Showing posts with label President Obama. Show all posts
Showing posts with label President Obama. Show all posts

Monday, May 10, 2010

President Obama Makes A Supreme Choice: Elena Kagan Nominated To The United States Supreme Court


I try to keep my promises--earlier on this blog I posted a piece on Associate Justice John Paul Stevens' retirement from the United States Supreme Court. I promised to update you when President Obama picked a nominee to replace Justice Stevens. Well, just today, President Obama held a press conference to announce that Elena Kagan was his pick to succeed Justice Stevens. President Obama described Kagan as a "consensus builder." If the Kagan nomination is successful we shall see.


In my earlier post I suggested that President Obama should do two (2)things to refresh the Supreme Court. First, I suggested that President Obama should pick a moderate to liberal leaning candidate to balance the Supreme Court's seeming conservative to right movement. Second, I advocated for a selection that exhibited a measure of diversity--namely a candidate who wasn't a sitting federal appellate judge.


Elena Kagan is fifty (50) years young. So, based on the odds, she will likely shape the law for a generation, assuming she enjoys good health. Kagan is preeminently qualified. Kagan is currently the Solicitor General of the United States. She is the former dean of the Harvard Law School. In a past life, she served as associate White House counsel during the Clinton Administration.


Elena Kagan would be the third woman to sit on the current Supreme Court bench--joining Associate Justices Ruth Bader Ginsburg and Sonia Sotomayor. Overall, Kagan would be the fourth woman to serve, if confirmed, over the course of the Surpeme Court's history.


Personally, I think Elena Kagan is a wonderful choice. What do you think? Did President Obama get this selection right?

Saturday, May 1, 2010

When Drill Baby Drill Becomes Spill Baby Spill: The BP Louisiana Oil Rig Tragedy

Drill Baby Drill!!! During the 2008 Presidential Election Campaign this was the mantra chanted at Republican rally after Republican rally. Crowd-after-crowd in city-after-city was stoked up by politicians like John McCain and Sarah Palin in passionate calls for more off-shore oil drilling. In 2008, American consumers were facing pain at the gas pump—gasoline was selling for over $3.00 per gallon in many parts of the country. Politicians, like McCain and Palin, latched on to a rather mindless and short-term solution to our nation’s oil problem. Why don’t we open our shorelines up for off-shore drilling? Won’t we add millions of barrels of oil to our supply and thereby decrease our dependence on foreign oil? The world will be wonderful and gas prices will go down. This was the rhetoric pushed on us by a number of our politicians at the time. Unfortunately, in this country our political leaders often reach for short-term solutions rather than long-term solutions—I guess it is the political climate—in this country no matter the party (Democrat or Republican) it has become increasingly hard to govern a partisan, mistrustful, and restless populace. How hard is it to govern? Ask President Obama.

Several weeks ago I was struck by a political announcement—President Obama announced plans for his Administration to move forward with plans to increase off-shore oil drilling. During the 2008 Presidential Campaign, Candidate Obama opposed increased off-shore oil drilling. Flash forward to 2010, President Obama reversed course and announced plans to increase off-shore oil drilling. Drill Baby Drill became the official policy of the Obama Administration. I can only speculate, but it appears that President Obama was sending an olive policy branch designed to placate Republicans, by announcing his newfound support for off-shore oil drilling.

The Louisiana BP oil rig tragedy this past week has forced us to examine and deliberate on the efficacy of off-shore oil drilling. It appears that this tragedy could eclipse the 1989 Exxon Valdez oil spill in Alaska. Coastlines from Texas, Louisiana, Mississippi, and Alabama could be affected. Already, these are fragile coastlines and ecosystems. The first oily birds have started to reach the beaches. This is a tragedy beyond belief. It will take years for this region of the country to recover.

Are we really willing to bear these sorts of tragedies for a meager amount of more oil? How would you like to see the beaches of Maryland, New Jersey, and Delaware choked with oil? This is something no right-minded person would want to see. This should serve as a wake-up call for our nation’s leaders to develop a comprehensive alternative energy program. We can’t keep drilling for oil. We literally are destroying our planet and environment. Selfishly we are destroying the future of our children and grandchildren.

