Archive for the ‘Property Law’ Category
On the Servicing Settlement
posted by Frank Pasquale
Today, Jon Walker tweeted that “No one man has done more to protect the power of the financial elites than President Obama.” Is that a fair assessment? Here are some views expressed on the mortgage settlement today:
Adam Levitin, The Servicing Settlement: Banks 1, Public 0:
[The settlement] cover[s] robosigning and overbilling in foreclosures. Given the relatively narrow scope of this settlement, it’s not surprising that the dollars involved are quite small compared to the overall harms created by the housing bubble and aftermath.
The formal price tag for the settlement is $25 billion, although it is projected to accomplish up to $40 billion in relief. Only $5 billion of that is hard cash contributed by the banks. Let me repeat that. The five banks involved in the settlement, which have a combined market capitalization of over $500 billion, are putting in only $5 billion. That’s less than 1% of their net worth. And they are admitting no wrongdoing. To call that accountability is laughable. . . . $32 billion of the settlement is being financed on the dime of MBS investors such as pension funds, 401(k) plans, insurance companies, and the like—-parties that did not themselves engage in any of the wrong-doing covered by the settlement.
William K. Black, How Liberals are Getting Spun in the Mortgage Settlement Debate:
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February 9, 2012 at 9:47 pm
Posted in: Financial Institutions, Property Law
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Stanford Law Review Online: Don’t Break the Internet
posted by Stanford Law Review
The Stanford Law Review Online has just published a piece by Mark Lemley, David S. Levine, and David G. Post on the PROTECT IP Act and the Stop Online Piracy Act. In Don’t Break the Internet, they argue that the two bills — intended to counter online copyright and trademark infringement — “share an underlying approach and an enforcement philosophy that pose grave constitutional problems and that could have potentially disastrous consequences for the stability and security of the Internet’s addressing system, for the principle of interconnectivity that has helped drive the Internet’s extraordinary growth, and for free expression.”
They write:
These bills, and the enforcement philosophy that underlies them, represent a dramatic retreat from this country’s tradition of leadership in supporting the free exchange of information and ideas on the Internet. At a time when many foreign governments have dramatically stepped up their efforts to censor Internet communications, these bills would incorporate into U.S. law a principle more closely associated with those repressive regimes: a right to insist on the removal of content from the global Internet, regardless of where it may have originated or be located, in service of the exigencies of domestic law.
Read the full article, Don’t Break the Internet by Mark Lemley, David S. Levine, and David G. Post, at the Stanford Law Review Online.
Note: Corrected typo in first paragraph.
December 19, 2011 at 3:14 am
Tags: banks, credit card companies, DNS, DNS filtering, domain name seizures, domain name servers, domain names, financial institutions, Intellectual Property, Internet, internet security, internet stability, IP, IP addresses, IP rights, online advertisers, PROTECT IP Act, search engine censorship, search engines, SOPA, Stop Online Piracy Act, World Wide Web
Posted in: Current Events, Cyberlaw, First Amendment, Google & Search Engines, Google and Search Engines, Innovation, Intellectual Property, International & Comparative Law, Law Rev (Stanford), Law School (Law Reviews), Movies & Television, Property Law, Social Network Websites
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Application of the Public Trust Doctrine to the University of California
posted by Frank Pasquale
Aaron Bady’s blog has been a must-read on the Occupy movement all this fall. Property law professors may be interested in a guest post on it from Gina Patnaik, applying the public trust doctrine to the UC:
In the latter half of the twentieth century, Joseph Sax, Professor Emeritus at UC-Berkeley School of Law, revived public trust doctrine within American case law. Because common law principally derives from court rulings and judicial opinion instead of legislation, it is useful only insofar as it is used: Sax argued that public trust doctrine was a prime example of the ways that historical understandings of a legal concept could be resuscitated to serve the changing demands of the American people. Sax’s seminal work, “The Public Trust Doctrine in Natural Resource Law: Effective Judicial Intervention,” demonstrated that public trust doctrine provided a compelling framework for “lawsuits in which citizens, demanding judicial recognition of their rights as members of the public, sue the very public agencies which are supposed to be protecting public interest.” And Sax was right: the forty years since his article’s publication have seen the public trust doctrine invoked by the courts to shield public lands, natural resources, and even endangered species. Over the course of the past century, the scope of public trust doctrine has moved inexorably towards expanded protections of the public’s interest. Read the rest of this post »
December 9, 2011 at 1:13 pm
Posted in: Property Law
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Brooke Shields to Play Suzette Kelo in Lifetime Movie
posted by Sarah Waldeck
Really, the headline says it all. But I am disappointed I didn’t see this one coming. Anyone who has read Jeff Benedict’s Little Pink House should have seen its made-for-TV-movie potential.
