Why President Bush Might Not Want to Pardon His Administration: An International Angle

I have been dismissive of the idea that President Bush will pardon administration officials (and maybe himself, contrary to my post here) involved in the policy surrounding the mistreatment of detainees in the current conflict. I had filed this concern in the same place as the preposterous notion that President Bush would cancel the election in November, or the inauguration on January 20.

After listening to Professor Phillipe Sands on NPR's Fresh Air this afternoon, though, I am starting to think that the President might need to think more seriously about the pardons. Sands made a case for investigations, both by the Obama Administration and international authorities. I am not qualified to weigh in here with my opinion on the relative merits of Sands's argument, but listening to him, it did strike me that prosecutions--especially international ones--are more of a possibility than I had previously thought.

Somewhat counterintuitively, though, I think that the increased possibility of prosecution should make it less likely that President Bush will pardon Dick Cheney, David Addington, John Yoo, or himself. It seems to me that international human-rights activists will be in a much more punitive mood than the Obama administration will be. However, it would be much easier for Bush officials to stiff-arm international efforts if the possibility of some sort of domestic process--which could have more legitimacy and would avoid sovereignty concerns--remained open. But pardons would close that possibility. The international activists would be able to say that there is no alternative left for them but to proceed in international tribunals.

If President Bush does not expect any prosecutions at all, or expects them only domestically, then there is no issue. But if his pursuers will be both foreign and domestic, it would make sense for him to try to keep his home court advantage, so to speak.

Another permutation--impeachment of Bush Administration officials after they have left office--looms as well. If President Bush pardons people, or if the Obama Administration is disinclined to take up the case, I have argued (here) that Congress can still step in and take some action. Such action would, admittedly, be limited, but it would be much more than nothing, and it too could slow down international proceedings somewhat. (I'll post more on "late impeachment" in the next few days.)

Again, I'm not saying that President Bush should pardon anyone, or that anyone is guilty. I just think that pardons could weaken his position, in a way that I didn't realize a few hours ago.

Posted by Brian_Kalt at 01:17 PM | Comments (1) | TrackBack

More on the Roland Burris Appointment: A Response to Amar and Chafetz

Over at Slate, Josh Chafetz and my mentor Akhil Reed Amar have penned what I think is the best argument one can make that the Senate can and should refuse to seat Roland Burris, Illinois Governor Rod Blagojevich's pick to fill that state's vacant Senate seat. The best, but still not enough in my opinion, following up on my earlier post.

The core of their argument is that the Senate can judge the elections and returns of its members, and so "[i]f the Senate may refuse to seat a person picked in a corrupt election, it likewise may refuse to seat a person picked in a corrupt appointment process." They continue that:

To be sure, there is no evidence Burris bribed the governor to get this seat. But imagine if Burris had won election only because other candidates were wrongly and corruptly kept off the ballot. Surely the Senate could properly deem this an invalid election. Similarly, it now seems apparent that there were candidates that Blagojevich refused to consider for improper reasons—because one refused to "pay to play" early on, or because another is at the center of the impending criminal case against the governor. With the appointments process so inherently and irremediably tainted, the Senate may properly decide that nothing good can come from a Blagojevich appointment.

Here's why I think that's wrong.

Their analogy would work if, say, Jesse Jackson, Jr. got appointed over the corruptly excluded Valerie Jarrett. But that's not what is happening here. Go back to the election analogy. Let's say that an election was corrupt. The Senate rightly refuses to seat the winner of the election. Now there is a vacancy. Thus, the governor gets to appoint someone to fill it, and if he does so without any shenanigans that time, it should be OK.

The alternative would be to say that once one bad thing happens, the Senate can force the vacancy to persist until there can be a new and clean election. As my colleague Mae Kuykendall points out, though, the new election wouldn't remove the "irremediable taint" of the corrupt vacancy anymore than a new and clean appointment would. What removes the stain of corruption is a non-corrupt appointment pursuant to state law. As warm-feeling a policy as boycotting Blagojevich might be, I don't read Art. I, § 5 and the 17th Amendment as giving the Senate that authority here. It seems to me that those provisions leave it to state law to determine how vacancies are filled.

The alternative is a situation in which the seat remains vacant until the IL legislature either removes Blagojevich or passes a law stripping him of the appointment power and mandating an election. But surely that puts the cart before the horse. The legislature has had the opportunity to do both of those things already, and has declined to do so.

Put another way, the law is that the governor fills this vacancy. That law was followed here. No one is claiming that Blagojevich broke the law in selecting Burris. In the absence of any such evidence—let alone in the absence of an attempt to even look for such evidence—the Senate cannot legitimately question the "returns" here.

At least Amar and Chafetz have made a plausible legal argument, as opposed to Senator Reid's legally vacant pronouncements. I find it ironic that Reid, a Mormon, is hearkening back to the pre-Powell notion of excluding people from Congress through guilt by association. Back in the day, that illegal approach was used to keep Mormons out of Congress for being Mormons. Senator Reed Smoot was challenged on these grounds, and it took four years of hearings and debate before he was seated. Notwithstanding their hard-to-overstate distaste for the people who sent Smoot to the Senate, the senators eventually let him take his seat.

More relevant for current purposes is that they seated him provisionally in the meantime, and had a real debate about it, instead of reaching their conclusion before he had even arrived.

Posted by Brian_Kalt at 02:17 PM | Comments (14) | TrackBack

Can the Senate Refuse to Seat Blagojevich's Appointee?

Politico and MSNBC are reporting that the Senate Democratic leadership is indicating its refusal to seat Roland Burris, who Illinois Governor Rod Blagojevich today indicated he will appoint to fill President-Elect Obama's vacant Senate seat.

I'm not sure where the Senate Democratic leadership thinks it gets the authority to not seat Burris. Under Powell v. McCormack, the ability of the Senate to exclude someone would seem to be limited to judging that he hadn't won the election (not applicable here) or that he is not qualified (30 years old, a resident of Illinois, and a U.S. citizen for nine years). Their discomfort with Burris's appointer doesn't enter into it.

Presumably, they could seat Burris and then expel him, but that would require a 2/3 vote, which would be hard to muster given that, by all accounts today, Burris is personally unobjectionable.

My best guess is that the Senate Democratic leadership would argue that the Senate's authority to judge the elections of its members extends by analogy to judging the appointments of its members; and that a corrupt election would be cause to not seat someone, so a corrupt appointment should be too. But surely this sort of determination would require some sort of investigation rather than a conclusion that Burris is unfit for office (even if the Senate could get away with this constitutionally, it shouldn't try to). Burris has not been connected to the corruption case as far as I know. What are the odds that Blagojevich would appoint him corruptly in the middle of this investigation?

If I were a leader in the Senate, I would confer with Sen. Durbin and Illinois state officials, and see what they think. I might hold some hearings to find out more about the circumstances of Burris's selection. But I would not say that the Senate can just refuse to seat Burris.