How does all of this relate to corporate justice? Keep reading and I’ll explain to you how this relates to corporate justice. Well, this week I was driving (yeah, burning oil) and listening to a right-wing radio host blast President Obama’s response to the BP oil spell. The talk show host blasted what he dubbed as Department of the Interior SWAT teams being deployed to inspect off-shore oil rigs. The talk show host characterized the Obama Administration’s response as a move to a police state, where the government would conduct warrantless searches in violation of the Fourth Amendment of the Constitution. This radio host went on to say that President Obama was planning to nationalize the American oil industry. The host compared President Obama to Hugo Chavez. What was this guy smoking or drinking? Remind me not to drink from his cup. This is nonsense!

BP realized early on that its resources were inadequate to respond to an oil spill of this magnitude. BP specifically asked for government help. Apparently, the NAVY has at its disposal remotely-operated dive vessels and robots that can assist in capping the leaky oil rig. The NAVY would lend these vessels to civilian authorities to assist in their mitigation efforts.

Some schools of political thought preach a gospel that the government is always an impediment and should step aside. The gospel preaches that corporations and free-markets are be-all-to-end-all of the world. Again, government has no role in our lives. This harkens back to the right-wing radio talk show host that I referenced a moment ago. Instead of truly talking about the role that corporations and government can and should play vis-à-vis one another, this radio talk show host was distracting his targeted listeners from the real trouble. Yes, corporations are vast and control enormous resources—still there are times when they are playing outside of their league. This time around, BP is in the midst of a tragedy of nation proportions. Even with billions of dollars, BP can’t buy its way out this one. Undoubtedly, BP needs the government’s help. More importantly, the people of the Gulf of Mexico region need their government’s help in this time of need and tragedy. This tragedy reinforces in our minds that the path of corporations and governments sometimes collide and intersect.

Where are the people who were yelling Drill Baby Drill? What happens when the mantra gets reversed to Spill Baby Spill? I’m curios to hear your thoughts on the BP oil rig tragedy. What role and culpability do corporations like BP have when things go tragically bad? What role does or should the government play in this these types of tragedies or disasters? I want to hear from you.

Saturday, April 10, 2010

U.S. Supreme Court Justice John Paul Stevens Announces Retirement: Will The Court's Liberal Wing Be Silenced?

Yesterday, Supreme Court Justice John Paul Stevens announced that he would retire from the Surpeme Court at the end of the Court's current term this summer. Stevens, who will soon turn 90, was appointed by Republican President Gerald Ford. Stevens will step down as the second-oldest justice to ever serve on the Supreme Court, slightly behind Justice Oliver Wendell Holmes, who retired in 1932 at age 90 years, and 10 months. Depending on the date of his actual retirement Justice Stevens quite possibly could end up being the second longest serving justice behind Justice William O. Douglas.

During his tenure on the Supreme Court, Stevens "evolved from a maverick who would often write solitary opinions to a coalition builder and leader of the court's liberal wing." Richard Fallon, a Harvard Law School constitutional law professor made the following observation about Stevens: "There really were two Justice Stevenses...[t]he first Justice Stevens was a somewhat iconoclastic moderate. The second Justice Stevens was the great liberal voice on the Supreme Court for the past two decades." Justice Stevens stance shifted from a moderate stance to a more liberal stance in the early 1990's upon the retirement of liberal Justices William Brennan and Thurgood Marshall. Professor Fallon noted: "It was as if there was a void on the court...[t]here was no longer a great liberal voice, and Justice Stevens moved to fill that void."

Let's examine some of Justice Stevenses notable majority opinions and dissents:







Older age did not slow Justice Stevens down. Most recently, in Citizens United v. Federal Election Commission, the recent decision paving the way for corporate spending in elections, Justice Stevens issued a passionate 90-page dissent. This momumental decision was discussed recently on this blog by my colleague Steve Ramirez. Citizens United struck down decades-old precedent banning corporate money from political campaigns. In his dissent, Justice Stevens wrote: "While American democracy is imperfect, few outside the majority of this court would have thought its flaws included a dearth of corporate money in politics..." Additionally, Justice Stevens noted: "The difference between selling a vote and selling access is a matter of degree, not kind...And selling access is not qualitatively different from giving special preference to those who spent money on one's behalf." Only time will tell whether Justice Stevenses admonition that treating corporate speech the same as that of human beings holds validity.