What actually got me thinking about Kelo, however, is the reporting this week in various media outlets that Justice Richard Palmer, one of the four Connecticut justices who found New London’s exercise of eminent domain to be constitutional, apologized to Suzette Kelo after hearing a keynote speech by Benedict. According to Benedict, Palmer approached Kelo and said, “Had I known all of what [Benedict] just told us I would have voted differently. I’m sorry.”
This certainly seems like grist for the Kelo mill, especially since it’s not every day that a judge apologizes to a litigant for having voted against her. Except that the back story matters a lot here, because that’s not what Justice Palmer says he did. Rather, as the Justice eventually clarified to Benedict, “Those comments were predicated on certain facts that we did not know (and could not have known) at the time of our decision and of which I was not fully aware until your talk — namely, that the city’s development plan had never materialized and, as a result, years later, the land at issue remains barren and wholly undeveloped.” The Justice further added the Court could not have known those facts “because they were not yet in existence.” Moreover, the Justice later responded to a series of written questions from Benedict, one of which was, “Looking back at the Kelo decision (by the Connecticut Supreme Court), how do you see it now? In other words, has it led to good law?” The Justice responded, “I think that our court ultimately made the right decision insofar as it followed governing U.S. Supreme Court precedent.” (The fullest account I’ve found of Justice Palmer’s encounter with Kelo and Benedict is here.)
So, not exactly an apology, but perhaps instead a very human expression of regret over what Suzette Kelo went through.
By the way, readers will note that I chose not to refresh anyone’s recollection about the substance of Suzette Kelo’s case or the eventual ruling from the U.S. Supreme Court. Instead, you can all just catch the movie.
Hat Tip to my former student Eric Abes.
September 22, 2011 at 9:20 pm
Posted in: Property Law
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Armenian genocide and the Third Amendment
posted by Kaimipono D. Wenger
As Tom Bell has noted, the Third Amendment gets no respect. It is as likely to be mentioned by comedians as by courts, and holds a position of honor among the odd clauses of the Constitution, where it is so infrequently used that even non-uses draw attention. But this neglected amendment has one potential application today, where it could play an important role in a somewhat high-profile case.
I’m talking, of course, about the Armenian genocide litigation.
Here’s a snippet from a recent story in the Armenian Weekly (with emphasis added):
In July, Armenian American attorneys sued the Republic of Turkey and its two major banks, seeking compensation for confiscated properties and loss of income. A new federal lawsuit was filed last week by attorneys Vartkes Yeghiayan, Kathryn Lee Boyd, and David Schwarcz, along with international law expert Michael Bazyler, against the Republic of Turkey, the Central Bank, and the Ziraat Bank for “unlawful expropriation and unjust enrichment.” The plaintiffs are Los Angeles-area residents Rita Mahdessian and Anais Haroutunian, and Alex Bakalian of Washington, D.C. The three Armenian Americans, who have deeds proving ownership of properties stolen from their families during the genocide, are seeking compensation for 122 acres of land in the Adana region. The strategic Incirlik U.S. Air Base is partly located on their property.
