same time, it’s significant that the answer to Choke Point was *not* to pass some new law compelling banks to do business with payday lenders, fireworks stands, or X-rated studios.
Part of a free society is that we shouldn’t force commercial relationships on private actors. Businesses — and that includes providers of credit and payments services — should legally be free to follow their conscience.
And Eric Boehm quotes me at Reason:
“It should serve as a warning that the government doesn’t get to flag for banks—or businesses generally—which legal-but-suspect domestic customers it would like them to ostracize,” Olson told Reason on Friday. “Those in power must refrain from signaling that they’d be pleased if certain categories of otherwise legal customer get cut off from their access to economic life.”
- “Unintended Consequences of Military Lending Act Hurt Some Families” [R.J. Lehmann]
- Tenth Circuit: Fed must provide all depository institutiona access to the clearing system, whether they serve marijuana businesses or any other kind [George Selgin, Cato]
- “Moneylending has been taboo for most of human history. So how did usury stop being a sin and become respectable finance?” [Alex Mayyasi, Aeon]
- Financial regulation: too many cooks in the compliance kitchen [Cato Daily Podcast with Thaya Brook Knight and Caleb Brown] “DOL Fiduciary Rule: It’s Not Always Fun to be Right” [Knight]
- “2016 was an unprecedented year in securities class actions filings.” [Baker Hostetler, JD Supra]
- Trusts and the offshore wealth trade: from Edmund Burke to the Cayman Islands [Graham McAleer, Law and Liberty]
- New Treasury report lambastes CFPB, calls for reforming its powers [Thaya Brook Knight, Alex Spanko/Reverse Mortgage Daily, text of report]
- Very likely headed for Supreme Court: “En banc D.C. Circuit splits over constitutionality of SEC administrative law judges” [Jonathan Adler, Thaya Brook Knight] “One Loss before ALJ Doesn’t Unmake SEC’s Home-Court Advantage” [Stephen Bainbridge, WLF] Earlier here;
- “The case for pruning the shareholder proposal regime” [Stephen Bainbridge]
- Amid feds’ push to cut banking access for cannabis business, PNC Bank closes long-term accounts of advocacy group Marijuana Policy Project [Washington Post]
- “House member launches fintech lending investigation” [Ballard Spahr]
- Overregulation of small banks and credit unions: “Financial Reform Both Parties Can Agree On” [Mark Rambler, Bloomberg]
According to a British think tank report, one unnamed British bank has been “monitoring” its customers’ accounts for possible indications of involvement in prostitution, among them “payments to ‘high end restaurants and cheap diners on the same day’ in the belief that such transactions could indicate a sex worker dining with a client while her ‘handler’ eats more frugally nearby.” Another bank cooperating with authorities is looking for daily payments to drugstores “that might indicate repeated purchases of contraceptives.” [Martin Bentham/Evening Standard, Elizabeth Nolan Brown/Reason, Tom Keatinge and Anne-Marie Barry/Royal United Services Institute on bank cooperation with law enforcement] More on bank privacy here.
In other news of governments’ war on financial privacy, the Internal Revenue Service has demanded transaction and customer records for U.S. customers of Bitcoin exchange Coinbase [Jacob Gershman, WSJ]