Mojo - May 2010

Kagan: "Nothing Short of Terrifying" As Law Prof

| Tue May 11, 2010 11:06 AM EDT

Supreme Court nominee Elena Kagan may never have been a judge. But for those looking for clues about what she might be like on the bench, Elie Mystal over at Above the Law, offers some insights. Mystal didn't know Kagan as a colleague, a legal opponent, or even a military recruiter, but as his first year civil procedure professor. And it wasn't pretty. He writes:

Like Frodo on Weathertop, there are some wounds that never fully heal. Professor Kagan massacred me intellectually, and brutalized my pride. I got some form of a B in her class (I honestly don’t remember if there was a modifier — I’ve tried to suppress those memories). Kagan was a frightening professor for those who wanted to match wits with the brightest legal minds in the world. For people like me, people who just wanted to get through law school with minimal mental damage, Kagan was nothing short of terrifying.

Mystal describes Kagan as a part of a dying breed of classical Socratic method instructors, a woman who could leave students shaking like leaves with her cold-call questioning. If Kagan performs on the bench the way Mystal describes her in the classroom, the Supreme Court bar is in for some fun if she gets confirmed.

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The Closed-Door Derivatives War

| Tue May 11, 2010 10:51 AM EDT

The most heated fight in the financial reform battle right now involves a provision blandly named Section 716. This provision, introduced by Sen. Blanche Lincoln (D-Ark.), is arguably the most aggressive of the reform bill's crackdowns on the $600 trillion over-the-counter derivatives market, the home to the opaque yet lucrative financial products that allow big banks and gutsy traders to bet on swings in the financial market. More than 90 percent of derivatives trading occurs within the walls of the five largest commercial banks. Lincoln's Section 716 would essentially force these big banks to carve out their derivatives, or "swaps," desks into separate subsidiaries—a proposal that's anathema to Wall Street, many Republicans, some Democrats, and even the White House.

So far, Lincoln has managed to keep 716 in the bill, despite a lobbying onslaught to kill the provision. But as the New Republic’s Noam Scheiber reports, an unlikely opponent to Lincoln's aggressive plan has emerged: former Federal Reserve chairman and reform advocate Paul Volcker. In a May 6 letter, Volcker wrote to Sen. Chris Dodd (D-Conn.) that commercial banks "should not be prohibited" from dealing in derivatives as a normal part of doing business. Volcker justified his opposition—which more or less aligns him with the Wall Street lobbyists fighting to gut Lincoln's derivatives overhaul—by saying that the "Volcker Rule," a provision he helped create that would wall off commercial and investment banking, would render moot Lincoln’s 716.

But academics and outside experts say the Volcker Rule is no substitute for spinning off swaps desks. Jane D'Arista and Gerald Epstein of the Political Economy Research Institute at the University of Massachusetts, Amherst write today that Section 716 would go a long way toward breaking up the anti-competitive monopoly on derivatives trading held by the five largest commercial banks, "encourage new entrants, and bring the benefits of competition to end users in all sectors of the economy." D'Arista and Epstein add that breaking off swaps desks will actually increase transparency "by bringing derivatives out of the shadows so that dealers can be more easily regulated." Not separating swaps desk will only cement the too-big- or too-interconnected-to-fail status of the biggest commercial banks, they argue.

Nonetheless, with Volcker in opposition, the odds are now stacked heavily against Lincoln's provision. Later this week, Sens. Judd Gregg (R-NH) and Saxby Chambliss (R-Ga.) are expected to offer an amendment that would do away with 716, and it's unclear whether any new lawmakers will come to its defense—or whether the proposal will be left, like other tough provisions, on the cutting room floor. 

 

Does Kagan Oppose Mother's Day?

| Tue May 11, 2010 10:27 AM EDT

It's funny how much can change in 17 years. Yesterday I was reading through Supreme Court nominee Elena Kagan's written responses to questions from the Senate Judiciary Committee during her confirmation hearings last year to be Solicitor General. I was struck by one about her time working on Justice Ruth Bader Ginsburg's confirmation. The committee asked Kagan:

In 1993, you worked on Justice Ginsburg’s confirmation hearing. Prior to Justice Ginsburg’s confirmation to the Supreme Court, she wrote on a number of women’s issue. She had written that the age of consent for women should be 12, that prisons should house men and women together in order to have gender equality, that Mother’s and Father’s Day should be abolished because they stereotype men and women, and that there is a constitutional right to prostitution. In a 1995 book review, you called Justice Ginsburg a “moderate.” Do you believe these are moderate positions?

