The Debate Link

I won't claim to be an expert on what transpired with Silicon Valley Bank. I suspect the causes of the failure were complex and multifaceted, and hopefully a post-mortem can help point us to areas of insufficient oversight or regulatory gaps that can be filled to forestall such events in the future.

Of course, we can skip all that hard work if you can go to the old chestnut of "it's minorities fault". And low and behold, enter Andy Kessler in the Wall Street Journal!

“In its proxy statement, SVB notes that besides 91% of their board being independent and 45% women, they also have "1 Black," "1 LGBTQ+" and "2 Veterans." I’m not saying 12 white men would have avoided this mess, but the company may have been distracted by diversity demands.”

What's striking about this -- okay, there's a lot that's striking about this. But one thing that stands out in particular is that Kessler is literally flagging as his problem that SVB had one Black person on its board. One! (And one queer director! And two veterans!). One drop of Black blood directorship suffices to lead SVB into ruin.

In his "Chronicle of the DeVine Gift" essay, Derrick Bell posited that even in cases of incontestable candidate quality, predominantly White institutions would start getting skittish about hiring more Black candidates past a certain threshold. Bell is rarely accused of being insufficiently cynical, but even he didn't argue that this threshold would be "one" (for what it's worth, in the story it was the seventh extraordinarily well-qualified Black candidate under consideration at a historically White law school that set off alarms).

But such is the time we live in. As Ron DeSantis has made abundantly clear, the working conservative definition of "wokeness" is "any non-White or non-straight person present in any capacity." Hence why the mere presence of a gay penguins suffices to ban a book in the Sunshine State. And hence why the Wall Street Journal can see a single, solitary Black director at SVB and conclude "aha -- well there's your problem."

Next week is the first substantive meeting of the "Intro to Political Theory" class I'm GSIing. It's mostly made up of first- and second-year students. The professor's initial reading assignment includes excerpts from Zizek and Gramsci. I'm prepared to be absolutely despised.

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An LSU professor fired (against the advice of a faculty committee who reviewed her case) for using profanity in the classroom has lost a First Amendment suit against the university. I can't comment on the legal issues involved, but I can say that I fully agree with the AAUP's decision to censure LSU (in part) over the termination (the ruling does not effect the AAUP censuring decision).

The best piece I've read on liberal opposition to Ken Marcus taking up a civil rights position at the Department of Education. Tl;dr: It's not about BDS, it's about him being a conservative who isn't trusted to enforce the priorities of the civil rights community.

Why do Republicans need 60 votes to pass a budget? Because they used reconciliation to slam through a giant tax cut for the rich. Priorities, priorities.

RIP, Julius Lester.

Jewish convert discovers that her conversion means her old leftist buddies assume she's now all-in for apartheid. Welcome to the club!

A bank executive actually will go to prison for fraud (relating to the collapse of Nebraska bank TierOne).

This morning, the Supreme Court issued its decision in Jesinoski v. Countrywide Home Loans, involving the exercise of a borrower's "right of rescission" under the Truth in Lending Act (TILA). TILA requires that a bank provide its borrowers r with certain disclosures; if it fails to do so the borrower may elect to rescind the loan for three years after the date of closing. The question in Jesinoski was what the borrower needs to do to effectuate the rescission -- did they need only to notify the bank that they were electing to rescind, or did they need to actually file a lawsuit within the three year period. In a 9-0 decision, the Court held that only notification was necessary.

This is a case near and dear to my heart, because I worked on it as a clerk for Judge Murphy (I normally wouldn't reveal my involvement, but Judge Murphy emailed me this morning to "advertise your role in this widely," and far be it from me to ignore an order from a federal judge). Technically, the case I worked on was Keiran v. Home Capital, Inc., 720 F.3d 721 (2013), but they're the same case -- Jesinoski was a per curium opinion by the 8th Circuit bound by Keiran; the only reason that the former was the SCOTUS case was because for a variety of technical reasons it presented a cleaner case to review. The majority in Keiran had held that a lawsuit must be filed within the three year timeline; Judge Murphy dissented and took the (now-vindicated) position that only notification was required.

Not to put to fine a point on it, but we were clearly in the right, and the five page Scalia opinion (shortest of the year, according to SCOTUSblog) explaining why is all the time this question really deserved. The statutory text (15 U.S.C. 1635(a)) is crystal clear: "[T]he obligor shall have the right to rescind the transaction . . . by notifying the creditor, in accordance with regulations of the [Consumer Financial Protection Bureau], of his intention to do so." The implementing regulations say the same thing ("To exercise the right to rescind, the consumer shall notify the creditor of the rescission by mail, telegram or other means of written communication."), and pretty much any other tool of statutory interpretation (the view of the implementing agency, the canon of construction for a remedial statute like TILA) points in favor of that outcome.

But if it was so obvious, why did it come out the other way in the 8th Circuit? And not just there -- the Supreme Court was resolving a deep circuit split that pitted (off the top of my head) the 8th, 9th, and 10th Circuits against the 3rd and 4th Circuits. I don't think it's a left/right divide -- unanimity of the Supreme Court aside, following the decision in Keiran two Republican appointees on the 8th Circuit (Judges Colloton and Melloy) went out of their way to express their view that the majority had gotten it wrong and Judge Murphy's dissent was correct. Rather, it seems clear to me that it was simply a case of an attorney mismatch.

