When admitted to practice law in Oregon, attorneys take an oath to support the Constitution. Many of us shirked those obligations when we failed to protest the Bush administration’s breathtaking assault on the U.S. Constitution.

That’s not hyperbole. This is the administration that suspended habeas corpus, that expanded the use of warrantless wiretapping, that groundlessly asserted executive privilege, and that re-defined “torture” to make it legal.

The early revelations of the use of torture were accompanied by profound understatement as to whether, when and how often CIA interrogators used waterboarding. We’ve now learned otherwise.

This is not really surprising, I suppose.  Still, it’s a stark reminder of how bad things were and how much we abdicated to the lawlessness of the Gonzales Department of Justice. There are those who want to keep this in the past.

At the very least, we must chronicle the revelations. This is likely a naive effort, but at least writing it down creates one more data point as a caution for those who may look backwards next time around.

David Sugerman

New topic today, as President Obama took office yesterday. He quickly got down to business, ordering a freeze and review of all of the Bush administration’s pending midnight regulations.

In one sense, this isn’t new or radical, as it’s been done by every incoming president since President Reagan. But it’s particularly good news for consumers because the Bush midnight regulations were something of a last chance all-you-can-eat ticket to the trough.

My guess is that a number of these last-gasp gifts to the greedy won’t stand.  At a minimum, it’s re-assuring to know that they’ll be reviewed before implementation.

David Sugerman

The rush to the bottom isn’t quite over yet, as the Bush administration seems intent on passing last minute regulations to harm consumers and help big business. The range is breathtaking. It includes loosening worker safety rules, clean water standards and–here’s today’s dose of irony–easing regulations on securities.

Before the financial crash and deepening recession, it would have been easy to write this off as misguided zealots pushing through the final touches on the deregulation agenda. But after the collapse it’s just plain greed, jet-fueled by a dangerous mix of urgency and stupidity.

David Sugerman

Okay, maybe I’m the one who is insane, but did you catch this one, in which (still?!) President Bush cautioned against regulation of the free market? The financial crisis–he said–”was not a failure of the free market system.” Huh?! So the free market works fine? So that $700 billion bailout was not necessary? Or it wasn’t because of the failures of the free market? Riiiight.

My 13-year old daughter is a smart kid, but she’s not exactly schooled in the fine details of the constitutional law. So when she heard the President on the radio utter the above wisdom, she asked if he couldn’t just be through yet. I explained that the new president can’t take office until January 20. (For those who like text citations, or if you want to impress your friends: U.S. Const. Amend. XX, Sec. 1.) She didn’t miss a beat. “Okay, so could it just be January yet?”

I guess he’s got to believe that the free market works, and that regulation is bad. But of course, that raises more questions. If it’s not a problem of inadequate regulation, exactly how did we get into this mess? That’s to say, if it’s not a lack of regulation that allowed the sale of bad mortgages, what exactly was it?

This matters to consumers for the simple reason that we’re left with this mess. We’re paying for it, and last I checked no one provided us with a sweet golden parachute. So since we get the tab, I tend to think that we should write the rules. Because there’s no way we’re going to repeat this train wreck.

If I had the ability to talk to President Bush about all this, I could cover it in four words.  “Man up, Mr. President,” would adequately convey my thoughts on the subject.

David Sugerman

Back on the kleptocracy, and it looks like the Chamber of Commerce is working to keep its position at the trough by threatening to go to war with the incoming Obama administration. It seems that the Chamber is concerned about how new or revised regulations that reverse the Bush-era’s kleptocracy may affect the Chamber. The Chamber, of course, opposes the rules, claiming that they will benefit plaintiffs’ trial lawyers.

Classic diversion tactic, as the Chamber fails to take responsibility for its role in the financial meltdown. In fact, the Chamber got paid handsomely to lobby against regulation.  In their rush to demonize trial lawyers, the Chamber always forgets to mention its role in lobbying for failed insurance giant, AIG. I’m going to guess that when and if the real story of the U.S. Chamber of Commerce gets told, trial lawyers will be the least of their concerns.