Kagan, naturally, sprinted away from Ginsburg and claimed she wasn't even aware of some of her more liberal positions. (Kagan is, of course, pro-Mother's Day.) But what struck me about the question was just how impossible it would be today for someone with Ginsburg's career as an advocate to make it on to the federal bench at virtually any level, much less the Supreme Court. I mean, arguing to abolish Mother's Day? A constitutional right to prostitution? Any one of those things would be the kiss of death in today's polarized world. Yet Ginsburg's nomination wasn't the least bit controversial. She was confirmed overwhelmingly in a 96 to 3 vote. Only a single witness testified against her.

What's depressing about how much the confimration process has changed is that it hasn't kept judges (or justices) with extreme views off the bench. It's just made aspiring justices better at hiding those views, at least until they get a lifetime appointment, at which time they are free to say, rewrite 100 years of campaign finance laws in favor of big corporations.  

We're Still at War: Photo of the Day for May 11, 2010

Tue May 11, 2010 7:42 AM EDT

 

US Army Soldiers prepare to conduct a static line airdrop during a forcible entry exercise on Pope Air Force Base, N.C., on April 26, 2010. Photo via the US Army.

Arizona Bill Targets Latino Students

| Mon May 10, 2010 6:20 PM EDT

The lawmakers who helped Arizona adopt a racist immigration law are now targeting the state's large Latino student population, the Los Angeles Times reports. A bill awaiting signature or veto from Arizona Gov. Jan Brewer would ban schools from teaching classes that advocate ethnic solidarity, promote overthrow of the US government, or cater to specific ethnic groups, putting the state's popular "Xicano" or Chicano studies programs in jeopardy.  

Supporters of Mexican-American studies say the courses allow students to explore historical perspectives that are often ignored by academia's mainstream, fostering ethnic pride among a frequently marginalized group. Tuscon High School literature teacher Curtis Acosta's classroom walls are covered with posters of labor leaders Cesar Chavez and Dolores Huerta, and his students read fiction by Luis Alberto Urrea and Junot Diaz, but this doesn't mean his Chicano studies courses encourage ethnically motivated uprisings, Acosta told the Times. "Literature is art, man," he said. "That's why I love teaching it."

Three percent of the 55,000 students in Tuscon Unified School District take Chicano studies courses, and they hail from all grade levels. Sean Arce, Tuscan's Chicano studies program director, told the Times that lawmakers should stop trying to legislate against ethnic pride and start thinking more about closing the achievement gap between white and Latino students. "Why aren't these legislators up in arms that we have this huge Latino population going to prison and not to higher education?" he asked. "They should be outraged about that. They should be saying, 'What can we do to fix that?' But they're not."

Brewer has until Tuesday to approve or reject HB 2281.  If she does nothing, the bill becomes law.

Kagan + ENDA = Gay Rights Summer?

| Mon May 10, 2010 4:48 PM EDT

With Solicitor General Elena Kagan’s nomination to the Supreme Court, right-wingers have revived speculation that Obama's pick is a closeted lesbian, despite strong statements by the White House that such charges are false. “We cannot afford to have another sexually abnormal individual in a position of important civic responsibility,” blasted the American Family Association in a blog post Monday. But the Kagan whisper campaign is only the start of the gay rights debate that's certain to heat up this summer. And activists on both sides seem eager to drive the issue to the forefront.

Having vocally objected to the military “Don’t Ask Don’t Tell” policy on gay service members, Kagan briefly restricted—but never cut off—military recruiters’ access to students while she was dean of Harvard Law School, prompting critics to label her as “an anti-military zealot” who would push for same-sex marriage “as a supposed federal constitutional right.” On the other side, gay rights groups have hailed Obama's pick, citing her DADT views and "commitment to protecting the liberty and equality of all Americans, including LGBT Americans,” in the words of the Human Rights Campaign. And liberal activists who've been frustrated with the White House's reluctance to repeal DADT could use the confirmation process as another chance to voice their grievances.

Meanwhile, there’s another issue coming down the pipeline that could also bring gay rights to the front burner this summer. The Employee Non-Discrimination Act—which would prohibit employers from discriminating on the basis of sexuality or gender identity—is currently before the House Education and Labor committee. Written by Rep. Barney Frank (D-Mass.), ENDA already has 202 co-sponsors, prompting gay rights advocates to push for a vote in the House as early as this month. The momentum behind the legislation has prompted anti-gay activists to slam the bill as “the Cross-dresser Protection Act,” as the Family Research Council calls it. Warning that the bill would let drag queens invade schools across the country, the Traditional Values Coalition has urged a newly formed group of the House’s most conservative Republicans to take up the issue. And The Washington Times has already editorialized against the bill for subjecting “kids to weirdos,” arguing that it would make it impossible for parents remove their children from the classrooms of “she-male” teachers.

