How Retired Justice David Souter Can Save the Supreme Court

The reputation of the United States Supreme Court is in trouble. Americans’ approval of the Court dropped fifteen points from 2009 to 2011, according to the Gallup Poll. Faith in the Supreme Court is dropping right along with confidence in government as a whole. Less than 2/3 of Americans say they trust the judicial branch, Gallup says.

And with good reason. Beginning with Bush v Gore in 2000, the court has issued a series of starkly partisan rulings in favor of conservative and corporate causes.

The decision of the high court that has most inspired outrage and derision in recent years is Citizens United. The Supreme Court rewrote the First Amendment to equate money spent on influencing elections and lobbying elected officials as a form of free speech under the First Amendment. Then the Court granted corporations the same First Amendment rights as humans. This twofer has unleashed a spree of legalized bribery by corporate America that will reach epic proportions in elections this year. It’s also ignited a grassroots firestorm. Where’s Our Money, and many other organizations, are backing a Constitutional Amendment to restore the primacy of humans to American Democracy.

As Justice John Paul Stevens pointed out in his blistering dissent to the majority’s opinion in Citizens United, the decision overturns a hundred years of  Supreme Court rulings upholding restrictions on corporate campaign spending. Such a sudden and profound reversal in what the Constitution supposedly means is an offense in itself. It flouts a core principle of the American judiciary, known as “stare decisis,” which requires judges to respect the judicial decisions of their predecessors. “Stare decisis” is the basis for public faith in the integrity and honesty of judges and courts.

Perhaps for that reason, the Citizens United decision seems to have inspired several former justices of the Supreme Court to speak out.

In late May, now retired Justice Stevens, in a speech at the University of Arkansas, condemned the majority’s opinion in Citizens United as internally inconsistent because it leads inexorably to the conclusion that “the identity of some speakers may provide a legally acceptable basis for restricting speech,” something that can’t be squared with the text of the First Amendment – even as interpreted by the Republican majority in that very case.

Stevens also defended President Obama for taking on the Citizens United decision in his State of the Union speech in 2010, right in front of several of the justices. Which may or may not have something to do with why Stevens was at the White House last week to receive the Medal of Freedom. Stevens took the opportunity to again criticize Citizens United.

Another retired justice has also weighed in, perhaps involuntarily. As Jeffrey Toobin reported in the New Yorker two weeks ago, Citizens United started out as relatively modest challenge to a federal campaign finance law. Supreme Court Chief Justice John Roberts and his conservative fellow travelers on the Court subsequently decided to use the case as an opportunity to rewrite the First Amendment in favor of big corporations. But Justice David Souter, a fiercely independent and revered jurist, objected to this tactic. According to Toobin, Souter, scheduled to retire in June, 2009, “wrote a dissent that aired some of the Court’s dirty laundry. By definition, dissents challenge the legal conclusions of the majority, but Souter accused the Chief Justice of violating the Court’s own procedures to engineer the result he wanted.” Toobin describes Souter’s draft dissent as “an extraordinary, bridge-burning farewell to the Court.”

To avoid a published dissent that would have profoundly questioned the integrity of his Court, Chief Justice Roberts set the case for re-argument on June 29, 2009.  This highly unusual move kicked the decision over until the next court term. Toobin says that Roberts did this knowing that Souter would be gone by then.

The source for this explosive reporting could be Justice Stevens... or it could be retired Justice Souter himself.

Souter has donated his papers – including presumably his draft dissent in Citizens United – to the New Hampshire Historical Society. Unfortunately, he has barred any access to them for fifty years.

We can’t wait that long. It’s hard to estimate how much damage to American politics will be done between now and 2056. A nation dominated by corporations and mega-wealthy CEOs for the next half-century will look a lot worse than even the corrupt system in effect today.

And the erosion of trust in the integrity of the Supreme Court is something all Americans – not merely we lawyers devoted to justice – should be alarmed about. The judicial branch used to be the one branch of government where the average person could take on City Hall or a giant corporation and expect to be treated equally, free of political influences. Lose that option, and what’s left for the 99%?

Retired justices typically refrain from criticizing their former colleagues. A sense of decorum, and the sanctity of the judicial process, mandates a quiet retirement for most departed members of the Supreme Court. But the integrity of the institution itself is now in question. The rule of law is being supplanted by the political preferences of the appointees on the Court. It won’t be long before the monstrous swelling of money in politics spread by Citizens United directly infects the composition of the high court itself. Those who care about the independence of the judicial branch should do everything in their power to save the Supreme Court. This includes justices who have left the Court.