Posted by Brian_Kalt at 02:56 PM | Comments (17) | TrackBack

Toussie's Pardon *Was* Signed, Sealed, Delivered, and Probably Accepted

At his invaluable Pardon Power blog, Prof. Ruckman has done some very helpful reporting that, to my mind, strengthens Isaac Toussie's case immensely. The professor and I have tangled over pardon revocability in the text and comments here and here. His latest post reveals the following:

1) The President signed a formal pardon warrant, containing Toussie’s name, which expressly states that he was “hereby granted a full and unconditional pardon.”

2) That document was sealed and transmitted to Department of Justice (DOJ) with directions to notify the grantees.

3) The Office of the Pardon Attorney (OPA) called each grantee (or his counsel) via telephone and told him that he’d been pardoned by the President.

4) Then, the DOJ issued a press release that informed the world (including Toussie) that the grants had been made.

5) There is no issue about whether Toussie accepted the pardon – he had asked for it and it was granted without conditions.

It is well worth noting that, when the OPA makes these phone calls, the OPA has never informed grantees that they "will be" pardoned "as soon as they get the individual warrant" (which may take weeks to arrive). The OPA always tell them they "have been" pardoned. No contingencies.

So far, the president's argument has been that the pardons were still in some state of preparation--not yet a pardon, in essence--and thus could legally be halted. (Ruckman has labeled this argument foolish, and contended that pardons are revocable even when completed.)

Given that the facts Ruckman reports show that (1) the president signed a document saying he hereby gave a full and unconditional pardon to Toussie; (2) that that document was sealed; and (3) that the Office of the Pardon Attorney notified Toussie (or his counsel) that Toussie had been pardoned (not that he would be), I think it is fair to say that for all intents and purposes, this pardon had been signed, sealed, and delivered.

One might argue that Toussie hadn't accepted the pardon, but I reject that conclusion given that he had gotten exactly what he applied for with no conditions attached (the offer was his, and acceptance was the president's), and also given case law undermining the notion that pardons must be accepted. I also would be surprised if when Toussie or his counsel got the phone call, they didn't accept it.

I do not agree with Ruckman that a pardon, once granted, can legally be revoked. But I do agree with him that the president's argument in this case--that the Toussie pardon had not yet been granted--is foolish. I expect that there are a lot of people following this story whose thoughts paralleled mine. First, upon hearing that Toussie pardon had been revoked, I thought "what? you can't revoke a pardon." Then, upon hearing the claim that the pardon hadn't been processed yet, I thought "well, maybe this wasn't a pardon." Now, upon hearing that it had been signed, sealed, delivered, and presumably accepted, I'm back to "what? you can't revoke a pardon." I hope that Toussie litigates this and that the court settles this once and for all.

Of course, there is still the matter of Ruckman's argument that completed pardons can be revoked. His argument is backed up by examples that, while unlitigated and mostly old, are nevertheless numerous and undeniably there. (And, to Ruckman's credit, they shoot down the callow media reports that Bush's move was unprecedented.) If Toussie loses this case, that history will be why. But personally, for reasons I have posted already, I expect other arguments to prevail, and that the history to be relied upon by the dissenters, if any.

Posted by Brian_Kalt at 07:51 AM | Comments (3) | TrackBack

Vanity on Hold? Or More Important than Ever?

Not all the spending deferred during the Great Recession will be missed. Cosmetic surgery sets up a rat race of positional competition for better appearance, with dubious objective benefits. Natasha Singer suggests that many may now be "putting vanity on hold:"

“In Orange County, where plastic surgery is a part of their culture, doctors told me business is down 30 to 40 percent,” said Thomas Seery, the president of realself.com, a site devoted to reviewing vanity-medicine procedures. “That tells me something is fundamentally changing there.”

Even a few celebrities, those early adopters of appearance technology, have started to deride the plasticized look that sometimes accompanies cosmetic interventions, a harbinger perhaps of a new climate of restraint in which overt augmentation seems like bad taste.

However, Rhonda Rundle (on the Wall Street Journal's cosmetic surgery beat) suggests that those hooked on appearance enhancement may merely be scaling down, rather than breaking, the habit. Appearance competition can be vital to getting ahead--or merely staying in place:

Increasingly, many aesthetic patients view their treatments as professional self-preservation rather than as a personal indulgence. Appearances make a difference, says . . . a 57-year-old marketing consultant in Falls Church, Va. "If you're in the business world and you want to be competitive with the younger people, you need to stay on top of your game," she says.

[A] plastic surgeon in New York City, says that even people with good jobs and robust savings are worried about the future and are afraid to miss work for surgery. They come in, he says, knowing that they need a facelift but asking if there's "something I can do to tide them over." Botox and fillers, he responds.

Botox may turn out to be the methadone of cosmetic surgery addiction.

Photo Credit: Mart & Gree,

Posted by Frank_Pasquale at 02:30 PM | Comments (0) | TrackBack

More on the President's Attempt to Revoke the Toussie Pardon

Following up on my earlier post, I have some more thoughts on the Toussie pardon. I originally cited some thoughts by Michael Froomkin. Froomkin has a follow-up post in which he, in my opinion, gives up too easily.

The White House seems to be arguing that a pardon needs to be signed, sealed, and delivered before it is effective. I have already explained why I think that is wrong: signed, yes; sealed, probably, whatever that means; delivered, no. But regardless of all that, as Ellen Podgor points out, Toussie has a good argument that the pardon actually was signed, sealed and delivered. The DOJ press release on the 23rd said: "On Dec. 23, 2008, President George W. Bush granted pardons to 19 individuals and commutation of sentence to one individual." It didn't say that Bush started the process of pardoning them. It said he pardoned them, because that's what everyone understood was happening. Without knowing exactly how these things work, I can't assume that Toussie got a phone call, formally communicated his acceptance, or what, but maybe he did. In any case, there was a whole day there in which he and the rest of the word knew that he had been pardoned.

The anonymous fourth commenter on my original post makes some points that are helpful for untangling all of this. Because pardons are typically issued in big clumps, current practice is for the president to sign a master warrant with all of the names on it, then send it to the OPA, which prepares and delivers individual warrants for the people on the list. But (as the DOJ press release reflected) the master warrant doesn't purport to be an order to the OPA to execute and issue pardons. It purports to be a legal act by the president. As the excellent Pardon Power blog reports, from the NYT, the master warrant begins: "After considering the applications for executive clemency of the following named persons, I hereby grant full and unconditional pardons to the following named persons." That sounds like an official act to me. My commenter reports that a former pardon attorney testified that, indeed, the master warrant is the legally significant act here. Perhaps that is what underlies the understated comment from former Pardon Attorney Margaret Love (the person who, I think, knows more about presidential pardons than anyone now alive) here, that "it’s not clear to me that [revocation is] as easy to do as all that."

Indeed, all of the commentary has referred to this as a pardon that was issued and then revoked. But pardons can't be revoked. So the White House needs another theory. Enter the statement of the press secretary, introducing the notion that the pardon had not been executed. But the statement doesn't hold up. First of all, it describes the president as accepting the recommendation to pardon Toussie. Then, it concludes by describing how the president is going to now have the Office of the Pardon Attorney review Toussie's case, because he "believes that the Pardon Attorney should have an opportunity to review this case before a decision on clemency is made." But the president already had that opportunity, and chose not to take it. If President Bush believed that the OPA should have had a chance to review, say, the Marc Rich case, then he could have set up his OPA process that way. But surely, if he thought he could reach back and hold up the Rich pardon the way he did the Toussie pardon, he would have done so.