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Dems Try to Beef Up Finance Bill

| Mon May 10, 2010 3:13 PM EDT

In Washington, usually the longer lawmakers haggle and debate and offer amendments to a piece of legislation, the weaker the bill gets. On financial regulatory reform, a group of Senate Democrats today touted plans to buck that trend and improve the Senate's bill that would reimagine the guidelines and regulations of our financial markets.

In an afternoon press conference, Sens. Carl Levin (D-Mich.) and Jeff Merkley (D-Ore.) introduced an amendment to break off banks' proprietary trading desks—the riskier operations where traders bet for their own company's gain, not for a client. The Levin-Merkley amendment draws on the "Volcker Rule," a provision popular with the Obama administration that would redivide investment and commercial banking. The Levin-Merkley amendment would ban banks from making high-risk investments involving bonds, stocks, derivatives, and other financial products; it would also block them from sponsoring or investing in hedge and private equity funds, both riskier operations that lie outside the purview of federal regulators. Levin-Merkley would also try to eliminate the conflict of interest inherent in a firm like Goldman Sachs, which both advises on and executes trades for clients while also investing to pad its own bottom line. The conflict of interest is at the heart of SEC's ongoing securities fraud suit against Goldman. "Maybe we can’t stop the extreme greed that lies behind these conflicts, but we can act to end the conflicts which have allowed big payoffs," said Levin.

Meanwhile, Sen. Jack Reed (D-RI) is another Democrat looking to beef up the financial reform bill. Reed said that an amendment he introduced today will crack down on the hedge, private equity, and venture capital funds that operate almost entirely unregulated. In Reed's amendment, all private funds will be required to register with the Securities and Exchange Commission. (The existing Senate bill requires funds larger than $100 million to register, with exemptions for certain types of funds.) Reid told Politico, "This amendment will shut down loopholes and provide the SEC with long-overdue authority to examine and collect data from this key industry."

While both amendments boast Democratic support, it's unclear whether they can garner 60 votes. Last week, an amendment from Sen. Ted Kaufman (D-Del.) and Sherrod Brown (D-Ohio) that would've capped the size of banks and the leverage they use, seen by many as an improvement to the bill, fell considerably short, 60-33. The Senate resumes talks on the financial bill tomorrow, and soon enough we'll see whether these amendments have the support or not.

Don't Cry for Bob Bennett

| Mon May 10, 2010 2:11 PM EDT

You can be forgiven for missing it—it's not every weekend that big political news comes out of Utah—but the anti-incumbent fervor that's sure to dominate the November elections has claimed its first victim. Bob Bennett, a three-term senator, came in third in the Utah Republican convention on Saturday, becoming the first sitting senator from the Beehive state to lose his party's nomination in seventy years.

Bennett could still run a write-in campaign in the fall, but he won't be the GOP nominee. Instead, Republicans will vote in a June 22 primary between businessman Tim Bridgewater, who finished first at the convention, and lawyer Mike Lee, who came in second. The winner of the primary will be heavily favored to take Bennett's seat in Washington.

Bennett came under fire from the right because of his vote for the bank bailout and his role in writing a health care reform proposal with Oregon Dem Ron Wyden that would have required individuals to purchase insurance. Two conservative political action committees—the Tea Party-organizing Freedom Works, run by former majority leader Dick Armey, and the Club for Growth, founded by former Rep. (and Pennsylvania senate candidate) Pat Toomey—funded a barrage of ads against Bennett in the months leading up to the convention. But more broadly, conservative activists and the PACs believed that Bennett—the 27th most conservative senator—just wasn't quite conservative enough to represent one of the most conservative states in the union.

David Frum, a conservative who has criticized the movement's strategy, thinks the right waged an "unjust war" against Bennett, and argues that "the attack on Bennett sends the message that serious health care thinking is unwelcome in the GOP." That may be a side effect of what happened. But the fact remains that Bennett was not as doctrinaire of a conservative as conservatives might have liked. From a political strategy standpoint, what FreedomWorks and the Club for Growth did to Bennett was perfectly rational.

Before the Civil Rights era, liberals and conservatives were split between both parties, and there was lots of bipartisanship. But since then, Congress has become an increasingly partisan place, with less room for voting across party lines. Liberals have gravitated towards the Democratic party, and conservatives have moved towards the GOP. Given that fact, it's in both liberals and conservatives' interests to make their parties more ideologically consistent. If one party's members are more likely to defect on key issues than the other party's members, the party with more defectors will be at a disadvantage, all other things being equal. (Philosophy professor cum blogger John Holbo illustrated a similar point earlier this year.)

Conservative activists are right to want the most conservative states to be represented by the most conservative members of Congress—just as liberal activists are right to prefer liberal candidates to moderates in deep-blue states. Even unsuccessful primary challenges can help activists' cause by forcing rogue members to shore up their flanks. Politics is serious business. Trying to elect the most conservative (or liberal) member of congress a state or district can support is a totally rational—even obvious—move for activists. Moderates might have a different take, but the bottom line is that if you didn't cry for Joe Lieberman, don't even think about crying for Bob Bennett.

