The Status of Financial Reform in the Senate

This article in today's New York Times explains a push by Senate "liberals" to amend the pending financial reform legislation to break up the large banks and to audit the Federal Reserve, among other things. It notes that some Republican "conservatives" may be their best pals.  Here are a couple excerpts:

The liberal amendment that could be hardest to defeat — and is among the most deeply dreaded by Wall Street — also has some of the purest populist appeal: a proposal by Senator Sherrod Brown of Ohio and Senator Ted Kaufman of Delaware to break up the nation’s biggest banks by imposing caps on the deposits they can hold and limits on other liabilities. * * * Another case in point is the proposal by Mr. Sanders, a self-described socialist, who is feeling bullish about his amendment requiring a public audit of the Fed. Mr. Sanders’s idea is opposed by the Fed and the White House, which view it as an encroachment on the central bank’s traditional independence. Conservative Republicans like David Vitter of Louisiana also support the idea, and Mr. Sanders says he believes he can win the 60 votes needed to attach his proposal to the bill.

Elizabeth Warren on the CFPA on Colbert

Here.  A highlight: Colbert, after noting that we already have bank regulators, asked why we need both belts and suspenders.  The reply: "Right now, we don't have any pants on."  (HT: New Deal 2.0). 

D.C. Council To Pass Landmark School Nutrition Legislation

The first page of today's Washington Post has this article on the D.C. Council's consideration this coming Tuesday of the nation's most far reaching school nutrition legislation. Among other things, it will mandate low-fat, low-calorie school meals, and ban trans fats and limit sodium and saturated fats in school foods.  It will also require students to take more phys ed.  Proponents estimate that implementing the law will cost the District $23 million per year, and to pay for that, the Council is considering a controversial penny-per-ounce tax on soda.

The Shadow Terms: Contract Procedure and Unilateral Amendments

David Horton of Loyola Law School has an interesting and timely new article in the UCLA Law Review exploring the increasing phenomenon of companies using the authority of blanket "change-in-terms" provisions to unilaterally revise the terms of consumer contracts, often in an attempt to evade or stay one step ahead of court review.  For example, cell phone companies whose arbitration clauses have been struck down as unconscionable have have invoked change-in-terms provisions to impose more consumer-friendly arbitration clauses on their customers in an attempt to salvage their bans on class actions.

The article makes a case for legislation that would ban such unilateral revisions. Here's the abstract:

For decades, courts and commentators have debated the normative implications
of contract procedure. Conservatives argue that mandatory arbitration clauses reduce
the burden on the judicial system and that class arbitration waivers, choice-of-law
clauses, and jury trial waivers allow businesses to pass litigation savings to their
consumers in the form of lower prices. In response, liberals object that contract
procedure dilutes substantive rights and runs roughshod over important jurisdictional
and constitutional values.

This Article argues that neither view has accounted for a defining trait of contract
procedure: the regularity with which drafters unilaterally amend procedural terms.
Indeed, many standard form consumer agreements and a growing number of state
statutes authorize drafters to revise procedural terms unilaterally. The frequency
with which drafters exercise this power undermines the foundational conservative
theory that sophisticated adherents can exert market pressure on drafters to offer
efficient procedural terms. However, the liberal model of contract procedure—which
urges courts to nullify procedural terms that erode substantive, jurisdictional, or
constitutional interests—creates perverse incentives. Drafters respond to judicial decisions
voiding procedural terms by amending their terms again. The target audience
for these revisions is not the adherents who will be subject to them, but the courts who
will adjudicate their validity. This “private conversation” between corporations and
courts not only widens the informational gulf between drafters and adherents, but
increases the burden on the judicial system. To end this pernicious feedback loop, the
Article encourages policymakers to eliminate drafters’ ability to amend procedural
terms unilaterally.

Recall News

Kids' Tylenol and similar kids' products have been recalled because they may be more potent than alleged on the product label.

Go here for the April 2010 product recalls from the Consumer Product Safety Commission.

Bullying Critics and Suppressing Competition Not Enough to Keep Video Professor in Business

by Paul Alan Levy

Video Professor, notorious for filing lawsuits against message boards and message board posters to suppress criticisms of its sales practices, and for filing spurious trademark actions to prevent effective competition, is apparently teetering on the edge itself.  Video Professor's latest judicial defeat was an unsuccessful suit against Amazon for bidding on the keyword "video professor" and then displaying competitive options on the linked landing page.

