Is the Public Utility Holding Company Act a Model for Breaking Up the Banks That Are Too-Big-to-Fail?
Roberta S. Karmel
Volume 62, Issue 4, 821-864
During the financial crisis of 2007–08 and the debates on regulatory reform that followed, there was general agreement that the “too-big-to-fail” principle creates unacceptable moral hazard. Policy makers divided, however, on the solutions to this problem. Some argued that the banking behemoths in the United States should be broken up. Others argued that dismantling the big banks would be bad policy because these banks would not be able to compete with universal banks in the global capital markets, and in any event, breaking up the banks would be impossible as a practical matter. Therefore, better regulation was the right solution. This approach was generally followed in the financial reform legislation that was passed.
In the past, the United States has taken a variety of approaches to reining in banks. These include capital constraints, geographical restrictions, activities restrictions and conflict of interest restrictions. The primary techniques for reining in big banks recently enacted by Congress were increasing capital requirements, walling off proprietary trading and/or derivatives trading from commercial banking, and creating a resolution regime for failed financial institutions.
One approach that has not been tried or even seriously discussed with regard to the big banks is the approach that was used to break up the utility pyramids created during the 1920s, that is the antitrust approach utilized in the Public Utility Holding Company Act of 1935. This targeted and highly effective regulatory framework empowered the Securities and Exchange Commission to dismantle and simplify the corporate structures of the utilities without destroying them. This Article argues that this approach should be considered as a solution to the too-big-to-fail problem since it combines deconcentration, capital limits, activities restrictions and conflict of interest restrictions as an alternative to antitrust regulation, outside of adversarial prosecutorial case development.
Righting the Historical Record: A Case for Appellate Jurisdiction over Appeals of Sentences for Reasonableness Under 28 U.S.C. § 1291
Briana Lynn Rosenbaum
Volume 62, Issue 4, 865-922
This Article is the first to analyze critically the jurisdictional basis for the Supreme Court’s mandate in United States v. Booker that all courts of appeals review the length of criminal sentences for “reasonableness.” The availability of appellate review has expanded greatly since the Booker opinion, and, indeed, recent research shows that the number of sentence appeals has risen. Unfortunately, the Court did not explain the jurisdictional basis for its expanded “reasonableness review.” The omission is not trivial. For decades, federal courts have held that courts of appeals do not have jurisdiction to review the length of criminal sentences. This view has been especially entrenched since 1984, when Congress created the Federal Sentencing Guidelines and a corresponding “limited” right to appeal sentences. The Supreme Court may not increase the jurisdiction of these courts; the Constitution gives this power to Congress alone. This Article revives the scholarship on the historical and legislative underpinnings of appellate review of criminal sentences in an attempt to find a justification, if any, for Booker’s expanded appellate review. The Author concludes, as have other scholars, that the courts of appeals have had jurisdiction under 28 U.S.C. § 1291 to review the length of sentences since at least 1891, and additionally argues that this jurisdiction survived the Federal Sentencing Guidelines. The Supreme Court in Booker created an entirely new type of sentencing decision, a purely discretionary decision, that lies outside the federal Guidelines system and, thus, outside that system’s limited appellate review. Accordingly, at least for these types of purely discretionary sentencing decisions, § 1291 remains the basis for jurisdiction over Booker reasonableness appeals.
The Myth of “Conquered Provinces”: Probing the Extent of the VRA’s Encroachment on State and Local Autonomy
Volume 62, Issue 4, 923-1002
This Article advances the controversial thesis that the preclearance provision under section 5 of the Voting Rights Act (VRA) is not as intrusive as is generally assumed. It shows that the architecture of the preclearance regime is consistent with “new institutionalist” models of administration that favor devolution and learning through monitoring and disclosure. The Article thereby counters the unchallenged view— articulated in Supreme Court jurisprudence, the legislative record, and scholarship— that the U.S. Department of Justice’s authority to object to state and local election law changes under the preclearance regime has amounted to a heavy-handed intervention into state and local lawmaking processes.
More immediately, the Article speaks to the Supreme Court’s likely reconsideration of the constitutionality of the VRA as no longer “congruent and proportional to an ongoing constitutional violation” under the standard advanced in City of Boerne v. Flores. It argues that the purported “federalism costs” of the preclearance regime should not weigh as heavily in the constitutional balance as many have suggested.
Note – Preserving Dignity in Due Process
Sara B. Tosdal
Volume 62, Issue 4, 1003-1036
Procedural due process is a guarantee of fairness. Fundamentally, this guarantee requires notice and an opportunity to be heard. Procedural protections from arbitrary state action vary according to the context of each case, and protections in administrative actions are distinct from those provided in formal judicial proceedings. The administrative state developed to address a pressing need: how to govern and regulate when the three branches of government lack the capacity to efficiently and effectively administer an everevolving society. But as society has developed and expanded, individuals have more frequently interacted with the administrative state, in turn necessitating the expansion of procedural due process into an area of law that prioritizes efficiency over individual rights.
Both the United States Supreme Court and the California Supreme Court have addressed this tension, but with different emphases. Where the U.S. Supreme Court applies a narrow constitutional threshold for rights implicating procedural protections, the California Supreme Court applies a more expansive threshold, with a particular focus on the dignity of the individual confronted with an adverse state action. Where the U.S. Supreme Court uses a three-factor balancing test for procedural adequacy, the California Supreme Court has articulated a four-factor balancing test that recognizes a person’s dignitary interest in procedural protections against the state.
However, California’s due process analysis has been applied haphazardly, at best, leading to confusion amongst appellate courts. This Note argues that uneven application of the doctrine stems from unclear guidance from the California Supreme Court in the first instance and, ultimately, demeans the dignitary interest. After outlining the federal and state frameworks and explaining the misapplication of the California due process tests by the state’s courts, this Note urges a clearer definition of the due process trigger and more vigorous consideration of the dignitary interest in order to achieve a truer appreciation for and greater protection of an individual’s position before a state actor.
Note – Privacy and Security During Life, Access After Death: Are They Mutually Exclusive?
Volume 62, Issue 4, 1037-1064
The Internet has transformed the way we live our lives. What we have not yet fully realized is how it will impact what happens after we die. Specifically, the migration of financial services online, and the corresponding elimination of paper records, will hamper access to a decedent’s financial assets and may eliminate knowledge of their existence entirely. This Note explores how federal financial and internet privacy laws affect the disclosure of a person’s private financial information and offers solutions for reconciling lifetime privacy interests and the desire for access after death.
Note – Conscionable Judging: A Case Study of California Courts’ Grapple with Challenges to Mandatory Arbitration Agreements
Volume 62, Issue 4, 1065-1092
This Note addresses a study of California state court decisions concerning the invalidation of contracts on the ground that the contract is unconscionable. Cases in this area have proliferated rapidly as a consequence of the frequent and highly successful use of the unconscionability defense as a weapon to attack petitions to compel mandatory arbitration of disputes. A review of four years of unconscionability-related decisions in the California courts of appeal leads to certain conclusions, which generally support a hypothesis that while judges form definite personal opinions as to the legality of typical mandatory arbitration agreements, those opinions are only weakly related to factors, such as political partisanship or workload, which might explain strategic behavior by judges. It concludes by discussing the future of unconscionability challenges in the arbitration arena in light of both recent U.S. Supreme Court cases that may substantially influence those challenges, and the current legislative environment.