In any case, if I were Toussie (the only person with standing to challege the president's action here), I would fight this. I think that it is pretty unlikely that Bush is going to re-do the pardon. Nevertheless, there is no point litigating the issue until after January 20; as long as the OPA is sitting on the question, there is a ripeness issue that would not be worth adding to an already complicated situation.

But once President Obama takes office, one can assume the application will be rejected, if it hadn't been already. Then Obama's administration will have to defend the revocability of the pardon. One might expect a spirited defense, under the old "let's not cede any authority we may have" doctrine. Then again, Obama could argue in favor of the president's power to issue pardons that take effect immediately, rather than ceding that power (and, ironically, watering down the unitary executive theory) as Bush has purported to do here. Further, the Obama Administration could make the more political argument that do-overs raise political convenience over the care and diligence that the Constitution expects of the president here.

To be sure, there is a Gilded Age history of revoking pardons that the initial press reports missed. But the more modern precedents on the nature of the pardon power, not to mention modern communications, suggest to me that Toussie has a good case here.

Posted by Brian_Kalt at 11:13 AM | Comments (5) | TrackBack

President Bush Revokes Pardon of Isaac Toussie

As this MSNBC story and this CNN story detail, President Bush pardoned real estate scammer Isaac Robert Toussie, and then revoked the pardon a day later (today).

It seems to me that this is not constitutional. Once issued, a pardon is a pardon. That's that. The president has the power to lift criminal consequences from someone, but not to unilaterally impose them, which a pardon revocation does.

I can't find all of the details here. Perhaps President Bush announced that he would be issuing the pardons, but did not actually issue them in the requisite official form. But it sure seems like he signed off on them. One other possibility is that the pardon was made conditional on some sort of follow-up by Toussie, which he had not performed. But I see no reporting on that either. It just looks like the president issued a pardon and then un-issued it.

President Bush actually referred the matter to the Office of the Pardon Attorney for further consideration, so it is possible that Toussie will get his pardon back. One can imagine that Toussie and his lawyers might not want to challenge the president's revocation if they still hope to get something from him. Since Toussie is probably the only one with standing to argue the constitutional point, though, the only way to answer the revocability question is for Toussie to challenge the president's action in court. From the CNN story, though, it doesn't sound like that is going to happen.

Strange days indeed.

UPDATE: According to the official White House statement, President Bush did not actually pardon Toussie, but only delivered a Master Warrant of Clemency to the Office of the Pardon Attorney. This just instructs the pardon attorney to execute and deliver the pardons. So it wasn't final.

Marbury v. Madison famously held that a presidential appointment need not be delivered before it is effective, but as this helpful blogger notes, pardons are different from appointments in the Supreme Court's eyes:

There is, however, some weighty precedent for the proposition that at least a garden-variety pardon is not complete until delivered. This line of argument originates in this statement of Chief Justice Marshall’s in U.S. v. Wilson, 32 U.S. 150, 161 (1833). Marshall, famously, had earlier decided in Marbury v. Madison that an official’s commission was valid without delivery, and hence must be delivered even if the President did not want the appointment to go through. But pardons, he argued, were different:

A pardon is a deed, to the validity of which, delivery is essential, and delivery is not complete, without acceptance. It may then be rejected by the person to whom it is tendered; and if it be rejected, we have discovered no power in a court to force it on him. It may be supposed, that no being condemned to death would reject a pardon; but the rule must be the same in capital cases and in misdemeanors. A pardon may be conditional; and the condition may be more objectionable than the punishment inflicted by the judgment. The pardon may possibly apply to a different person, or a different crime. It may be absolute or conditional. It may be controverted by the prosecutor, and must be expounded by the court. These circumstances combine to show, that this, like any other deed, ought to be brought ‘judicially before the court, by plea, motion or otherwise.’

Similarly, the District Court decision in In re De Puy, 7 F. Cas. 506, 510-11 (S.D.N.Y. 1869) (No. 3814), described in Harold J. Krent, Conditioning the President’s Conditional Pardon Power, 89 Cal. L. Rev. 1665, 1704 (2001) as involving:

President Andrew Johnson’s offer of a pardon to Jacob DePuy, who had been convicted and incarcerated for violating the revenue laws. President Johnson predicated the pardon on DePuy’s agreement to pay a fine. When President Grant assumed the reins of power, he revoked the pardon, and the Court upheld the revocation because the paperwork had yet to reach DePuy even though the warden had the papers in his possession at the time President Grant revoked the offer. . . . Indeed, President George W. Bush’s administration reportedly studied the feasibility of revoking the Marc Rich pardon, and it was not clear whether the Clinton administration had completed all of the paperwork at the time Bush took office.

This takes a good deal of the wind out of the sails of the arguments that Toussie might make. But not all of the wind. Wilson dealt with someone who didn't want to accept the partial pardon the president had given him; the Court let him refuse it (a conclusion that I have questioned elsewhere in light of subsequent precedent, but let's accept it arguendo). DePuy dealt with someone who had a conditional pardon, which condition he had not yet fulfilled when the pardon was revoked.

In Toussie's case, he wanted the pardon. He had applied for it and (I think) gotten everything he had asked for. Wilson is thus inapt. There do not appear to have been any conditions placed on Toussie's pardon; DePuy therefore does not control. Toussie's pardon thus seems to be final in a way that Wilson's and DePuy's pardons were not.

However, Marbury adds another wrinkle. A commission, Chief Justice Marshall wrote, does not to be delivered to be valid, but it does have to be sealed (in that case by the secretary of state). Here, if the president sent a sealed document to the pardon attorney, ordering him to deliver it to Toussie; or if the president sent an unsealed document to the pardon attorney, who then sealed it but didn't deliver it, Toussie still has a good argument that the pardon is final. If the document was not yet sealed when it was revoked, his case is much weaker.

Posted by Brian_Kalt at 08:59 PM | Comments (10) | TrackBack

Inauguration Day—Plus One

Bars in the District of Columbia can stay open 24 hours a day (and night) from January 17 through January 21 (and sell alcohol until 5:00 a.m. instead of the usual 2:00 a.m.), thanks to legislation its City Council passed for the occasion. WaPo story here.

With hotels booked up early, at high prices, and many home owners or renters letting their places out for two nights at a rate that can cover a months’ carrying costs, maybe some revelers will simply spend the night in a bar and head home at dawn the next day!

For those of us scheduled to teach classes in Washington at 9:00 a.m. on the Wednesday after Inauguration Day, one wonders what percentage of students likely will preparedly attend.

Posted by Lawrence_Cunningham at 05:26 PM | Comments (0) | TrackBack

Can President Bush Be Impeached After He's Gone?

Can presidents be impeached after they have left office? In a 50,000-word article a few years ago, and in Chapter 6 of the book I am writing, I argued in favor of what I call "late impeachability," and identified the (admittedly rare) contexts in which it might make sense.

