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Thursday, March 22, 2012

Wickard v. Filburn: Federalism v. Congress

If you are wondering how the Congress got away with taking over so much from the state legislatures, you need look no further than Wickard v. Filburn, on which the U.S. Supreme Court unanimously decided that the interstate commerce clause can reach all the way to penalize a farmer for growing his own wheat.

 Filburn and his wheat.  Courtasy of Mary Lou Spurgeon  NYT

The complete essay is at Essays on Two Federal Empires.

Tuesday, March 20, 2012

Fraudulent Foreclosures

Looking at foreclosures from 2008 to 2010 of federally-backed mortgages serviced by five major banks, federal investigators at the Department of Housing and Urban Development (HUD) found that bank managers “ignored widespread errors in the foreclosure process, in some cases instructing employees to adopt make-believe titles and speed documents through the system despite internal objections.” Generally, the banks engaged “in a pattern of unfair and deceptive practices.” This finding contradicts the self-serving statements by managers at the banks that blamed low-level employees. The investigation found that the managers had actually been the active agents. That is, the shortcuts were in many cases formulated and directed by managers. The inspector general at HUD pointed to “simple greed” to explain how so many people could have participated in the misconduct. Considering that millions of Americans were tossed out of their homes as a result, I would sociopathic indifference or even callousness to the mix. Additionally, the rush to sign documents may have undercut the banks’ own positions with respect to both the foreclosure process and the homeowners—adding incompetence to the mix.

The full essay is in Cases of Unethical Business, available in print and as an ebook at Amazon.com.  

                  Four million foreclosures in the US during the 2007-2011 period.      Spencer Platt/Getty

Sunday, March 18, 2012

Spain’s Deficit Violating E.U. Law

In early March, 2012, Spanish Prime Minister Mariano Rajoy announced that Spain’s budget-deficit target would not be the 4.4% that had been promised by his predecessor to the E.U. Commission in 2011. Instead, the anticipated deficit in 2012 would be 5.8 percent. That announcement put the state of Spain on a collision course with the enhanced enforcement of deficit limits by the Commission and the ECJ. Even though Rajoy had signed onto the added-enforcement “pact” a month before, he said of the 5.8 percent, “This is a sovereign decision made by Spain.” A few days after his announcement E.U. finance officials met and accepted a 5.3% target. Although it comes with a “tough deficit target” for 2013, one wonders whether the proposed strengthening of the “fiscal pact” will ever be enforced—and in a way that is fair to all of the states.

The complete essay is at Essays on Two Federal Empires.