Is Elena Kagan Too Inexperienced?

| Mon May 10, 2010 8:49 AM EDT

So President Obama is set to announce today that Solicitor General Elena Kagan will be his next Supreme Court nominee. The choice doesn't come as much surprise given all the court chatter last week, though it will be the first time since 1972 that a president has nominated someone with exactly zero judicial experience. That's a pretty big deal, and Republicans are no doubt about to bludgeon Kagan with her inexperience. Kagan, for her part, has recently given them some help in that department.

When Obama tapped Kagan as solicitor general, she was the rare lawyer to take the job who had never actually argued a Supreme Court case. Then, as now, critics said she was too inexperienced for the position. Last month, Kagan seems to have confirmed that there was some merit to that early criticism. Kagan's first Supreme Court appearance came just last fall in the critical Citizens United case. She lost big time when the court decided to allow unlimited corporate money to slosh into federal elections. But last month, in a tribute to Justice Anthony Kennedy at Georgetown University, Kagan revealed that she was indeed out of her depth when she stepped up to the podium that day to defend campaign finance regulation--and that Kennedy saved her from looking like an idiot.  Tony Mauro at Legal Times reported last month:

Kagan told the Georgetown audience that the [Kennedy] had "a bit of a bad habit," namely that he asks advocates about cases that are not mentioned anywhere in the briefs for the case. Kennedy did just that in Citizens United when he asked Kagan whether something she had just said was "inconsistent with the whole line of cases that began with Thornhill v. Alabama and Coates v. Cincinnati." Perhaps many advocates know those cases, Kagan said, but "I at any rate did not." She added, "There was a look of panic on my face."

Without knowing for sure, Kagan said she believes that Kennedy "saw in the flash of an instant that ... I really had no clue" about the cases he was asking her about. Instead of waiting for her painful reply, Kennedy quickly went on to explain the Thornhill line of cases -- which relate to facial challenges to statutes under the First Amendment -- with enough detail that Kagan was able to recover and answer the question. Kennedy's kind rescue, Kagan said, showed that the justice had "sensitivity to my plight" and confirmed his "fundamental decency and abiding humanity."

Kagan's admission had the legal blogs afire with speculation about whether she really ought to be nominated to a post that does, after all, require justices to know a lot of cases that won't be in the briefs before them. Still, critics made similar arguments about Kagan when Obama tapped her as SG, and aside from her spectacular loss in Citizens United, she seems to have gotten up to speed fairly quickly. But this time, Kagan has given her opponents some rich material, in her own words, to make a case against her that has nothing to do with the usual partisan social issues that tend to bog down Supreme Court nomination fights. In a way, I appreciate her forthright admission about her shortcomings, but at the same time, I do have to wonder what she was thinking when she made that speech not even two weeks ago. It's not like she didn't know she was on Obama's short list. Disclosing ignorance of a body of law that many first year associates could have recognized was not, perhaps, very judicious on Kagan's part.

The Exec Who Wants to Turn Hollywood Into a Casino

| Mon May 10, 2010 6:00 AM EDT

When Big Hollywood found out about Wall Street's plans to start betting on movie box office receipts, it moved quickly to get Congress to put the kibosh on so-called "movie futures." Last month, the big studios' main lobby, the Motion Picture Association of America (MPAA), flexed its Capitol Hill muscle, ensuring that a provision was added to Sen. Blanche Lincoln's (D-Ark.) Wall Street reform bill outlawing movie futures.

Tinseltown's opposition to the plan was nearly unanimous. The Independent Film and Television Association opposed it. So did many entertainment industry unions. Hollywood worried that movie futures markets would be vulnerable to manipulation and fretted that falling futures prices could reduce audiences for some films.

Only one major studio didn't seem concerned. Lionsgate, which distributed Kick-Ass and all of the Saw movies, thought two companies' plans to launch box office futures markets seemed just peachy. During a congressional hearing on the issue in April, executives for the two firms—Cantor Fitzgerald and Media Derivatives, Inc.—pointed to a letter of support from Lionsgate vice chairman Michael Burns as proof that their proposals had merit.

But Burns has a very personal reason to support trading in movie futures: he came up with the plan in the first place. In the 1990s, while he was a trader at Shearson Lehman Brothers, Burns co-founded the Hollywood Stock Exchange, a fake-money website where players can bet on box office results. He always wanted to turn it into a real-money trading platform. (UPDATE: In a column in Monday's New York Times, Reuters blogger Felix Salmon also highlighted Lionsgate's support for movie futures. But he didn't mention the Burns connection.)