That’s right. Armenian-Americans are seeking to recover property seized by Turkey during the Armenian genocide. And significant portions of that land are currently used to quarter American troops. Read the rest of this post »
September 13, 2011 at 1:31 am
Posted in: Constitutional Law, Property Law, Weird
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Adverse possession amid the foreclosure crisis
posted by David Fagundes
Apparently I can’t stop blogging about morality, which is kind of weird because it certainly doesn’t play much of a role in my personal life or even my writing. Anyway, a student from a past property class recently passed along this really interesting article about Kenneth Robinson, a man who occupied a vacant house in a tony suburb of Dallas, apparently in an attempt to adversely possess it. The contemporary twist is that the house—valued at about $300,000—was vacant because its owners had abandoned it, apparently when they found themselves upside down on their mortgage. (They appear to still be the house’s title holders, since foreclosure has not yet taken place.)
I like this story for lots of reasons, including that it provides another modern data point about the continuing relevance of adverse possession. Another reason is that it stresses that adverse possession “is not just a loophole, it’s the law.” The article says that adverse possession is “as old as Texas” but even that understates the case—it’s actually one of the oldest property doctrines around, dating to Hammurabi’s Code.
But I like this story especially because it raises a new twist on the rationale for and merits of adverse possession doctrine. News stories about adverse possession are almost invariably accompanied by cries of outrage by people who regard the doctrine as offensive to property rights. In class, students also tend to regard the doctrine skeptically, though (to their credit) in a more measured and thoughtful way.
As this article (or at least the comments to it) illustrate, though, the ongoing housing crisis and related foreclosure epidemic have caused public reaction to adverse possession cases to become less angry and in some cases even positive. I explore this phenomenon in more detail below the fold.
July 26, 2011 at 2:45 pm
Posted in: Property Law
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Farewell, Barnes and Zoning Matters, Really
posted by Sarah Waldeck
In the last week I’ve come across two teaching resources that are worth sharing. As the headline suggests, the first is about the Barnes Foundation, which closed the doors to its original home in Merion, Pennsylvania at the end of June. For years I’ve been urging my Estates and Trusts students to visit the Barnes before it is “too late,” by which I meant “before it moves to downtown Philadelphia.” I did this partly because I thought one needed to see the Barnes to fully understand the ongoing battle over its future, and partly because the Barnes was really, really cool. Now that it is officially “too late,” I will point them to this 360 degree interactive tour of the Barnes that was put together by the New York Times. Their effort really gives a flavor of the place, although many of us undoubtedly mourn that we’re left with only a computer program.
Next up is something for Property professors: an episode of This American Life entitled “Game Changer.” You can access the episode, which is about drilling for natural gas in Pennsylvania, here. Fast forward to minute 33:30 and soon a reporter will say, “The standoff between [the gas company] and [the town] started with one of the least gripping topics in all of government: zoning.” While the reporter’s explanation of the difference between conditional and permitted uses isn’t any more interesting than what I say in class, the story she tells is much more engaging than anything I’ve previously used to teach zoning. Moreover, the story of the small town that tried to write a zoning ordinance after Big Gas arrived does a better job of driving home the economic consequences of zoning than anything I’ve encountered to date.
July 12, 2011 at 2:57 pm
Posted in: Property Law, Teaching, Wills, Trusts, and Estates
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Tsunami and “natural rights” in property
posted by Andrew Sutter
תַּחַת כָּל-הַשָּׁמַיִם לִי-הוּא
– Iyov 41:3 (Tanakh)
Whatsoever is under the whole heaven is Mine.
– Job 41:11 (Authorized Version)
It’s said that the Lisbon earthquake and tsunami of 1755 had a profound effect on the thought of Voltaire, Rousseau, Kant, and others. Having occurred so far from Western intellectual centers, the 2004 Southeast Asian tsunami and the 2011 Japan tsunami are unlikely to be so influential. The first fits easily into the discourse of “underdevelopment,” and evokes our pity. The second occurred in a country more “like us” in many ways, but was soon overshadowed by just one of its effects, a so-called nuclear “catastrophe” that fits easily into the discourse of energy politics and money, and that resonates with our bi-polar attitude toward technology.