With the announcement of Justice Stevenses retirement, the ball is now squarely in President Obama's court, no basketball pun intended. Justice Stevenses retirement reminds us that presidential elections are extremely important. By selecting Supreme Court Justices, the President can have an impact on society far beyond their years in office. Indeed, the judicial selection process can have generational impact.

If I could use this blog as my open letter and suggestion to the Obama Administration I would offer up but two (2) meager suggestions. I truly hope that President Obama takes this opportunity to appoint a moderate to liberal leaning associate justice. I think in recent years the Supreme Court majority has moved in a decidedly conservative direction. Often, judicial decisions reflect the overriding needs of society when there is a level of ideological balance and perspective. Hopefully, with balance between conservative, moderate, and liberal viewpoints judges must compromise. Ideally, there is no tyranny of the majority or tyranny of the minority. In order to get things accomplished, judicially and policitally, judges should decide to roll-up their sleeves and work together to reach the best judicial outcomes for society.

As a final matter, I hope that President Obama seeks a measure of diversity in his selection. Let me be clear, when I say diversity, I mean diversity in a broad sense. What one thing do all current Supreme Court Justices hold in common? If you look at the composition of the current Supreme Court, all the current judges are former federal appellate court judges. In the past, Supreme Court justices entered the bench from a diverse number of career paths. Former presidents, senators, politicians, administration officials, distinguished lawyers, law professors, business people, and others populated the bench. Perhaps the time has arrived to broaden the Supreme Court's perspective. As I've grown older, I've keenly come to realize that life is all about the choices that one makes. President Obama I urge you to choose wisely.

I leave you with several questions. Do you think the Supreme Court's liberal wing will be silenced by Justice Stevenses departure? What qualities do you want to see in the next Supreme Court Justice? If you were President Obama, who would you pick? Undoubtedly, it will be very interesting to follow the buzz in the coming weeks and months concerning President Obama's selection.

Saturday, January 23, 2010

The Bank Tax Revisited: A Closer Look At President Obama's Proposed Bank Tax To Recoup TARP Losses

In my post today, as a follow-up to Professor cumming's excellent post yesterday, I want to take a moment to revisit President Obama's bank tax proposal. I've uncovered some interesting data that explores the direct impact of the bank tax on a handful of big financial institutions like Citigroup, Bank of America, JP Morgan, Goldman Sachs, and Morgan Stanley.

On Thursday, President Obama announced a bank tax plan designed to tax roughly 50 of the largest banks and financial institutions over the course of the next decade to recoup losses associated with the bailout of Wall Street. Smaller community banks won't be affected by the bank tax. President Obama stated that his goal over the next decade is to “recover every single dime” from the TARP bailout of Wall Street. President Obama hopes to officially include the so-called “bank tax” provisions in February when he proposes his budget plans to Congress.

Who will be covered by the bank tax? The tax, if adopted, will be levied on banks, insurance companies and brokerages with more than $50 billion in assets, and would start after June 30, 2010. The bank tax would not apply to bank customer’s insured accounts, but rather it would apply to assets used as part of the institution’s risk-taking operations and activities. The goal that President Obama seeks to reach is to recoup roughly $90 billion over a ten (10) year period. The bank tax could remain in effect for over ten (10) years if losses from TARP are not recovered after a decade. At the moment, Obama Administration officials suggest that TARP will likely be about $117 billion, which is roughly 1/3 of the losses that officials projected last summer. The lion’s share of the TARP losses are associated with the bailouts of Chrysler, General Motors, and AIG.

In delivering his remarks on Thursday, President Obama noted: “We’re already hearing a hue and cry from Wall Street suggesting that this proposed fee is not only unwelcome but unfair…That by some twisted logic it is more appropriate for the American people to bear the cost of the bailout rather than the industry that benefited from it, even though these executives are out there giving themselves huge bonuses.” President Obama continued: “What I say to these executives is this: Instead of sending a phalanx of lobbyists to fight this proposal or employing an army of lawyers and accountants to help evade the fee, I suggest you might want to consider simply meeting your responsibilities”

Naturally, big banks have bulked at the bank tax. Their argument is that they have paid back their TARP allocations with interest. In anticipation of this argument, the Obama Administration noted that the bank tax is in a sense a “financial crisis responsibility fee” aimed at policing those institutions whose risky behavior started the financial crisis in the first place.