I'll do the same here, albeit in much, much less detail. In this post, I'll talk about practical considerations (i.e., the "Why bother?" question). In a few days, I'll post about the legal arguments supporting late impeachability (i.e., the "Whatchoo talking about, Willis?" question).

As with my post on presidential self-pardons, my writing on this question has been consistent over two presidencies; I have no partisan axe to grind. In any case, I don't support any efforts to impeach President Clinton or President Bush. This post's title is thus a bit dodgy (though presumably it succeeded in getting your attention).

My draft chapter starts out with this hypo, which touches on many of the practical considerations, and previews some of the legal arguments:

A year into his term, President Jack Martin is embroiled in the most scurrilous scandal in presidential history. Rumors swirled for several months before Martin finally gave into public pressure and appointed an independent counsel. It soon becomes obvious why he had been so reluctant: the independent counsel quickly uncovers mountains of evidence of President Martin's lucrative and corrupt relationship with Ted McGee.

McGee—a lobbyist and longtime friend of the president—collected tens of millions of dollars in "lobbying fees" from people, companies, and governments, and turned over half of the money to President Martin. Without fail, McGee's clients benefited from presidential attention to their needs almost immediately after paying their bribes. As desired by McGee's clients, Martin promoted or vetoed legislation, appointed or fired officials, and more. In the worst instance, Martin ordered the military to share certain top-secret missile technology with a less-than-steadfast ally.

It is a national disgrace. The independent counsel indicts McGee and fifteen of his clients, and she prepares a comprehensive indictment against Martin to move forward as soon as he is out of office. The House Judiciary Committee begins considering articles of impeachment, and there seems to be little doubt that Martin will be impeached and convicted swiftly.

Seeing the handwriting on the wall, President Martin resigns. He is indicted and prepares to defend himself in court. His successor, President Barker, clearly had no involvement in the scandal, and at age seventy-three he promises not to run for a full term. One of Barker's first acts as president is to pardon President Martin, on condition that Martin surrender all of the money mentioned in his indictment (which totals more than fifteen million dollars), plus an additional 20 percent, to the government. Addressing the nation, President Barker says that Martin has suffered enough and that the United States needs to move on: "A presidential prosecution would take a long time and be difficult to conduct evenhandedly. It would produce more spectacle than justice, and it would distract us at a time when we need to refocus our attention on the real problems facing Americans." Martin accepts the deal.

There is an uproar. Some people—mostly members of Martin and Barker's political party—agree that the country needs to move on, and they are satisfied that Martin has suffered enough. Most Americans disagree and think that Martin should go to prison. But with the pardon, and with little prospect of a state prosecution, there is no way for this to happen.

Luckily for the disgruntled majority, the opposition party controls both chambers of Congress, and they are not keen to let go of the Martin scandal. For one thing, there are still a lot of unanswered questions about Martin's conduct. For another, Martin's crimes are a political goldmine, not least because the midterm congressional elections are only a few months away. Multiple congressional committees hold hearings on Martin's bribes.

Subpoenaed by three separate committees, ex-President Martin refuses to testify. He submits a written statement arguing that the separation of powers precludes Congress from forcing him to testify under oath about his actions as president. He concedes that he can be subpoenaed by the independent counsel pursuant to her criminal investigation (or what's left of it, anyway), but he rules out providing any documents or live testimony to Congress.

It was bad enough that Martin shamed his country and his office and avoided prison. Now that he is adding insult to injury by thumbing his nose at Congress, the House's leaders decide to revive Martin's impeachment (which is beyond the reach of a presidential pardon). It is the only way for them to vindicate their authority, and the only hope for holding Martin accountable.

But Martin has left office, and the strong majority that would like to punish him is divided. Many say that impeachment is only for removing people from office, and that it is legally impossible to impeach the ex-president. Moreover, whether or not it is legally possible, many members of Congress ask what the point is. The most common answer—that it will keep Martin in the news during the congressional election campaign—seems cynical and turns off a lot of people who would prefer that Congress do something more productive.

Still, there are enough people who harbor enough anger at Martin that it looks like the impeachment will go forward. The leaders of the effort argue that it is perfectly constitutional to impeach someone who has left office. The constitutional text allows it and there is ample historical precedent, they say. In addition to being removed from office, convicted impeachees can also be disqualified from holding office in the future, and while it is unlikely that Martin will ever work in government again anyway, his foes would still like to brand him with this mark of shame.

If Martin were clinging to office, his impeachment in the House and conviction in the Senate would be a sure thing. But late impeachment is controversial, and it is obvious that the issue has to be settled before the case can go anywhere. The hottest political issue in the country is now a constitutional-law issue, and the nation's top politicians—and maybe its top judges—stand ready to adjudicate it.

Admittedly, the conditions under which Congress would ever bother to pursue an ex-president are rare. Then again, the conditions under which it would pursue a sitting president are rare too. The core importance of impeachment, late or otherwise, is not the cases that arise, it is the cases that don't. No president has ever been removed from office through impeachment, but every president has been constrained by the possibility of it. Imagine a United States in which the president knew that no matter what he did, he would be able to remain in office for four years. It seems obvious that the temptation to abuse power would occur more often in that system than it has in our real one.

Without late impeachment, this deterrent effect would fade fast near the end of a president's term. If impeachment cannot touch a president once he has left office, then it provides him with an incentive to behave only early in his term, or to conceal his wrongdoing long enough to run out the clock. By contrast, if the president is subject to impeachment for the rest of his days, he will have an added incentive to conduct himself appropriately to the very end of his term. If he fails to do so, he could at least face scrutiny.

So like regular impeachment, late impeachment is worth discussing even though it is highly improbable. For those who are unconvinced, here are some factors that I think could lead to a late impeachment actually happening.

First, the criminal penalties facing the president might be insufficient. There might be constitutional barriers to criminally investigating the president; the offense might not be a crime; or the ex-president could have been pardoned, cut a deal, or just left alone. (Significantly, no prosecution was ever brought against the obviously corrupt Secretary of War William Belknap—who was late-impeached but acquitted by five votes.) Congress might feel the urge to punish the ex-president as only it can, such as disqualifying him from future office. If it tweaks the presidential pension laws a bit, it could also use late impeachment to strip an ex-president of retirement benefits, as Senator Specter suggested be done to President Clinton in 2001 (had there been harder evidence against Clinton in the Marc Rich case, Specter's comments might be more than the less-than-a-footnote they are today).

Second, the impeachment would need to represent some sort of perceived political advantage for Congress. This is not inconsistent with the first point—going after bad guys can be popular—but unless the partisan zeitgeist in Congress is just so, pursuing an ex-president might seem like a waste of time. On the flip side, though, pursuing a sitting president can be unpopular too. Late impeachers might actually be emboldened once they can no longer be accused of trying to force a duly elected president from office; once that consequence is off the table, the case can just be about going after the bad guy. The bottom line is that Congress does what it thinks makes sense politically, so a late impeachment would have to make sense politically. Gerald Ford, pursuing Justice Douglas, famously said that an impeachable offense is whatever a majority of the House says it is. He might better have noted that an impeachable offense is only what a majority of the House can agree is worth pursuing, which is no small barrier to overcome—as the case of the unimpeached Justice Douglas shows us.