While I can’t speak to the 2004 tsunami, I did spend time earlier this month investigating the impact of the Japanese tragedy first-hand. Obviously, the effects of seeing one erased town or neighborhood after another, in three dimensions and 360 degrees, and of smelling them, and of sneezing or choking on their dust, were more than intellectual. But an unavoidable by-product of the experience is that it’s hard not to think some of our cherished intellectual positions are vain, self-serving and simply wrong. And among them, our notions of property.
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May 23, 2011 at 4:29 am
Posted in: Current Events, International & Comparative Law, Jurisprudence, Property Law
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Attention All Flatlanders, Fudgies, and Other-State Equivalents II
posted by Sarah Waldeck
Now for some seasonally-appropriate scholarship:
A while back, I asked readers who were involved with family cottages (or summer homes or cabins or whatever you want to call them) to tell me their stories. I was curious about how many generations the property had been in your family; how you handled carrying costs, improvements, scheduling and use; whether your property was governed by a tenancy in common or other legal arrangement; and whether that arrangement was rocky or smooth. Some first-rate sociology had already been done in this area, but I was curious enough to want to supplement with some casual empiricism.
I recently posted the article that grew out of these inquiries on SSRN. Forthcoming in the Notre Dame Law Review, the article discusses how “identity property” is passed along from one generation to the next. Identity property is that which is valued for what it represents about self and family—a sort of ratcheted-down version of Margaret Radin’s “personhood property.” In the absence of more sophisticated estate planning, identity property is often inherited by the decedent’s children, who take as tenants in common. Standard doctrine relies on familial bonds and the unilateral right of partition to mitigate bilateral monopoly problems and to foster cooperation in the management of the children’s common resource. I argue that with identity property, this standard account is often wrong. Because courts favor partition by sale, the exit of one tenant often means that the remaining co-tenants will be forced to sell the identity property. Because the remaining tenants perceive the property as non-fungible, the threat of exit can be powerful enough to exacerbate bilateral monopoly problems and decrease the likelihood of cooperation.
The article makes use of some of the stories that readers of Concurring Opinions told about their family cottages to elucidate how devisees modify the default rules of a tenancy in common, particularly the right of partition. What I found most interesting about these stories was how willing some individuals were to radically restrict their right of exit from the co-tenancy and the corresponding belief that a strong right of exit would ultimately work against their collective interest. The Article ultimately argues that when it comes to identity property, the right of exit through partition should not be as absolute as current law allows.
For those who are interested in learning more, the abstract and article are available here.
p.s. And for those of you who are gearing up for another season in property that is jointly owned with other relatives, rest assured that not one single person who responded to my request reported an entirely smooth arrangement!
May 18, 2011 at 2:59 pm
Posted in: Property Law, Wills, Trusts, and Estates
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Invisible Hand or Hidden Fist?
posted by Frank Pasquale
In his press conference last week, Ben Bernanke concluded on an upbeat note. He had high hopes for a US recovery, since he believed that the Great Financial Crisis (GFC) of 2008 hadn’t taken from the US any of its basic productive capacity.
Whatever the merits of that view, the GFC did highlight debilitating trends in US finance infrastructure that have been intensifying for years. In this week’s Businessweek, Hernando de Soto (with Karen Weise) highlights one of the most important: the opacity of key markets and relationships. With scant exaggeration, de Soto warns that the US is on its way to levels of uncertainty more common in developing and communist countries:
During the second half of the 19th century, the world’s biggest economies endured a series of brutal recessions. At the time, most forms of reliable economic knowledge were organized within feudal, patrimonial, and tribal relationships. . . . The result was a huge rift between the old, fragmented social order and the needs of a rising, globalizing market economy.
To prevent the breakdown of industrial and commercial progress, hundreds of creative reformers concluded that the world needed a shared set of facts. . . . The result was the invention of the first massive “public memory systems” to record and classify—in rule-bound, certified, and publicly accessible registries, titles, balance sheets, and statements of account—all the relevant knowledge available, whether intangible (stocks, commercial paper, [etc]), or tangible (land, buildings, boats, machines, etc.). Knowing who owned and owed, and fixing that information in public records, made it possible for investors to infer value, take risks, and track results. The final product was a revolutionary form of knowledge: “economic facts.”