Will the bank tax be passed on to consumers? The answer is to a certain extent yes. However, by exempting smaller community banks if large banks increase their fees too drastically savvy smaller banks will likely draw a line on their fees to attract customers of higher fee large banks. In many ways President Obama’s proposal drives a wedge between small and large banks. Due to their exemption from the bank tax, small community banks will likely support the Obama proposal at the cost of their larger brethren.

Practically speaking, how would the tax impact financial institutions like Citigroup, JPMorgan Chase, Bank of America, Goldman Sachs, and Morgan Stanley? Analysis shows that Citigroup would a roughly $2.2 billion per year assessment. Both JPMorgan Chase and Bank of America would face an annual assessment of $2 billion. Similarly, Goldman Sachs and Morgan Stanley would pay assessments in the same ballpark. The bank tax would amount to a roughly $1.5 million tax on every $1 billion in institutional assets subject to the tax or levy. Again, Tier 1 capital, including common stock, and insured customer deposit accounts, for which banks already pay fees to the Federal Deposit Insurance Corporation (“FDIC”), would not be subjected or exposed to the bank tax.

In a mid-term election year President Obama’s bank tax proposal taps into popular angst and distrust of large financial institutions on both sides of the political aisle. Philosophically, most fiscal conservatives are opposed to taxes in almost any form during a recession. Interestingly, Republicans have not been so quick to criticize the bank tax fearing that they may draw the ire of their own political base and remaining mindful of the fact that small community banks, which may benefit, exist in virtually every Congress member’s district. President Obama is tapping into populist angst that cuts across party lines—Citizens are angry about the role that large banks played in nearly pushing our economy over the abyss through uncontrolled risk-taking.

Saturday, October 17, 2009

The Tough Task of Financial Regulatory Reform: Those Ungrateful Banks

This week the Dow surged past 10,000 points. JPMorgan Chase and Citigroup reported earnings that exceeded analyst’s estimates. These are all positive indicators. However, structural and regulatory problems that caused the current financial crisis have remained unaddressed to this point.

The Obama Administration has proposed major overhauls to the financial regulatory system. In the past year taxpayer’s have provided vast sums of money to bailout banks. For the most part, these bailed out banks have been restored to profitability and are providing record compensation for their executives. In the midst of President Obama’s push to reform and overhaul financial regulations, guess who’s pushing back the hardest? If you said banks, you’re correct. Yes, the very industry that the federal government saved is lobbying the hardest to thwart overhaul and regulation of their industry.

This week, the Obama Administration voiced frustration with the banking industry. Administration officials noted that the banking industry is returning to a sounder footing because of government bailout, and that lobbying efforts to kill regulation run counter to the nation’s longer term interests. Valerie Jarrett, a senior advisor to President Obama noted: “We are disappointed by the lobbying of anyone in the financial industry against regulatory reform, considering the obvious need for change on that front.”

The banking industry misses the point. Some banks are reporting record compensation and a return to pre-financial crisis meltdown profits. This is the picture on Wall Street. On Main Street, unemployment is close to 10%. Foreclosures over the last year have jumped close to 30%. If Main Street is hurting Wall Street should be more conscious of that fact. Quite honestly, Wall Street, and banks and the financial services industry in particular, should be more thankful and grateful for the lifeline extended to them by taxpayer’s.

Keep an eye on the Sunday morning talk shows. The Obama Administration has promised to send a tough message to the financial services industry regarding the industry’s pushback on regulation. We shall see.

Tuesday, September 22, 2009

A New World Financial Order: G-20 Leaders Discuss International Regulation




On Thursday, the world leaders from the 20 most powerful countries (G-20) will gather in Pittsburgh, PA to discuss the matters affecting their respective countries. On the top of every leader’s list is financial regulation. Many are concerned that despite the harsh realities of failing economies, concrete reforms are likely to remain a distant prospect, primarily because the G-20 has no law-making power. EU Ambassador to the United States John Bruton stated that "G-20s don't make the detailed decisions ... But they can create the conditions…. for reforms.” However, any real reform will have to be drafted, adopted, and implemented by national authorities not the G-20.