Third, Congress might act to protect its prerogatives. If the president left office to avoid impeachment, or if the ex-president was stonewalling a lower level congressional investigation, Congress might feel as though late impeachment was the only way to vindicate its authority. To take a current example, I can easily imagine (1) President Obama deciding not to pursue criminal charges against President Bush and his administration over the torture and surveillance controversies; (2) a netroots-led partisan groundswell that spurs the House to pick up the matter, as the only authority with the power to investigate and make public the former administration's actions; and (3) impeachment emerging as the only way to break through the ex-president's assertions of privilege and hold him accountable. Not my cup of tea, but I can still picture it.

Of course, the president would likely challenge congressional authority to impeach and try him. The courts might take the case, or they might leave it to Congress to sort out. Heaps of arguments about the Constitution's text, structure, history, and precedents would fly back and forth in the courts, Congress, and public square. But all that will have to wait for my next post.

Posted by Brian_Kalt at 10:59 PM | Comments (6) | TrackBack

IBG: Foundation of American Finance Capitalism?

Thomas Friedman delivers today with a column that makes me proud he's a fellow Marshall Scholar. My favorite paragraphs:

I have no sympathy for Madoff. But the fact is, his alleged Ponzi scheme was only slightly more outrageous than the “legal” scheme that Wall Street was running, fueled by cheap credit, low standards and high greed. What do you call giving a worker who makes only $14,000 a year a nothing-down and nothing-to-pay-for-two-years mortgage to buy a $750,000 home, and then bundling that mortgage with 100 others into bonds — which Moody’s or Standard & Poors rate AAA — and then selling them to banks and pension funds the world over? That is what our financial industry was doing. If that isn’t a pyramid scheme, what is?

[T]his legal Ponzi scheme was built on the mortgage brokers, bond bundlers, rating agencies, bond sellers and homeowners all working on the I.B.G. principle: “I’ll be gone” when the payments come due or the mortgage has to be renegotiated. . . . The Madoff affair is the cherry on top of a national breakdown in financial propriety, regulations and common sense.

Thank you, Mr. Friedman. Finally, respectable opinion is coming around to a view that the "man on the street" has intuited for some time: the recklessness of contemporary finance capitalism is systemic, not merely the product of a few bad apples. A passion for deregulation and budget cuts left an administration unable to detect even the grossest frauds. In that culture, virtually anything went. And as the Bush years come to a close, I expect many inspector generals across the administrative state will be detecting ever more wrongdoing.

Friedman reported on Chinese dismay at the breakdown in the American system, and the growing international sense that US assets are being hollowed out by a craven superclass. James Fallows's interview with Gao Xiqing, "the man who oversees $200 billion of China’s $2 trillion in dollar holdings," gives another perspective on the Chinese view of America's descent toward kleptocracy:

If you look at every one of these [derivative] products, they make sense. But in aggregate, they are bullshit. They are crap. They serve to cheat people. I was predicting this many years ago. In 1999 or 2000, I gave a talk to the State Council [China’s main ruling body], with Premier Zhu Rongji. They wanted me to explain about capital markets and how they worked. These were all ministers and mostly not from a financial background. So I wondered, How do I explain derivatives?, and I used the model of mirrors.

First of all, you have this book to sell. [He picks up a leather-bound book.] This is worth something, because of all the labor and so on you put in it. But then someone says, “I don’t have to sell the book itself! I have a mirror, and I can sell the mirror image of the book!” Okay. That’s a stock certificate. And then someone else says, “I have another mirror—I can sell a mirror image of that mirror.” Derivatives. That’s fine too, for a while. Then you have 10,000 mirrors, and the image is almost perfect. People start to believe that these mirrors are almost the real thing. But at some point, the image is interrupted. And all the rest will go.

When I told the State Council about the mirrors, they all started laughing. “How can you sell a mirror image! Won’t there be distortion?” But this is what happened with the American economy, and it will be a long and painful process to come down. I think we should do an overhaul and say, “Let’s get rid of 90 percent of the derivatives.”

Fans of Fischer Black-inspired financial wizardry may blanch. But we need a fundamental reconsideration of the modern "science" of finance, as this essay shows, systematically deconstructing the myths that got us where we are today:

Neoclassical economics . . . is based on the following assumptions:

i. Most of the time markets are in or close to stable equilibrium, ii. Participants in markets act rationally to maximize fixed and known preferences described by definite and time independent utility functions., iii. Participants in markets have perfect knowledge of the information driving the markets as well as all other participants., iv. Prices are set by a deterministic process of joint maximization of the preferences of all involved in a trade, v. Fluctuations in prices are small, random and uncorrelated, vi. There is perfect liquidity so all prices are well defined, and all markets clear, vii. There is no important difference between markets comprising a few individuals and those comprising millions, so simple models suffice to elucidate the principles that govern markets.

The neoclassical paradigm based on these ideas has had some undisputed successes. At the same time, it appears to have led to the adoption of practices and recommendations, which are at least partly at the root of the present crisis. These included the ideas that,

i. Regulation is limited or unnecessary because markets find and stay close to stable equilibrium where they operate most efficiently, leading to maximally stable economic growth, whereas regulation only leads to slower growth. But we face a potentially precipitous decline in economic growth and prosperity in the wake of some deregulation.

ii. Everything has a value or price, at all times, that can be uniquely determined by some definite objective process. This includes contracts that refer to prices of fluctuating variables at future times. There is experience with futures contracts, which have prices which are set daily by their being actively traded. But we are now seeing these values evaporate.

iii. This trading experience may be generalized to a claim that complex financial instruments which oblige actions to be taken at future times based on conditions not known till then, still have definite values and prices even if they are never or rarely traded. But part of the crisis is due to the fact that the balance sheets of banks and companies holding these contracts cannot be computed because they include instruments whose prices have been revealed as simply hypothetical and are now proving to be indeterminate .

iv. Stability can be increased by inventing and trading abstract complex financial instruments rather than principal contracts like stocks and mortgages. Examples are derivatives. . . . The theory behind the possibility of combining fluctuating variables into variables that fluctuate less is critically dependent on the above assumptions, especially that the fluctuations are small, random and uncorrelated. But these assumptions have been shown to be false.

v. It has been argued that these innovative instruments should not be regulated even as much as stock trading because they function as insurance to increase stability. This was based on another false assumption that any mathematical function of the values of stocks at different times has a fixed and determinate value at any time.

vi. Because price determination is a definite process of maximization of known preferences in an environment of perfect knowledge, and because all values are definite, it can be in some instances automated and carried out by computers programmed to trade under specified conditions. But some markets thus operated have failed to function or clear trades.

I think the Edgesters behind the essay correctly diagnose the problems here, but may be making the same old mistakes they criticize when they try to address the crisis by reifying the economy as a physical system. If this crisis teaches us anything, it is that distributional questions are fundamentally moral. Our system has failed to recognize the inevitably value-laden nature of economic policy. As Linda Bilmes and Joseph Stiglitz lament, recent American economic policy has utterly failed to take this moral dimension of economic life into account:

The worst legacy of the past eight years is that despite colossal government spending, most Americans are worse off than they were in 2001. This is because money was squandered in Iraq and given as a tax windfall to America’s richest individuals and corporations, rather than spent on such projects as education, infrastructure, and energy independence, which would have made all of us better off in the long term.