April 30, 2011 at 4:49 pm
Posted in: Bankruptcy, Corporate Finance, Economic Analysis of Law, Financial Institutions, Insurance Law, Property Law
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Sidebar Publishes Essay on Reforming the American Land Title Recording System
posted by Columbia Law Review
The Columbia Law Review Sidebar is pleased to announce the publication of Foreclosures and the Failure of the American Land Title Recording System, by Professor Tanya D. Marsh of Wake Forest Law School.
In her essay, Professor Marsh argues that the current mortgage crisis should serve as a wake-up call for an overdue modernization of the American land title recording system. The essay describes how the current public land title recording system is lacking and suggests how it can be improved to lessen the chance of such problems in the future. The essay goes beyond other recent proposals for the modernization of the American system of land title recording by proposing a radical solution: the gradual federalization of land title records.
April 3, 2011 at 7:09 pm
Posted in: Law Rev (Columbia), Property Law, Uncategorized
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A2K Symposium: Owning the Stars
posted by Frank Pasquale
I heard Lawrence Liang give a terrific talk at the Open Video conference in New York last Fall. His contributions to the A2K volume are also thought-provoking. Here is the conclusion from one of them:
I end this piece with a small parable that many of us will have read while we were children. The story is from Antoine de Saint Exupéry’s tale The Little Prince. The Little Prince visits a number of planets and encounters a range of different characters. On the fourth planet, he meets a businessman who owns millions of stars, and the reason why he owns them is because he was the first one to think of owning the stars.
The Little Prince is perplexed, because he can’t seem to find a reason for owning the stars beyond the fact that they can be put in a bank to enable the businessman to buy more stars. The Little Prince tells the businessman that “I own a flower myself, which I water every day. I own three volcanoes, which I rake out every week. I even rake out the extinct one. You never know. So it’s of some use to my volcanoes, and it’s useful to my flower, that I own them. But you’re not useful to the stars.”
Liang’s parable in turn made me think of ownership as an obligation, not (just) an opportunity for exploitation.
A2K As a a Statement of Progressive Intellectual Property?
In a special issue of the Cornell Law Review, four noted professors of property law wrote a brief series of propositions they identified as “A Statement of Progressive Property.” I found the following propositions particularly compelling:
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February 2, 2011 at 8:59 pm
Posted in: Financial Institutions, Intellectual Property, Property Law, Symposium (Access to Knowledge)
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On Feudalism
posted by Gerard Magliocca
My colleague Tom Wilson, who just did a sabbatical in Scotland, told me an interesting fact today. Feudalism was the law there until 2000. The Abolition of Feudal Tenure Act ended vassal status and entail except for lands owned by the Crown. This makes Scotland the last European region to get rid of feudalism. England did so in 1290, though there were earlier attempts at reform.
January 25, 2011 at 5:50 pm
Posted in: Property Law
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Hockett on the Financial Crisis
posted by Frank Pasquale
There is a growing consensus that our mortgage markets are fundamentally broken. In a recent article in The American Prospect, Robert Kuttner surveys a number of leading legal academics’ prescriptions for the foreclosure crisis:
Katherine Porter, a law professor at the University of Iowa and an expert in mortgage servicing, recently testified to the Congressional Oversight Panel for the Troubled Asset Relief Program (TARP) that according to lawyers for both home-owners and banks, “a very large number (perhaps virtually all) securitized loans made in the boom period in the mid-2000s contain serious paperwork flaws, did not meet underwriting or other requirements of the trust, and have not been serviced properly as to default and foreclosure.” . . . .