President Obama and the leaders of Britain, Germany and France are expected to try to reignite the fervor of a year ago to regain momentum for international financial reform by raising the sensitive issue of executive compensation. There is recommendation that executive bonuses should be linked to the long-term performance of investment decisions and the financial condition of banks’ balance sheets to discourage short-term risk taking. Ambassador Bruton stated that “[t]here is a high level of anger in Europe about the fact that the remuneration packages have been designed to emphasize short-term returns." G-20 leaders will also recommend comprehensive regulation of the over-the-counter (OTC) derivatives markets, hedge funds, credit rating agencies and debt securitization.

When Lehman Brothers collapsed in September 2008, freezing world capital markets, the G-20 leaders were galvanized around one single point-- tighter financial regulation. Now its been a year later, economies are stabilizing with the help of their respective governments, markets are rebounding – in the U.S. the Dow Jones industrial average, is up approximately 50 percent since February – there is a light at the end of the tunnel (and it is not the proverbial train). The G-20 leaders have less of an impetus to “create the conditions” for international financial regulation reform.

The reality is to introduce tough new capital requirements for banks, at this time, may actually harm banks’ balance sheets because governments want banks to lend more to help spur economic recovery. Stephen Green, chairman of the British Bankers' Association and HSBC bank, wrote in a letter to British Prime Minister Gordon Brown that "[t]he simple fact remains that financial institutions cannot take steps to further increase the amount of capital they hold and at the same time lend that capital to businesses and consumers."

Debates on details and timing for reform are growing heated. The Financial Stability Board (FSB), the G-20's policy coordinating arm, last week cited "challenges in maintaining an appropriate balance and pace of regulatory reform." Europe is suspicious about a U.S. push for banks to adopt a leverage ratio. There is a worry in Europe that adopting a leverage ratio that goes beyond being just a "backstop" to Basel II would undermine the Basel rules. There is still no consensus on how to define a leverage ratio or what assets should be included.

Many nations have already pledged to take new steps to strengthen regulation of the global financial system. However, the continental Europeans and the United States have stressed different elements of reform. The European Union is pushing for restrictions on bankers' pay in order to eliminate what they see as perverse incentives that encouraged irresponsible risk-taking. The United States has put more emphasis on forcing banks to raise the quality and quantity of capital they have on hand to cover potential losses in an effort to better protect taxpayers from having to pay for banks' mistakes. Joe Engelhard, policy analyst at investment research firm Capital Alpha Partners stated that the G-20 might produce a consensus on capital standards, but it will take much longer to settle on "the exact levels of the new capital and leverage ratios and even longer to agree to the new liquidity regime."

The G-20 members are working on a framework for regulatory reform with firmer deadlines. Ultimately, though, it is up to national legislatures to follow through. The U.S. Congress is working on a proposal to overhaul financial regulation.

Lydie Nadia Cabrera Pierre-Louis
St. Thomas University School of Law

Friday, September 18, 2009

Economic Recovery?

With the recent announcement of the Disney/Marvel acquisition and the unsolicited bid by Kraft Foods for Cadbury, it appears the the Mergers and Acquisitions market is finding new footing. Financial periodicals are trumpeting this new acquisition activity as a sign that the broader global markets are recovering and that the near economic meltdown precipitated by the Lehman Brothers-Bear Stears-AIG debacle are becoming distant memories. While the $4 billion Disney acquisition of Marvel and the potential $16.7 billion coupling of Kraft Foods and Cadbury are heartening economic signs, the White House worries whether we are forgetting too soon the financial industry failures that precipitated the still lingering unemployment figures and decimated retirement accounts affecting millions of Americans.

This week, President Obama called together the "captains of industry" to sternly remind them that new regulatory systems need to be implemented in order to protect against recurrence and potential break down of the financial system in the United States. As financial titans return to profitability, President Obama warned:

"'It is neither right nor responsible after you've recovered with the help of your government to shirk your obligation to the goal of wider recovery, a more stable system, and a more broadly shared prosperity,' Obama said in a stern bid to boost his regulation proposals.