President Bush did manage, by way of deficit spending, to grow the economy by 20 percent during his tenure. But who benefited from that growth? Between 2002 and 2006, the wealthiest 10 percent of households saw more than 95 percent of the gains in income. And even within those rarefied strata, the gains tended to be concentrated at the very top. According to one study, the nation’s 15,000 richest families doubled their annual income, from $15 million to $30 million. . . . .

Even as the wealthiest families have increased their holdings, the families at the center of the income spectrum saw their incomes shrink by 1 percent. In 2000, the average weekly earnings of production and nonsupervisory workers (70 percent of the workforce) amounted to $527 (in current dollars). Six years later, their wages had risen a mere $11, and those same workers have meanwhile seen their net worth (assets minus liabilities) wither as a result of falling home values, higher personal debt, and shrinking savings—factors now being exacerbated by the collapsing stock markets.

And let's not forget skyrocketing health insurance premiums. With benefit of hindsight, these windfalls for the wealthiest appear more and more pointless. Friedman and Gao are helping us see exactly the kind of conduct that was "incentivized" by tax cuts for the ultra-rich: feverish shuffling of representations of assets that ultimately metastasized the risk it was putatively managing.

Posted by Frank_Pasquale at 09:20 PM | Comments (6) | TrackBack

Yeshiva University Remains Strong, President Writes

Echoing Dave Hoffman's post reporting from the President of Yale University, the President of Yeshiva University, Richard Joel, circulated a note to consitutencies to assure them, in light of both allegations concerning Bernard Madoff and prevailing economic adversity, that the Univesity is "financially strong," student financial support "will not diminish," and staff pensions are unaffected. President Joel continued as follows:

We have been engaged over the last two months in reviewing our budgets to seek ways to cut our operating costs due to global economic realities. We will continue to do so and remain committed to advancing our crucial mission of providing an education that ennobles and enables our students

Bernard Madoff is no longer associated with our institution in any way. The University had no investments directly with Madoff. Last Thursday night, we were informed by Ascot Partners, a vehicle in which we had invested a small part of our endowment funds for 15 years, that substantially all its assets are invested with Madoff. The Ascot fund was managed by J. Ezra Merkin who has served as a University trustee and chairman of the investment committee. Mr. Merkin has resigned from all University positions.

In the most recent statement from Ascot, Yeshiva's investment was valued at about $110 million, which represents about 8% of our endowment. While these facts are disappointing, we need to remain focused on the larger picture. We are but one of many institutions and individuals that have been impacted.

. . . [T]he University's endowment, taking into account the Ascot loss, is currently estimated to be approximately $1.2 billion, down from approximately $1.7 billion on January 1, 2008. That loss of 28%, calendar year-to-date, compares with an S&P loss of 38% and Dow Jones loss of 32%. While certainly this represents a painful decline, we are in the same or better position as many universities.

Although this decreased endowment must factor into our long term fiscal plans, it will have minimal impact on day-to-day operations. Total income from endowment last year represented 13% of the University's operating income. Much more critical to our future health is the continued level of financial support from the YU family, philanthropists, and friends. So, while we are in a healthy and strong position to move forward, we must use the moment to address all concerns that this situation has illuminated.

In light of recent developments, we have decided to examine our existing conflicts policies and procedures, and governance structures to assist us in this process. We have engaged Sullivan & Cromwell and Cambridge Associates, internationally renowned and respected institutions with recognized expertise in corporate and institutional governance, to ensure that our policies and procedures and structure reflect not only best practices, but the gold standard -- the standard to which we aspire for all our endeavors. We will be working closely with our advisors over the coming weeks and months and I'm confident that we'll emerge stronger than ever.

. . . We all should use these times to reflect on our blessings but also to reflect on our responsibilities. We should constantly be communally introspective and focus on advancing our ideals. The times are appropriate for us to focus on our core values, to practice and refine them and to share them with the world. We can and should always advance. Yeshiva University is committed to engaging in that conversation with other people of good will. . . .

Posted by Lawrence_Cunningham at 07:47 AM | Comments (0) | TrackBack

Fraud, Everywhere

Recent investor pressure to liquidate investments has exposed fraud of massive proportions. On Thursday, federal investigators arrested trader and hedge fund manager Bernard L. Madoff, a former chairman of the Nasdaq Stock Market, for allegedly defrauding investors of $50 billion. According to the accompanying civil complaint filed by the SEC in federal district court, Madoff ran Bernard Madoff Investment Securities (BMIS), a broker dealer and investment firm, where he also maintained a lucrative investment adviser business. Madoff apparently kept that business on a separate floor of the firm under "lock and key" from BMIS employees. There, Madoff managed money for hight net-worth individuals, hedge funds, and other institutions, a business whose steady returns had long provoked skepticism from traders. Early this month, investors sought $7 billion in redemptions from the business. Unable to pay these returns, Madoff allegedly confessed to two senior employees (his sons, according to the Wall Street Journal's sources) that his investment advisory business was a fraud. Madoff allegedly admitted: "it's all just one big lie," a "giant Ponzi scheme" that for years had paid returns to investors out of the principal received from other investors and had nothing left. Madoff apparently told those employees that the business had been insolvent for years and the fraud was worth billions.

This recalls 1987, the "Den of Thieves" period of insider trading, risky takeover stocks, and manipulations of the junk-bond market. As Time reported that year, maintaining integrity was a "difficult challenge in the deregulated, hurly-burly Wall Street of the 1980s, where traders have been tempted to use insider tips to maintain their competitive edge." Now, as then, fraud has blossomed in the face of loose regulatory controls and oversight as well as a lack of transparency in a complex financial market. One might suppose that our current task is to figure out how to strike the balance between tougher regulation and a productive and unencumbered market. But there are no doubt other important questions, and hopefully our insightful corporate/law and economics gurus Dave, Frank, Lawrence, and Nate will help us explore them.

Posted by Danielle_Citron at 09:44 AM | Comments (4) | TrackBack

Oversight Panel Report Grim, Tough, Inviting

Americans are being formally invited to participate in discussingthe ongoing federal program to stabilize the country’s economy. The invitation is by the five-member panel Congress created to oversee the program’s implementation. The panel also issued its first report yesterday, signed by the panel’s Chair, Harvard Law Professor Elizabeth Warren, plus AFL-CIO Associate General Counsel Damon Silvers and New York Superintendent of Banking, Richard Neiman. (One panel member, Rep. Jeb Hensarling of Texas, voted against issuing the report and the fifth panel seat is vacant.) The report contemplates asking ten tough questions about the program that give a sense of its tenor:

1. What is Treasury’s Strategy?
2. Is the Strategy Working to Stabilize Markets?
3. Is the Strategy Helping to Reduce Foreclosures?
4. What Have Financial Institutions Done With the Taxpayers’ Money Received So Far?
5. Is the Public Receiving a Fair Deal?
6. What is Treasury Doing to Help the American Family?
7. Is Treasury Imposing Reforms on Financial Institutions that are taking Taxpayer Money?
8. How is Treasury Deciding Which Institutions Receive the Money?
9. What is the Scope of Treasury’s Statutory Authority?
10. Is Treasury Looking Ahead?