I watched the oral arguments in Keiran, and the disparity in talent was quite evident. The lenders were represented by a former Scalia clerk who was simply superb -- one of the best advocates we saw all year. The homeowners were represented by a random mortgage foreclosure defense attorney, who was decidedly mediocre (the CFPB also had an attorney who argued briefly on behalf of the homeowner -- my coclerks and I divided in our appraisal of her -- I found her average at best, my colleagues thought she was pretty solid). One side had eloquent and polished presentation with well-crafted, sophisticated arguments; the other was bumbling and disjointed and did little to give the court guidance as to the right outcome (which could start and end with the clear statutory language). The mismatch in talent canceled out the mismatch in legal justification, and so the result was a deep divide in the lower courts. Once the case went to the Supreme Court, by contrast, the homeowners got much better representation -- plenty of firms are willing to take a prestigious SCOTUS case for little or no fee, simply for prestige -- and when that imbalance was rectified the outcome of the case was assured.

Clerking is an interesting experience. It gives you an inside look at how the sausage is made, which, like most sausage-production, can be equal parts fascinating and horrifying. It also does wonders to alleviate the sense of imposter syndrome -- because a lot of lawyers are bad. Nothing did more to make me feel qualified to be a lawyer -- a good lawyer, even -- than reading the submitted briefs during my clerkship. But while this did wonders for my self confidence, and emphasized that yes I could make a difference, it was also quite sobering. Good representation matters. A lot. And it is no mystery and no coincidence that for the most part it is the big banks that get the former Supreme Court clerks and the poor homeowners who get the remains (or worse, the grifters). Judges, no more than any one else, are not superhuman, and they can be swayed by good advocacy even where the law unadorned seems to obviously suggest another result. Here, the right outcome was reached in the end. It isn't always.

Rep. Barney Frank (D-MA) is retiring, and that's not good news. Rep. Frank has been one of the more vocal and passionate voices for financial sector reform, and his vigor and assertiveness will be sorely missed in the chamber.

In line to be Frank's replacement as ranking member of the Financial Services Committee is Rep. Maxine Waters (D-CA). And that's bad news -- Waters not only has a ton of corruption allegations swirling around her, but those corruption allegations are specifically tied to banks. To be sure, while Waters is next in line on a seniority basis, no decision has been made on this question as of yet.

This story, about a Florida homeowner who foreclosed on a Bank of America branch to satisfy a judgment against them (Bank of America wrongly tried to foreclose on their house, a judge ordered the bank to pay the family's legal fees, which the bank refused to do for months) has been making the rounds, and it is pretty sweet reading. The lawyer got sheriff's deputies to come with a moving truck and just start taking things (cash, desks, copiers, filing cabinets -- whatever). Eventually, the bank manager managed to get permission to cut a check to the attorney for what his clients were owed. Oh, to be able to listen in to that manager's phone call to his superiors. "No, you don't understand -- they're foreclosing on us! My desk is being loaded onto a moving van as we speak!"

But, as cool as this is, I actually might know of a case that could top it. And, not to brag, but it involves my dad. Like the folks in this case, my dad also was seizing property in order to satisfy a judgment. Unlike this case, though, the property was held by the local police department. Here's the tale:

I represented two victims of a notorious serial burglar in a civil suit. We took a default judgment and received a seven-figure jury damage award. We then backed a U-haul truck up to the Fairfax County Police Department with federal marshals in tow to seize the unclaimed stolen jewelry and other merchandise from the Fairfax police on theory that the thief (and my clients as judgment creditors of the thief) had better title to the unclaimed stolen goods than anyone in the world (including Commonwealth of Virginia) except the true owners. This caused an armed federal/state police standoff. Eventually, we took the merchandise to a D.C. auction house and had a televised auction to partially satisfy my client's judgment.

One day, I too hope to legally cause a reenactment of the Civil War on the steps of the Fairfax County PD.

It looks like the bank bailout will end up paying for itself. The cost of saving the economy apparently really is priceless.

I have no idea if this will work or even accomplishes anything useful, but I have to think it got the bank's attention:

Hoskins said he's been in a struggle with RiverHills Bank over his Clermont County home for nearly a decade, a struggle that was coming to an end as the bank began foreclosure proceedings on his $350,000 home.

"When I see I owe $160,000 on a home valued at $350,000, and someone decides they want to take it – no, I wasn't going to stand for that, so I took it down," Hoskins said.
[...]
Hoskins said he'd gotten a $170,000 offer from someone to pay off the house, but the bank refused, saying they could get more from selling it in foreclosure.

Hoskins told News 5's Courtis Fuller that he issued the bank an ultimatum.

"I'll tear it down before I let you take it," Hoskins told them.

And that's exactly what Hoskins did.

Sometimes, one elbow is enough. Here -- I'm doubtful.