Jack Balkin: jackbalkin at yahoo.com
Bruce Ackerman bruce.ackerman at yale.edu
Ian Ayres ian.ayres at yale.edu
Corey Brettschneider corey_brettschneider at brown.edu
Mary Dudziak mary.l.dudziak at emory.edu
Joey Fishkin joey.fishkin at gmail.com
Heather Gerken heather.gerken at yale.edu
Abbe Gluck abbe.gluck at yale.edu
Mark Graber mgraber at law.umaryland.edu
Stephen Griffin sgriffin at tulane.edu
Jonathan Hafetz jonathan.hafetz at shu.edu
Jeremy Kessler jkessler at law.columbia.edu
Andrew Koppelman akoppelman at law.northwestern.edu
Marty Lederman msl46 at law.georgetown.edu
Sanford Levinson slevinson at law.utexas.edu
David Luban david.luban at gmail.com
Gerard Magliocca gmaglioc at iupui.edu
Jason Mazzone mazzonej at illinois.edu
Linda McClain lmcclain at bu.edu
John Mikhail mikhail at law.georgetown.edu
Frank Pasquale pasquale.frank at gmail.com
Nate Persily npersily at gmail.com
Michael Stokes Paulsen michaelstokespaulsen at gmail.com
Deborah Pearlstein dpearlst at yu.edu
Rick Pildes rick.pildes at nyu.edu
David Pozen dpozen at law.columbia.edu
Richard Primus raprimus at umich.edu
K. Sabeel Rahmansabeel.rahman at brooklaw.edu
Alice Ristroph alice.ristroph at shu.edu
Neil Siegel siegel at law.duke.edu
David Super david.super at law.georgetown.edu
Brian Tamanaha btamanaha at wulaw.wustl.edu
Nelson Tebbe nelson.tebbe at brooklaw.edu
Mark Tushnet mtushnet at law.harvard.edu
Adam Winkler winkler at ucla.edu
Unfortunately, secrecy has also been a troubling practice at the Fed and other financial regulators over the past few years. As Gretchen Morgenson has noted,
In August 2007, as world financial markets were seizing up, domestic and foreign banks began lining up for cash from the Federal Reserve Bank of New York. . . . Thus began the bank run that set off the financial crisis of 2008. But unlike other bank runs, this one was invisible to most Americans. Until last week, that is, when the Fed pulled back the curtain. Responding to a court ruling, it made public thousands of pages of confidential lending documents from the crisis. The data dump arose from a lawsuit initiated by Mark Pittman, a reporter at Bloomberg News, who died in November 2009. Upon receiving his request for details on the central bank’s lending, the Fed argued that the public had no right to know. The courts disagreed.
It's not just the Fed that's been opaque. I've previously discussed the Office of the Comptroller of the Currency here and here. Given those accounts, it's no surprise that the agency continues to serve, rather than police, big banks. The Maryland Commissioner of Financial Regulation has testified that OCC "forbade national banks from providing loss mitigation data to the states." Matt Stoller explains the significance of that decision. Without loss mitigation data, regulators found it difficult to detect and deter loan modifications that hurt struggling homeowners. Once reported, officials like Kaufman could identify the practices that led to redefaults. As Stoller explains:
A redefault . . . means that instead of foreclosing immediately, or modifying a loan so that it was a workable payment structure, the bank strung out the homeowner until they drained all their savings, and then foreclosed. [I]t looks a lot like the Office of the Comptroller of the Currency knowingly prevented the release of information that would have led to lower redefault rates.
But don't worry, Dick Parsons assures us OCC's been run by a "good guy." Perhaps the OCC will next try to promulgate regulations based on the Cayman Islands's Confidential Relationships (Preservation) Law, which makes it a crime merely to ask about certain financial or banking arrangements.
Before we can trust financial regulators again, they need much more awareness of what is going on in the markets, and the public needs timely access to their records. We may need to create new records, including complete and accessible accounts of the revolving door positions former regulators take, and how much they are paid at these jobs.
John Liechty, a professor of marketing and statistics at Pennsylvania State University, helped create the Office of Financial Research, a new agency created by the Dodd-Frank Act that is charged with identifying systemic risk in the financial sector. . . . He believes there is a “national need” to gather the data and do the research to understand markets better, just as was done to better model hurricanes and their impact. It took decades – and was a serious project.
[Alan] Greenspan believes the markets are “unredeemably opaque”. Mr Liechty thinks this can be remedied – and pushing Wall Street to track data and use common tags to identify counterparties would make a huge difference. Making this a priority for the financial industry is tough. But without a better way of knowing what goes on in the complex and interconnected markets, the only logical step would be to split large firms into lots of pieces that are many steps away from each other.
So we can either better track and regulate the big firms, or split them up. Of course, neither option is on the agenda of Spencer "Serve The Banks" Baucus, or Paul Ryan.Mike Konczal explains the mind-bogglingly struthious approach that Ryan's budget proposal takes. Konczal concludes:
There are problems with resolution authority that need to be addressed, particularly its international components. But the idea that the legal structure of summer 2008 is ideal – the idea that “let’s do it over, but mean it this time” is the strategy, is horrific.
Remember – Paul Ryan voted for TARP. And now he wants to say “no problems here” and simply set the dial back. What more could Wall Street want – someone who votes for bailouts in TARP and then fights any and all accountability and reform mechanisms after the fact? In a budget that skews so strongly towards the top 1% it’s telling that it tries to break apart one of the few mechanisms for holding Wall Street accountable post-crisis.