One remedy, proposed by professor Adam Levitin of the Georgetown Law Center, would create a new chapter of the bankruptcy code and allow a home-owner to come before a bankruptcy judge and get the mortgage reduced to the present value of the home. The process would also clear the title. Another proposal, by professor Howell Jackson of Harvard Law School, would use government’s power of eminent domain to take securitized mortgages, compensate the holder at the securities’ (much reduced) fair market value, and use the savings to turn the paper back into whole mortgages with steep reductions in interest and principal. This would also allow millions of people to keep their home and help stem the broad decline in housing values.
I think each of these ideas is valuable. I’d also like to see them complement a broad set of proposals articulated by Robert Hockett in a recent piece in the Washington University Law Review. Hockett’s proposals are worth quoting at length, since he keenly grasps the historical dimensions of this crisis:
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December 23, 2010 at 11:22 am
Posted in: Financial Institutions, Property Law, Securities, Securities Regulation, Uncategorized
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Liar Loans: White-Out & Scotch Tape at the Subprime Art Department
posted by Frank Pasquale
Doug Henwood has a good eye for the best of recent business analysis. Henwood’s interview with Michael W. Hudson (about Hudson’s new book, “The Monster”) is a must-hear for those interested in the subprime mess. From the book website:
This book tells the story of . . . subprime by chronicling the rise and fall of two corporate empires: Ameriquest and Lehman Brothers. . . . By the height of the nation’s mortgage boom, Orange County was home to four of the nation’s six biggest subprime lenders. Together, these four lenders—Ameriquest, Option One, Fremont Investment & Loan, and New Century—accounted for nearly a third of the subprime market. . . .
Under its pugnacious CEO, Richard Fuld, Lehman helped bankroll many of the nation’s shadiest subprime lenders, including Ameriquest. “Lehman never saw a subprime lender they didn’t like,” one consumer lawyer who fought the industry’s abuses said. Lehman and other Wall Street powers provided the financial backing and sheen of respectability that transformed subprime from a tiny corner of the mortgage market into an economic behemoth capable of triggering the worst economic crisis since the Great Depression. . . .
[Helped by Lehman,] Ameriquest Mortgage unleashed an army of salespeople on America. They numbered in the thousands. They were young, hungry, and relentless in their drive to sell loans and earn big commissions. One Ameriquest manager summed things up in an e-mail to his sales force: “We are all here to make as much f****** money as possible. Bottom line. Nothing else matters.” [This activity] helped fuel the mortgage empire that in 2004 produced $1.3 billion in profits [for Ameriquest's CEO].
November 14, 2010 at 8:25 pm
Posted in: Administrative Law, Corruption, Economic Analysis of Law, Law and Inequality, Property Law
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Foreclosures and the Rule of Law
posted by Frank Pasquale
Is the US becoming a third world nation? Arianna Huffington’s recent book makes the case, arguing that crumbling infrastructure and vast inequality herald a new era of unaccountable elites. She argues that “our financial system [has] become a bad carnival game where the rich always get the grand prize and the average American walks away empty-handed.”
Matt Taibbi directly connects financialization with the decline of common infrastructure in his new book, Griftopia. He describes a litany of roads and bridges “already leased or set to be leased for fifty or seventy-five years or more in exchange for one-off lump sum payments of a few billion bucks at best, usually just to help patch a hole or two in a single budget year.” Taibbi says the process is “stripping wealth out of the heart of the country,” reminiscent of the extractive industries of Nigeria or Equatorial Guinea. Even the New York Times‘s moderates are finding the US uncomfortably close to a “banana republic,” with Nicholas Kristof concluding that “You no longer need to travel to distant and dangerous countries to observe . . . rapacious inequality. We now have it right here at home.”*
Attorneys have a difficult time coming to grips with this new political economy. Many wholeheartedly believe that today’s chief executives deserve to make four or five hundred times the average worker’s wages (rather than the roughly fifty-fold multiple prevalent in 1980 America, and elsewhere in the world today). Perhaps the nation’s richest 1 percent in some sense deserves to have captured 80% of the increase in income from 1980 to 2005. These are moral claims that cannot be conclusively proven or disproven.