The report’s further tenor can be gleaned from its Introduction, which is very sobering indeed, and excerpted below (with footnotes omitted and emphasis added).

Introduction from TARP Oversight Panel Report

The U.S. and the global economy have been in a steadily accelerating downward spiral since the early spring of 2007. The American family is at the epicenter of this crisis.

The headlines may belong to the financial markets and mega-institutions, but the recession has visited every household in the country. The crisis affects Americans’ ability to pay their bills, to secure their retirement, to continue their educations, and to provide for their families.

The unemployment rate is the highest it has been in fourteen years. In the last three months, 1.2 million Americans lost their jobs; 533,000 in November, 2008 alone. Service sector employment levels, in particular, fell far faster than expected last month.

One in ten mortgage holders is now in default, unable to make payments on their homes. More than 200,000 families and small businesses filed for bankruptcy protection in the last two months.

Middle and lower-income families have watched nervously as reductions in state funding threaten college access and affordability. Retail sales continue to fall, credit card defaults are rising, and savings rates hover at zero. Shrinking retirement funds have left millions of retired people to wonder how they will pay basic expenses and millions more to wonder if they must continue working until they die.

A short summary of the economic history of the past few months is grim.

• Credit, when it is available, has become dramatically more expensive for all borrowers, and some worry it will get even more expensive next year.

• U.S. stock markets have lost more than 40% of their value over the past year, and markets elsewhere in the world have also declined sharply.

• In September, the federal government took control of the two largest mortgage financing intermediaries, generally known as Fannie Mae and Freddie Mac.

• All three major U.S.-based auto companies have told Congress they face the threat of imminent bankruptcy.

• The largest U.S. commercial bank, Citigroup, and the largest U.S. insurance company, AIG, have both received substantial infusions of capital from the U.S. government, with AIG under threat of imminent bankruptcy.

• Two major investment banks, Bear Stearns and Merrill Lynch, have disappeared in mergers. One major investment bank, Lehman Brothers, has filed for protection under the bankruptcy laws. The two largest remaining investment banks, Goldman Sachs and Morgan Stanley, have transformed themselves into bank holding companies.

• The largest thrift savings banks, Washington Mutual and IndyMac, have been taken over by their regulator.

• The Federal Deposit Insurance Corporation has placed 171 banks, with combined assets of $116 billion, on the problem list as of September 30, 2008.

In response to the financial crisis, Congress passed the Emergency Economic Stabilization Act of 2008, authorizing the Treasury Department to commit up to $250 billion in taxpayer dollars, to be followed by another $100 billion and another $350 billion if warranted. . . .

From the passage of the Emergency Economic Stabilization Act of 2008 to the present date, Treasury has used its authority under the Act to provide 87 banks with $165 billion in exchange for preferred stock and warrants. Treasury further used its authority to provide AIG with $40 billion in exchange for preferred stock and warrants, and to provide Citigroup with a further $20 billion in preferred stock and warrants. As part of a program to guarantee approximately $306 billion in Citigroup’s troubled assets, Treasury receives $4 billion of Citigroup preferred stock and warrants. Together, these disbursements constitute approximately $1,900 per American family, or almost 3% of the typical family’s pre-tax income.

Posted by Lawrence_Cunningham at 05:03 PM | Comments (1) | TrackBack

Zuckerberg's Law of Data Sharing

Technologists have helped us recognize many important laws of the universe, some empirical and some metaphorical. For instance, Moore's Law teaches us that computers double their power about every eighteen months. Metcalf's Law attests to the power of networks: the value of communication technologies and networks such as the Internet and social networking sites increases as the number of users do. Reed's Law tells us that the utility of large networks, particularly social networks, can scale exponentially with the size of the network. And Linus's Law explains that "given enough eyeballs, all bugs are shallow." Or: "Given a large enough beta-tester and co-developer base, almost every problem will be characterized quickly and the fix will be obvious to someone."

Here may be another law: Mark Zuckerberg, chief executive of Facebook, predicts that "next year, people will share twice as much information as they share this year, and that next year, they will be sharing twice as much as they did the year before." As Zuckerberg explains, people are ever more willing to tell others what they are doing, who their friends are and even what they look like as they crawl home from a college party. So this means, if true, that in the aggregate we will be posting more photos to Flickr, uploading more videos to YouTube and music to Tumblr, sharing travel plans on dopplr, uploading our transactions to wesabe, posting our stock trades to covestor, and many other forms of social sharing. And it also suggests a few other things. First, we will no doubt see more tools emerge that integrate and analyze this data across sites (and hence making it more commercially valuable). Second, we need to keep talking about privacy: how we understand, value, and protect it. As Dan Solove's long-standing project and superb book Understanding Privacy teach us, it is this task that is most urgent to take seriously.

Posted by Danielle_Citron at 11:18 AM | Comments (0) | TrackBack

Rep. Nadler's Proposal to Amend the President's Pardon Power

Rep. Jerrold Nadler (D-NY) is apparently going to introduce a constitutional amendment to limit the president's pardon power. It would prevent presidents from pardoning members of their own administrations for their official acts, and would limit the pardon power in the last months of a presidency.

Nadler is apparently worried that President Bush will do both of these things, and issue lame-duck pardons of his subordinates for their role in the administration's controversial torture and surveillance policies. [One might wonder why Nadler didn't have anything to say about President Clinton's controversial last-day pardons of a member of his administration (Henry Cisneros), and a domestic terrorist who had enlisted Nadler's assistance in the pardon process (Susan Rosenberg of the Weather Underground). To be charitable towards Nadler, though, Rosenberg wasn't a member of the Clinton Administration, and Cisneros's criminal conduct did not arise out of his Cabinet duties, so his proposed amendment is consistent with allowing those pardons.]

To me, the most interesting thing about Nadler's proposal is how diametrically opposed it is to the Framers' conception of the pardon power. This is not a criticism of Nadler's proposal as such—by definition, constitutional amendments are inconsistent with the constitutional provisions that they are trying to change. But it is striking, and illuminating.

When the Framers debated the pardon power, Edmund Randolph (later the nation's first attorney general) proposed that the president should be forbidden from pardoning people for treason. As Madison's notes record Randolph's argument: "The prerogative of pardon in these cases was too great a trust. The President may himself be guilty. The Traytors may be his own instruments."

But Randolph's motion was soundly defeated, and so presidents have the power to pardon treasonous conspirators that they themselves have directed. For the Framers, this was not too great a trust, for the same reason that the president is the best repository of the pardon power: the president is politically accountable to the whole nation, in a way that no other official in the government is, and he is not above the law.