Like everything else in our democracy, exposure is the first step toward healing. Americans deserve to know what is going on behind those closed bronze doors, above which reads the promise, “Equal Justice Under Law.”

Justice Souter should permit the immediate release of his original draft dissent in Citizens United.

Citizens United / Harvey Column - 06/06/2012

The Bank Occupy Couldn't Live Without

Bank of America seems determined to keep providing fuel to keep the Occupy movement going strong.

You probably recall the bank’s plan to soak its customers by charging them to use their debit cards, which was withdrawn after a torrent of bad press.

Clearly, all is not happy in Bank of Americaland, where the stock has dropped about 50 percent from 2010 levels. Despite being propped up by millions in taxpayer help as well as by Warren Buffet, the bank remains in so much trouble that in September, the bank announced plans to lay off 40,000 employees, mainly in its consumer division.

Who needs those consumers anyway?

It’s not just the bank’s lowly employees that are losing their jobs. A couple of top executives are leaving too, but the bank made sure to cushion the pain of their leaving with millions of dollars in severance and benefits.

The bank was also forced to cut back one of its most prized activities last year, spending a paltry $2.2 million on lobbying last year, down from nearly $5 million before the financial collapse.

You may not have heard about the bank’s latest effort to keep the protestors busy. They’ve decided to put the squeeze on another bunch of customers, this time small-businesses.

Several small-business owners told the Los Angeles Times is now forcing them to pay their balances in full, instead of on a monthly basis, as they used to. This change, the business owners say, could wipe them out.

Meanwhile, a firm that helps small businesses get loans calls Bank of America’s level of small-business lending “a disgrace for the largest bank in the country”.

Ami Kassar, CEO and founder of MultiFunding, says Bank of America ranks 6,128 out of 6,800 based on its small-business lending.

Three years after the financial collapse, Wall Street is still a dysfunctional mess, providing little help for Main Street. Meanwhile, our political leaders, for the most part, show no inclination to correct the mistakes that have gotten us here.

 

 

Bank of America (BoA) / Martin Column - 01/05/2012

The Real "Entitlements"

For most of us, the Wall Street housing bubble popped in 2008, with painful consequences.

But for those at the top of the nation’s too big to fail banks, the party keeps rocking, even though their institutions are still in trouble and wouldn’t even exist without taxpayers’ generosity.

Take for example that wild and crazy region known as Bank of Americaland, where dwells one of the country’s biggest and sickest banks.

It’s basically never recovered from the financial collapse, which, in Bank of America’s case included a nasty hangover induced by swallowing up the king of sleazy subprime lending, Countrywide, as well as fallen investment banking titan Merrill Lynch (labeled in 2009 by the Wall Street Journal the “$50 billion deal from Hell – no link).

Here’s how Bank of America has squandered its share of the bailout: engaging in a pattern of improper foreclosures on military families and spending millions in campaign contributions and lobbying to fight regulation of its business. Most recently, the bank imposed a new $60 annual debit card on its customers.

After all, the bank’s president, Brian Moynihan, insisted, Bank of America “has a right make a profit,” which occasionally will have to be guaranteed by U.S. taxpayers.

The company is doing so poorly that it’s going to have lay off 30,000 of its employees, some of whom will spend their waning days training their lower paid, outsourced replacements. But the company isn't doing so poorly that it didn’t manage to tuck away $11 million to the ease of parting for two of its top executives.

After all, they’re executives of a floundering bank that’s made a series of poor business decisions. So they’re “entitled” to get even more money on top of their fat salaries.

Across the political spectrum, it’s become fashionable to belittle programs like Social Security and Medicaid as “entitlements,” turning that into a dirty word. But like so much about our current, out of touch with reality political debate, it’s completely upside down.

The way the debate has been framed by our political leaders and media, they’re only “entitlements” if they’re claimed by the 99 percent of Americans who have suffered in the collapse of the middle-class and economic meltdown.

We need a crackdown on “entitlements” all right, but on the real  entitlements, the ones claimed by the top 1 percent, like those Bank of America lays claim to, scooping up millions for its executives while gouging its customers and buying our political system through lobbying and campaign contributions.

But Bank of America won’t give up these entitlements without a fight, because the bankers believe that these are the benefits they’ have a right to, along with their profits.

Bank of America (BoA) / Martin Column - 10/13/2011

Mortgage Frauds, Official Shenanigans

Just how did the biggest bank fraud in the nation’s history go on with the full knowledge of authorities for 7 years?

Apparently, without much trouble.

Earlier this week, a judge sentenced Brian Farkas to 30 years in prison. He was the head of one of the country’s largest non-depository mortgage companies, convicted of a multibillion-dollar fraud that has been labeled the largest in the country’s history. The case was brought to prosecutors by the bailout’s former special inspector general – after a bank associated with the mortgage company tried to rip off the Troubled Asset Relief Program for $550 million.