But we as attorneys can at least insist on a common rule of law for all. And that’s what our legal system has grievously failed to provide during the foreclosure crisis. As the indisputably pro-market Jonathan Macey notes, “the banks have created significant legal exposure for themselves ‘by committing fraud upon the courts.’” And yet the first thing our Congress could think to do was to endorse legal cover for them, as eagerly as it retroactively immunized warrantless wiretapping.
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November 7, 2010 at 9:00 pm
Posted in: Economic Analysis of Law, Law and Inequality, Property Law, Uncategorized
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The American Dream and Federal Foreclosure
posted by Lawrence Cunningham
Friends of ordinary people urge them to walk away from mortgage contracts if they want and protest mishandling documents as a defense to resulting foreclosure proceedings. Champions of institutional interests counter that it’s morally wrong for people to walk away from mortgage obligations and detect opportunism in challenges to the technical sufficiency of the paperwork.
Writers on both sides discern a double standard in the other. Consumer advocates accuse lenders and their backers of insisting on the sanctity of contracts to reject strategic default, yet excuse their own failure to handle contract documents with requisite care, sometimes deliberately mishandling them. Lenders and their backers complain that deadbeats are trying to game the system, backing out of contracts then using technical legal process as a disguise to enable staying in homes.
Many get overheated in staking out positions. It’s easy to understand such heated lapses, though. After all, the mortgage meltdown and foreclosure furor make enticing platforms for ideological chanting. Stoking the passions is burbling anger inflamed by the mid-term election campaigns.
Yet narrators on both sides vastly oversimplify the reality. It’s also easy to understand that, aside from the political motivations. After all, more than 10 million individuals in the country faced the prospect of mortgage default and/or foreclosure, each with a personal story; scores of lenders were involved on the other side of those deals. The related contracts and foreclosure processes are governed by the laws of the 50 states and other localities, each varying substantially. Any meta-narrative about such deeply-detailed realities will inevitably succumb to sweeping generalizations and hysterical finger-pointing.
Worth noting, though, is how the existing machinery is both handling the turmoil reasonably well and yet how we could take sober lessons from these stories. One concerns the value of tossing out the prevailing state-based system of mortgage foreclosure and replacing it with a single national standard.
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October 22, 2010 at 12:45 pm
Posted in: Current Events, Property Law, Uncategorized
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Where Have You Gone, Hernando de Soto?
posted by Frank Pasquale
Remember Randy “Duke” Cunningham’s “bribe list” pricing—”$50,000 for every $1 million in appropriated funds he would obtain?” There are now allegations that certain firms offered to “fabricat[e] documents out of whole cloth” to lubricate the foreclosure machine. For a mere $95, one could “recreate entire collateral file,” which is all “the documents the trustee (or the custodian as an agent of the trustee) needs to have pursuant to its obligations under the pooling and servicing agreement on behalf of the mortgage backed security holder [including] the original of the note (the borrower IOU), copies of the mortgage (the lien on the property), the securitization agreement, and title insurance.” Yves Smith draws some interesting implications:
Amar Bhide, in a 1994 Harvard Business Review article, said the US capital markets were the deepest and most liquid in major part because they were recognized around the world as being the fairest and best policed. As remarkable as it may seem now, his statement was seem as an obvious truth back then. In a mere decade, we managed to allow a “free markets” ideology on steroids to gut investor and borrower protection. The result is a train wreck in US residential mortgage securities, the biggest asset class in the world. The problems are too widespread for the authorities to pretend they don’t exist, and there is no obvious way to put this Humpty Dumpty back together.
Smith’s global perspective reminds me of two items. I once heard that, in the wake of Bush v. Gore, a representative of the OAS began a meeting by saying something along the lines of: “We are now to hear from a fragile democracy, one that has suffered severe strains but which looks capable of attaining legitimate procedures for governance. Would the United States representative please come to the dais?” And policymakers who prescribe the titling work of Hernando de Soto for Latin America might want to apply it a bit more carefully at home.