These themes are evident in the debate. The response to Edmund Randolph came from James Wilson (later the first justice sworn onto the U.S. Supreme Court), who said: "Pardon is necessary for cases of treason, and is best placed in the hands of the Executive. If he be himself a party to the guilt he can be impeached and prosecuted." The pardon power is an important safety valve in the legal process, and its importance is heightened in serious cases like treason. It is not that Wilson thought no president would ever issue a bad pardon. It was that he thought that no president would be able to count on doing so with impunity.

It is certainly true that presidents are politically unaccountable at the ends of their terms. Consider President Bush (41) on Christmas 1992 (when he pardoned figures in the Iran-Contra scandal), or President Clinton in January 2001 (when he pardoned 'everyone and his brother'), or President Bush (43) right now—at that point in the term, they know they will never face the voters again. But accountability runs further than elections. Presidents are also accountable to Congress, and to the criminal law. As Wilson noted, presidents can be impeached and prosecuted.

This might ring hollow to some readers, and it's why I will be blogging this month about the ability of presidents to pardon themselves, the ability to impeach presidents after they have left office, and the ability to prosecute presidents. One thing to mention right now, though, is that even if the president has the power to issue a corrupt pardon, he cannot do so with the assurance of impunity. Corruption is corruption, and can be punished. A pardon issued in exchange for a bribe, or as part of a criminal conspiracy, might make some underlying criminal charges go away, but it tees up a new one. [Some have characterized President George H.W. Bush's pardons of Iran-Contra defendants—after Bush had been defeated by Bill Clinton, but before Clinton took office—as the closest thing we have seen to Randolph's scenario, since Bush himself was a target of the investigation, which his pardons effectively shut down. I reject this characterization. Bush still could have been prosecuted or even (I argue) impeached.]

At some level, I am sympathetic to the second part of Rep. Nadler's proposal, because I think that the president, while still accountable in his last few weeks, is so much less accountable that the potential for mischief exceeds the benefits on unrestricted power. Perhaps allowing two-thirds of the Senate to override such lame-duck pardons would make sense. But in the grand scheme of things, this is a trifle. We don't amend the Constitution over such things, and it is largely pointless to try.

I am less sympathetic to Nadler's other proposal, because it is problematic to limit the president's ability to pardon his own subordinates. Again, it is not that such pardons are necessarily good (or ever good, for that matter). It is that our Constitution generally does not try to get specific. It relies on structure, on the political process, and on the rule of law. For instance, instead of specifying the qualifications for offices, the Constitution relies on the Senate to use its confirmation power wisely, and for presidents to make their nominations with that in mind. By the same token, the Constitution does not restrict the pardon power much, because it relies on the political process, the impeachment process, and the criminal law to prevent ill-advised or corrupt pardons.

Perhaps Rep. Nadler wouldn't disagree with any of this. Maybe his proposal is intended not to actually lead to a new constitutional amendment, but to cow the president into withholding pardons. Maybe, in other words, Nadler is using the political process to hem in the pardon power. If that's what he is doing, then the system is working just fine. And if and when his proposal quickly fizzles for lack of political support, the system will be working just fine then too.

Posted by Brian_Kalt at 10:41 PM | Comments (10) | TrackBack

Baseball Player Salaries

Many people now clamor to cap corporate executive compensation, especially for those running companies seeking government financial support. Wall Street firms are laying off personnel and withholding bonuses to those lucky enough to have not been fired yet this year. Corporations are increasingly cutting their work forces, pushing tens of thousands of people out of jobs, and putting unemployment claims at a 26-year high.

Many leading universities have declared hiring freezes and budgetary constraints likely to result in caps on raises for people they cannot terminate. A recession is underway and there are essentially no positive economic signals giving reason to be optimistic about any recovery.

Yet, meanwhile, baseball players in negotiations over their contracts appear unfazed by these economic realities--despite teams and agents signaling tough economic times ahead. Even so, team owners are paying up.

The New York Yankees are offering a 6-year $140 million to pitcher C. C. Sabathia, which he has not yet accepted. The Yankees are also offering $10 million a year to veteran pitcher Andy Pettitte, who is reportedly insisting on the same $16 million salary the team paid him last year.

Two days ago, the Boston Red Sox signed a 6-year contract with the third-year player, Dustin Pedroia, set to cost the team $40.5 million. The San Francisco Giants have agreed to pay $2.75 million next year to a relief pitcher, Bobby Howry.

Where will team owners get the resources to pay baseball players annual salaries of $1 to $10 million in the next several years as the economy and workforce reel in financial straits? If such soaring salary commitments persist, look for serious financial difficulties to beset major franchises. When the salaries come down, that may be an indicator that the recession is nearing an end.

Posted by Lawrence_Cunningham at 07:40 AM | Comments (0) | TrackBack

Odds on Corporate Pardons

Talk in Washington at the end of any President’s term turns to the unbridled power that US presidents have to pardon people for having committed crimes. This year, chatter debates whether President Bush will give a pass to convicted former corporate executives, despite a national mood unlikely sympathetic to redemption for financial deception.

Executives seeking pardons reportedly include criminals from the technology-sector financial scandals that erupted during President Bush’s first term. The most infamous applicant is Bernie Ebbers, now serving a 25-year federal prison term for crimes he committed at the fraud-infected telecom giant, WorldCom. That company imploded in 2002 amid $10 billion worth of deceptions that were a primary catalyst of the Sarbanes-Oxley Act of 2002, the law designed to reduce the likelihood of similar large scale corporate accounting fraud.

Other corporate criminals seeking pardons from President Bush come from yet earlier periods. They include the disgraced publishing magnate Conrad Black, and the 1980s-90s junk-bond king-pin, Michael Milken.

The Presidential pardon power can strike the ordinary civics student as bizarre. No doubt, President-elect Obama’s putative nominee for Attorney General is having second thoughts for supporting President Clinton’s late-term pardon of the tax-evading financier, Marc Rich. But Presidents face little risk of rebuke for such decisions.

The betting on whether President Bush will grant pardons to these corporate wrongdoers hedges two competing observations. On one hand, President Bush’s record on just use of law is weak (or mixed, at best), increasing the odds that pardons will be forthcoming. On the other, the country, in the early grip of a deepening recession with roots in perceived corporate financial deception, is unlikelyin in the mood to forgive or offer redemption to crooked business executives.

Net: the smart money is on pardons, for all three of these fellows--and perhaps thousands more.

Posted by Lawrence_Cunningham at 10:05 PM | Comments (2) | TrackBack

2009 Looking up for Large Law Firms

Despite what appears to be a challenging economic environment for lawyers, including at large law firms, 2009 may bring additional work flow. According to an extensive annual survey of corporate directors and general counsel at thousands of large public companies, 80% expect to retain outside counsel in 2009 to address important legal matters. Almost of all of these cite needs in mergers, compliance, intellectual property, labor matters and contract disputes.

Demand for non-legal consultants also appears less strong, with 61% of respondents citing need to retain outside experts in those same fields plus in risk management. The survey is the 8th annual one undertaken by Corporate Board Member and FTI Consulting. The survey report also summarizes leaders’ views on topics seen as of greatest importance to corporate America and corporate governance in 2009.

Posted by Lawrence_Cunningham at 01:03 PM | Comments (0) | TrackBack

Who Hid All the Poor People?

Former Reagan speechwriter Peggy