Prosecutors said they sought the tough sentence as a deterrent, though bankers might not get the message.

Writing in the New York Times, white-collar criminal law expert Peter Henning said more respectable executives at bigger companies “perceive themselves as different from – and often better than – those who have been caught and punished, even if they are not.”

But one of the most outrageous aspects of the case has nothing to do with Farkas’ behavior: It has to do with how a government-sponsored  agency, Fannie Mae, found evidence of his wrongdoing  in 2000 and didn’t report it. According to court testimony as reported by Bloomberg News and the New York Times, when Fannie Mae found out that the bank was selling loans that had no value, the agency merely cut its ties with the bank.

Another government-sponsored agency picked up the business a week later, Bloomberg reported.

William Black, a former bank regulator who has been a sharp critic of the current administration’s lack of aggressiveness in investigating fraud in the wake of the 2008 financial collapse, told Bloomberg: “If there had been a criminal referral, Farkas would have gone to jail in 2002.”

Farkas’ firm, Taylor Bean remained in business for another 7 years before it collapsed in August 2009.

The confidential agreement to disentangle Freddie Mac from Taylor Bean was overseen by Freddie Mac’s general counsel, Thomas Donilon, who now serves as national security adviser to President Obama.

It’s not the first time Donilon’s actions have been called into question: while he was a lawyer in private practice, he led lobbying efforts to undermine the credibility of an investigation into Fannie Mae’s shaky finances in 2004.

It’s worth cheering that prosecutors finally successfully prosecuted a major case stemming from mortgage crowd. But it’s also worth noting that the perp does not come from the ranks of the nation’s too big to fail banks.

It’s also worth noting that Donilon’s conduct in the financial collapse didn’t get him cast out as a pariah, it won him one of the most important jobs in this administration.

 

 

 

 

 

 

 


Around the Web / Financial Crisis / Martin Column / President Barack Obama - 07/01/2011

Happy Talk

Treasury officials and many politicians are busy patting themselves on the back because the Troubled Asset Relief Program will end up costing taxpayers less then expected.

The way these folks describe it the TARP and other aspects of the federal bailout were just supposed to function as a loan program for the banks while they were having some trouble.

TARP is also winning praise for having “restored trust” in our financial system.

Beyond the scary rhetoric that gave birth to the bailout and self-congratulatory sermons it’s being buried with, the bailout consisted of a set of rules and a way of picking winners and losers in the economic crisis that did anything but build trust.

Remember when the Fed chair, Ben Bernanke, insisted that he was a Main Street guy, that he was interested in the financial system only inasmuch as it helped out Main Street?

But the bailout institutionalized a system where the government could only afford to bail out the biggest bankers and corporate officials while abandoning smaller banks and business owners along with millions of troubled homeowners and vulnerable employees.

As Fortune’s Alan Sloane wrote, “the more bailout rocks you turn over, the more well-connected players you find who aren't being forced to pay the full price of their mistakes.”

Oh well, the apologists say, nothing’s perfect. It could have been so much worse.

One official who hasn’t joined in the festivities is Neil Barofsky, the former special inspector for the Troubled Asset Relief Program, who bid the bailout a scathing farewell in the New York Times, which you can read here.

The Obama administration and bailout apologists would like to have us believe that it was just a necessary first stage of the recovery to ensure that the bankers stayed rich and the wealthiest Americans’ increasing share of the nation’s wealth kept on growing.

But in Barofsky’s view, there was nothing inevitable about the no-strings attached bailout that filled the bankers’ pockets while offering little to Main Street. It had nothing to do with the operation of the free market either. It was very carefully crafted by public officials working hand in hand with Wall Street to maintain its power while gnawing away at the increasingly fragile livelihoods of ordinary Americans.

As Barofsky notes, “Treasury officials refuse to address these shortfalls. Instead they continue to 
stubbornly maintain that the program is a success and needs no 
material change, effectively assuring that Treasury's most specific 
Main Street promise will not be honored.”

And while recent employment gains are welcome news, Dean Baker points out the losers – African-Americans among whom unemployment remains distressing high and wage earners in general, whose pay is not keeping up with inflation.

The bailout celebration is just part of the happy talk designed to buoy the notion that the recovery is well underway. But this bailout-fueled recovery continues to pick highly predictable winners – with the powerful, wealthy and politically connected doing swimmingly while everybody else just limps along.

 

 

Around the Web / Martin Column / SIGTARP / TARP - 04/04/2011