October 3, 2010 at 5:56 pm
Posted in: Contract Law & Beyond, Property Law, Securities, Securities Regulation, Uncategorized
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Foreclosure Mills Under Fire; A New Way Forward?
posted by Frank Pasquale
The early days of the financial crisis revealed megabanks indulging in sloppy and self-serving recordkeeping on the macro-scale. Now we see the devastation and disorder that happens when that same profit-at-all-costs mentality is inflicted on individuals. As has recently been reported, foreclosure horror stories include “a man who was foreclosed on when he didn’t have a mortgage and paid cash for the home; a home that had two foreclosure suits against it because both servicers claimed ownership of the title; and a couple foreclosed on over a contested $75 late fee.”
Reform groups like A New Way Forward are gaining strength and members because large financial institutions are increasingly untrustworthy. They no longer appear to be unitary “actors” at all, but rather shadowy and unstable ensembles of desks and divisions whose main goal is slipping by whatever bonus-maximizing scheme won’t set off alarms among risk managers and regulators. As Satyajit Das memorably puts it in his book Traders, Guns, and Money, “no trader making $1 million + a year is going to take questions from an auditor making $50,000 a year” (144).
Given this grim landscape, I wanted to highlight two hopeful items. First, this Monday the Roosevelt Institute will host a conference on the future of financial reform, featuring some of the most credible and compelling voices in the field (including Jennifer Taub, Mike Konczal, Richard Carnell, Sen. Jeff Merkley, and Michael Greenberger). Read the rest of this post »
October 2, 2010 at 3:31 pm
Posted in: Economic Analysis of Law, Property Law, Sociology of Law, Uncategorized
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Money Matters in Ongoing Marriage Law
posted by Alicia Kelly
Married life is characterized by a sharing norm. As I described in an earlier post, spouses commit to and in fact engage deeply in sharing behavior, including a shared family economy. Overwhelmingly, spouses pool economic resources, including labor, and decide together how to allocate them to benefit the family as a whole.
In addition to its affects in the paid labor market (see my last post), sharing money matters inside a functioning marriage. It shapes the couple relationship as well as each partner individually. Research shows that in an ongoing marriage, money is a relational tool. For example, making money a communal asset is a way to demonstrate intimacy and commitment, and that can nurture a couple’s bond. Yet, in some circumstances, an assignment of resources to just one spouse can also be understood (by both partners) to be appropriate and deserved—a recognition of the individual within a sharing framework. Conversely, it is also possible that spouses’ monetary dealings can undermine individual autonomy and the relationship as well. For example, one person might exercise authority over money in a way that disregards the other. Accordingly, power to influence financial resource allocation within the family is important for individual spouses and for togetherness.
It becomes a special concern then, that sharing patterns in marriage are gendered. As highlighted in my previous post, role specialization remains a part of modern intimate partner relations. Particularly true for married couples, men continue to perform more as breadwinners, and women more as caregivers. As a result, women tend to have reduced earning power in the market. How does this market asymmetry translate into economic power at home? Happily, in a significant departure from the past, a majority of couples report that they share financial decisionmaking power roughly equally. Indeed, most married couples today endorse gender equality as an important value in their relationship. However, in a significant minority of marriages, spouses agree that husbands have more economic power. For some couples then, a husband’s breadwinning role and/or perhaps his gender, confers authority in contentious money matters.
How should law governing an ongoing marriage respond to these sharing dynamics? Consider this hypothetical fact situation. A husband has a stock account from which he plans to make a gift to his sister who he feels really needs the money. The husband suspects that his wife would not approve of the gift. Even though the wife too loves the sister, she believes the sister is irresponsible with money. Let’s assume that the money in that stock account was acquired while the parties were married, and that it came from the market wages of one or both of the spouses earned during marriage. It was a product of the couple’s shared life. Does contemporary law allow the husband to give his sister the gift without her consent? Without even telling her? How should legal power over the money be allocated?
October 1, 2010 at 1:04 pm
Posted in: Family Law, Feminism and Gender, Law and Inequality, Law and Psychology, Legal Theory, Property Law, Psychology and Behavior, Uncategorized
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