The president's speech reflected public sentiment that taxpayers were immeasurably harmed from last year's financial collapse — and that, barring change, it could happen again. As investment giants return to profit, millions of Americans are still coping with unemployment, home foreclosures and retirement portfolios that got washed away in the storm."

Some fear that, as reported by the Wall Street Journal, the impetus for regulatory overhaul has dissipated as the economy churns forward. Lobbyists in Washington, D.C. are now fully engaged in fighting against new regulation as the environment for radical overhaul has waned. As discussed on this blog previously, the Obama administration seeks wide ranging reform, including vast oversight being situated within the Federal Reserve.

President Obama chose the one-year anniversary of the collapse of Lehman Brothers to remind America and its financial leaders, that the time for relaxing and a return to status quo was inappropriate. President Obama reminded:

"'Unfortunately, there are some in the financial industry who are misreading this moment,' Obama told a quiet audience of leaders from the investment sector. 'So I want them to hear my words,' Obama said. 'We will not go back to the days of reckless behavior and unchecked excess that was at the heart of this crisis. ... Those on Wall Street cannot resume taking risks without regard for consequences.'"

The next several months will prove crucial as Congress debates and the White House urges regulatory overhaul of the U.S. financial system. If the recent judicial slap down of the Securities and Exchange Commission is any indication (rejecting the SEC/Bank of America settlement) then plenty of fire remains in the belly of some who continue to be sick and tired of financial sector excess and reckless disregard.

- andré douglas pond cummings
University of Utah S.J. Quinney College of Law

Tuesday, August 11, 2009

North American Leaders Summit Raise Concerns Regarding Trade, Public Health, and Human Rights


President Barack Obama and Canadian Prime Minister Stephen Harper joined President Felipe Calderon in Guadalajara, Mexico for the annual North American Leaders Summit to discuss increased cooperation amongst, and the future of the three North American nations under the auspices of the North American Free Trade Agreement (NAFTA) which was enacted in 1994 presumably to relieve trade barriers between the United States, Canada and Mexico.

During this year’s summit, President Obama commented on the strong trading partnership among the three North American nations and that he intends to expand commerce between the three nations. Canada is America's top trading partner. China is America’s second top trading partner and Mexico is America’s third top trading partner. Given President Obama's intent to increase commerce between the three North American nations, the Buy American provision in the $787 billion economic stimulus package, which require many of the public works projects paid for by the U.S. economic stimulus plan to use materials made in the United States, has drawn criticism from Canadian Prime Minister Harper. However, President Obama stated that every effort will be made to implement the Buy American provision in a manner consistent with U.S. international obligations, while minimizing disruption to trade. As a result, Congress has made changes to the bill to include various exceptions. To date there has been no statistically significant change in trade between U.S. and Canada. The three leaders agreed to a shared recovery, to reform the international financial institutions, and to lay the foundation for future growth between the three North American nations.

With regard to public health, the three North American nations agreed to a "joint, responsible and transparent" response to the swine flu threat. President Obama noted that although, the Canadian health care system is fundamentally different from the U.S. system. He expects that "more sensible and reasoned arguments will emerge" regarding the U.S. national healthcare program.

Despite the lofty trading terms in NAFTA, NAFTA has drawn much criticism including, the loss of American jobs to Mexican workers, the collapse of small American and Mexican farmers, and a significant increase of illegal immigration from Mexico to the United States. Additionally, trade disputes have also arisen with Mexico alleging that the U.S. violated a NAFTA accord when the U.S. canceled a program allowing some Mexican trucks to operate in the U.S. Mexico responded by imposing retaliatory tariffs of $2.4 billion on U.S. goods back in March.

Not everyone was pleased with the North American Leaders Summit, approximately 400 people marched outside of the meeting place for the summit to protest the negative effects of free trade and to demand benefits for retired Mexican laborers who worked in the U.S. The protesters also demanded immigration reform in the U.S. and that Mexican laborers who work under the World War II guest-worker program receive the money withheld from their paychecks.

Human rights concerns in Mexico persist, particularly at the state level where violence surrounds local elections and misuse of the judicial system. However, President Calderon stated that the Mexican government has an "absolute and categorical" commitment to human rights.

Lydie Nadia Cabrera Pierre-Louis
Assistant Professor of Law
St. Thomas University School of Law