Meanwhile, let’s be clear about a few things. Americans of all backgrounds, ages, races, and political persuasions voted for change. The kleptocracy is over. No more feeding at the trough. It’s time to put regulations in place because taxpayers–and our children–are going to pay for your greed and the lack of oversight that got us here. It’s time that corporations paid their fair share of taxes. It’s time to make sure that juries decide product safety issues. It’s time for equal pay for the same work, regardless of race or gender. In short, the Chamber of Commerce’s time at the trough is over.

David Sugerman

I grew up on Mad magazine, and one of my favorite features was “What they say…What they really mean.” And I’m reminded of that feature with this L.A. Times report on the Food and Drug Administration staff’s opposition to preemption.

Digression, first off, to credit reader JW on the pithy term “Kleptocracy” to describe the current regime’s fondness for allowing all its friends to gather at the trough. JDub says that he got it from wiki. Even so, his reverb is worthy of thanks and recognition.

And then some legal geek background on preemption. It’s a federal legal doctrine–based in the U.S. Constitution’s supremacy clause–that allows federal law to preempt or displace or block all state laws in a particular field. “State laws” is read broadly to include even a claim that might be based on state law. What it means for purposes of the kleptocracy is that a corporate wrongdoer who injures a citizen need not answer in court if the claim is preempted by federal law.

So one more little piece of foundation for this forehead smacker. Next week, the U.S. Supreme Court hears argument in the case of Wyeth v. Levine, Case No. 06-1249. In that case, the Bush Administration and FDA counsel are arguing that federal Food and Drug Act should preempt state law claims.  That’s to say, if you’re injured by a dangerous drug regulated by the FDA, our kleptocrats believe that you shouldn’t be able to sue.

The LA Times article demonstrates the inane basis of the argument. FDA staff knows full well that the agency does not and cannot protect consumers from drug company mistakes and misconduct. So it’s folly to assert that preemption should limit these claims. Back to Mad. They say: “Preemption is the best way to protect consumers because the FDA rigorously monitors drug safety.” What they really mean: “These consumer lawsuits from unsafe products are eating at our profits. We don’t like them.”

David Sugerman

At first glance, this prediction bodes well for consumers. As reported here in the Seattle Post-Intelligencer, Congress will move to add Wall Street financiers to the list of those who will be held accountable for funding predatory mortgages.

The technical term is assignee liability. It’s important to understand the underlying concept because it plays a big part of what’s gotten us to the present crisis.  Banks were writing ridiculous and nasty mortgages and lending money to borrowers who had no business taking on mortgage commitments.

The banks and lenders would then group and package the bad loans into large pools, and through a series of sales and transactions, parts of these large groups of stinking bad loans wound up being traded like baseball cards on Wall Street. Actually, that’s a little unfair because for reasons beyond my comprehension, baseball trading cards actually have “value.” But I digress.

For years, the Bush Administration and the Free Marketeers (AKA “The Smartest People in the Room”) opposed rules that would allow asignee liability. To their way of thinking, buyers of the stinking bad loans should never, never, never have to answer to the borrower who may have been duped or otherwise wronged by the predatory loans.

The new rules would allow the borrower to chase the assignee, the Wall Street purchaser of the stinking horrible loans. It makes sense for a number of reasons, not the least of which is that our Wall Street purchasers are the recipients of socialist handouts.  Yes, Senator McCain and Senator Martinez, I used that very word to describe the Wall Street bailout…if you want to accuse your rivals of importing socialism into American life, you best go back and explain that whole bailout thing. Ugh, better have more coffee–or less–as I’m digressing again.

But here’s the real disappointment of the Seattle PI report. This is all about the future and prevention. Not a bad thing to be sure, but it’s a deafening silence about THIS round of problems. The Bush Administration declared class warfare on the middle class when they tried to limit the bailout to Wall Street and banking failures. Consumers were left in the drink without a boat, without a paddle, and without a life jacket.  So you’re talking about assignee liability in the future.  And in the meantime, consumers are supposed to ???

David Sugerman

So I was never a huge Who fan, but they had a way of crafting a phrase or a riff that invariably resonated far beyond the tune. The rauccous revolutionary anthem ends the refrain with this staunch declaration, “We don’t get fooled again!” That line sprang to mind as I learned more about the proposed Bush administration bailout of Wall Street.