Denver's 9News reports that Video Professor is furloughing staff and undergoing reorganization.  Apparently, the money that it spent hiring lawyers to suppress criticism and competition might have been better spent improving its product so that the sleazy sales tactics that were widely reported by its customers and others would not be necessary. 

U.S. PIRG's Financial Reform Legislative Scorecard

U.S. PIRG has issued a handy legislative scorecard that lists all of the likely amendments to the Senate Financial Reform legislation and its position on each.

Poll About Supreme Court Nominee Released

by Brian Wolfman

This story reviews a Washington Post-ABC News poll that shows that a majority of the public thinks prior judicial experience is the single most important qualification for appointment to the Supreme Court. That's understandable, don't you think?  After all, judging and all that goes with it -- like most things -- is probably something that one gets better at with experience. I found the poll's results interesting because recently some politicians have decried the concentration of former appellate judges on the Supreme Court and want one of their own to be the next nominee.

My opinion doesn't matter, but here it is anyway: I'm not against nominating for the Supreme Court a politician (or someone else) with little or no experience on the bench, but the notion that a non-judge will automatically (or even more likely) bring an understanding of the lives of "ordinary Americans" strikes me as strange. Some of the current members of the Supreme Court -- all of whom were federal appellate judges before they were Supreme Court Justices -- tend to vote more often for the consumer or the employee, and some don't.  And it's safe to say that the two Justices who (I believe) spent a higher percentage of their legal careers in government or the private sector than their colleagues -- Chief Justice Roberts and Justice Thomas -- are not Justices whom most readers of this blog would say tend to see things from the consumer's or the employee's perspective.  On the other hand, consumer and employee advocates see Justice Ginsburg (who served 13 years on the federal appellate bench before assuming her current position and was a law professor for 17 years before that) as more likely than either Chief Justice Roberts or Justice Thomas to understand a case from the consumer's or the employee's perspective.

Again, I'm not against a Justice who has a background in politics or otherwise spent most or all of her career in the "real" world. And I am interested in what people have done in their legal lives before becoming judges. Justice Ginsburg was a pioneering women's rights advocate. And we know about Justice Thurgood Marshall's background before becoming a judge and Justice.  And we also know that nearly zero percent of the current federal bench spent significant amounts of their careers as legal services lawyers or public defenders or lawyers for non-profit organizations. The lack of legal diversity on the bench may matter a lot. But is it important to get a Supreme Court justice who doesn't have judicial experience? I doubt it.

The Washington-Post ABC poll is here (see questions 16 through 20).

Jeff Gelles on "Click and Trick"

Here and here. The practice, sometimes called "data pass," refers to a transaction in which a consumer deliberately purchases something on the web and then agrees to a second transaction without realizing it because the consumer's credit card information is provided directly to the second company without the consumer supplying it again.  Visa has agreed to stop participating in such transactions, and Senator Jay Rockefeller plans to propose legislation to bar the practice.

The US News Rankings, Employment Statistics, and Consumer Protection

by Jeff Sovern

In ranking law schools, US News takes into account the percentage of students who are employed at graduation and nine months after graduation. This has led to reports that are interesting, to say the least.  For example, Brian Leiter has pointed out that Duke is the only law school to have reported 100% employment at graduation and and one of only five to report 100% nine months later.  Among other oddities, he also points out that "George Mason University reported 95.9% of its graduates employed at graduation, more than Georgetown and George Washington Universities." 

These reports may well be true. The numbers can be manipulated. For example, a law school may create the illusion of greater employment by hiring its own alums for the first nine months after graduation.  Perhaps more significantly, as far as I can tell, the numbers measure simply employment, and are not limited to jobs for which a JD is required or desirable.  Unless I am mistaken (possible, since I am going just from the methodology description at US News's website), jobs at Starbucks count the same as clerkships.  But of course, not many people go to law school with the hope of working at Starbuck's.  Similarly, probably few go with the hope of working at the law school for nine months. 

So here comes the consumer protection angle: US News should limit the jobs it counts in two ways: first, it should exclude jobs at the law school itself (either directly or indirectly to prevent imaginative ways around that restriction), and second, it should limit the jobs that count to those for which a JD is required or desirable.  That way, the rankings will reflect more accurately the value the law school adds to students' employment prospects as of graduation and nine months afterwards and eliminate an avenue for manipulating the figures.  To be sure, some people graduate from a law school and are perfectly happy with a non-law job, but probably few go into law school with that expectation, and perhaps the numbers of such students are similar across law schools (if that is a real issue, perhaps US News could include a separate list of those numbers, as it does for diversity, for example, or include them in the rankings with a lower weighting).