It’s a short proposal. Text is here, courtesy of the New York Times.  Buried in the middle is this short ditty in Section 8: “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”

Seems to me that the very same Secretary who steered the boat into the current ice berg is a poor choice for being the guy who makes “non-reviewable” decisions.  The current administration says we’re in a crisis, but doesn’t want to provide relief to mortgage holders. They claim that immediate and bold action is necessary, but they aren’t willing to consider limits on CEO compensation. And they want no one to question their decisions?

This is the same administration that got us into this mess. It’s the same administration that sent us off to an ill-considered war based on juiced up intelligence. It’s the same one that has presided over the destruction of the Bill of Rights.  The one that corrupted the Department of Justice. They have demonstrated time and again contempt for the rule of law. No wonder they propose no review by Congress or the courts.

With a track record like that, they want no oversight as they spend $700 billion of our money?

The Who had it right. No way.

David Sugerman

Sounds like it’s a long opinion–93(!) pages–but it looks like the Bush administration suffered a serious smack down in federal district court. Here’s the media report on the court’s ruling that President Bush’s aids must in fact honor Congressional subpoenas and appear and testify in response.

The district court’s ruling by Judge John Bates is a major blow to the Bush administration’s unprecedented claims of executive power. According to the MSNBC report, Judge Bates found that the assertion of immunity was entirely unsupported by existing law.  I have not yet read the opinion, so I can’t confirm the accuracy.

Side note and a bit of a digression: President Bush appointed Judge Bates.  This is of no import to most of us who work in the justice system. My experience is that most judges–especially those on the federal bench–highly value judicial independence.  It’s a core value of great importance, as we want judges to decide hard questions without political calculations.  While I frequently disagree with how a judge decides a particular case or issue, the value of judicial independence remains important. Nice to know that Judge Bates is not reluctant to find against the man who appointed him. To me, that’s the essence of judicial integrity and independence.

Bad week for the Bush administration. We got a re-run of the hack job done by Monica Goodling earlier this week. And now this slap down.

David Sugerman

On the political side, it’s a bit interesting to see President Bush cave and sign the housing rescue bill that he threatened to veto.  The president had little choice.  From what the experts say, if Freddie Mac and Fannie Mae go down, we would be looking at a profound financial crisis.

And of course, this means a taxpayer bailout.  I’ve got precious little math talent, so you should take my rough calculations with a grain of salt. But according to my pencil, when you add this bailout in the cost of the Iraq war and subtract revenue from tax cuts, we’ll be paying for this for…looks like about 407 years.  (Like I say, rough reckoning; you may get different numbers if you check my math.)

The sad truth is that this collision was brought to bear by very simple human forces. The truth is that people tend to be greedy.  And when you have a complex market, that tendency toward greed can go off in different directions. It will motivate lenders to loan money they should never loan. It will push borrowers to sign deals that are too good to be true. It will drive investors to buy junk securities that are nothing more than piles of bad debt. Everyone who gets a cut has an incentive to push and grab.

That’s where regulation comes in.  While market regulation isn’t perfect, it is the best way of controlling unchecked greed that gets you down into the multi-trillion hole that we will now bequeath to our children and grandchildren. I wonder if the president understands this now? Or is this profoundly expensive rescue going to be nothing more than the cost of doing future business?

I’m curious how the free market purists are reacting to this deal. I imagine that most concede that this rescue was inevitable. Regardless of whether they think the rescue was inevitable, I hope that a few have come to understand that unregulated markets don’t work in a complex world.

This issue of unregulated commerce is actually important to the work that I do.  Here’s how.

When a manufacturer sells an unsafe product that causes a profound injury, I have to come try to put the pieces back together.  That’s a claim and/or lawsuit process.

The purpose of that process is to assign responsibility for unlawful conduct and pay the injured person for his or her harms and losses.  Of course, we would all be better off if the injury didn’t happen. Reasonable regulation of product safety is the best way to prevent injury. And for those who really dislike trial lawyers, there is an added incentive: when regulations promote safety and injuries decrease, people like me have less work. That’s an outcome I’m ready to embrace.

I would really like to hear from free market advocates about whether this rescue was essential and whether this costly stain doesn’t undermine the argument that unregulated markets are essential.

David Sugerman