Legal Commentary

Treasury Conference Call: On Equity Warrants

Posted on September 29, 2008
I was on the conference call with the Treasury officials tonight, and listening to the official who opened the call (I didn't catch his name) talk about the warrants, I got the distinct sense that the Treasury isn't planning to take significant warrants from institutions that voluntarily participate in the "market mechanisms" (i...

NYT Has Text of Bailout Bill Online

Posted on September 28, 2008
Can't get on the House Financial Services website to look at the text of the bailout bill? Neither can anyone else; it looks like the website has crashed. Luckily, the New York Times obtained a copy of the bill and posted it on its own website, available here...

Adam Putnam, Please Stop Talking

Posted on September 26, 2008
Either Adam Putnam has been in a coma for the past few weeks, or he's a first-rate idiot:One of the top party leaders in the House, Republican Conference Chairman Adam H. Putnam of Florida, charged that the administration has been following an ?ad hoc strategy? that it hasn?t explained to the public or even to lawmakers...

Thank God McCain Rushed Back to the Hill

Posted on September 25, 2008
Obama shows that, contrary to popular belief, it's possible for the candidates to talk to their Senate colleagues without suspending their campaign first. From the WSJ:After a three-hour meeting, lawmakers agreed to legislative principles that would approve Treasury's request for the funds...

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Designing the TARP Auction

Posted on September 25, 2008
Now that the broad terms of the bailout bill are more or less set, attention will shift to the design of the auction(s) the Treasury will use to buy troubled assets. An article in yesterday's NYT briefly discussed the difficulty of designing the best auction, and the WSJ ran a full article this morning on potential auction designs...

Match-up to watch

Posted on September 24, 2008
Ben Bernanke and Hank Paulson are testifying in a hearing of the House Financial Services Committee tomorrow (2:30 pm). And you know who's on House Financial Services? Ron Paul, the longtime opponent of the Federal Reserve, and certified economic nut-job...

Oh My God, the CRA Didn't Cause the Housing Bubble

Posted on September 24, 2008
Now that the financial crisis has become a political issue, there has been a surge of commentary on the financial markets from political commentators. Let's just say that they haven't raised the quality of the discourse. The sooner they're back to fighting about the outrage-du-jour on the campaign trail, the better, as far as I'm concerned...

Odd Leonhardt Column

Posted on September 24, 2008
Yesterday I praised David Leonhardt of the New York Times (who has finally been given a blog of the Times' website), but I have to agree with Ken Houghton's analysis: Leonhardt's column today is bad. That's uncharacteristic, and I hope Leonhardt gets back to writing insightful and nuanced (for the mainstream media, that is) columns again soon.

NYT Expands Business and Economics Coverage

Posted on September 23, 2008
The New York Times has apparently taken Barry Ritholtz's advice and is expanding its business and economics coverage. To which I say: good for them. Throughout the credit crisis (by which I mean the last 15 or so months), the NYT has provided surprisingly good coverage...

Central Bank Independence

Posted on September 20, 2008
Dean Baker, in an otherwise excellent post describing his preferred conditions for a bailout, writes:The structure of the Fed should be changed so that all the officials with a direct say in monetary policy are appointed by the president and approved by Congress...

Overworked

Posted on September 20, 2008
Wall Street Journal: "Work Grows for Wall Street Lawyers"True story. I'm in my office right now, waiting for a colleague who flew up to Connecticut to fax me some documents.Damn you, financial sector. You owe me a total of 22 hours of sleep this week.

Roundup of Bailout Ideas

Posted on September 20, 2008
Here's a quick roundup of the various bailout ideas/proposals that have been floated in the past few days. I'm sure there are plenty that I've missed. What's interesting to me is the surprising heterogeneity. When people have to quickly come up with their own proposal, and can't take their queue from other people's proposals, there's less time for groupthink to take hold...

Insurers Have Asked for Discount Window Access Before

Posted on September 17, 2008
This passage from a 1999 article by Bert Ely claims (somewhat cryptically) that insurance companies approached the Fed about emergency loans in the '70s and '80s, which suggests that an emergency loan to a large insurance company like AIG might have been what Congress had in mind when it amended the "unusual and exigent circumstances" clause in 1991 (via Westlaw):While banks pay for the entire cost of their federal safety net, ...

Is The AIG Bailout Legal?

Posted on September 17, 2008
As might be expected, I've had to come out of securities-law retirement this week to help the Securities/Structured Finance department out (in exchange for their calling my return "Jordan-esque"). It's been a crazy week for a lot of lawyers, too.One big question following the Fed's bailout of AIG will surely be: Does the Fed have the authority to do that? It looks like the answer is probably yes...

There Will Be Blood

Posted on September 15, 2008
This was truly one of the most incredible days in Wall Street's history (and despite what Felix Salmon says, this isn't hyperbole).Once the news started coming fast-and-furious, it was a chore just to keep up. "Barclays pulls out! Lehman to file bankruptcy! BofA is buying Merrill! The Fed is turning the PDCF into a shadow repo market! Ten biggest banks pool $70 billion for private liquidity fund! Oh my God: AIG is collapsing, and asking the Fed for help!"Tomorrow will be chaos...

Paging Brad DeLong

Posted on September 14, 2008
This is tailor-made for Brad DeLong. As I noted yesterday, Gregg Easterbrook made this patently false assertion in a recent Slate article:Wind-turbine application went nowhere in the 1970s and 1980s when federally subsidized; actual use has come since the 1990s, when the government bowed out and the private sector took over...

The Battle of the Journalist-Pundits

Posted on September 13, 2008
It's Gregg Easterbrook vs. Thomas Friedman, in a clash between two of the most prominent journalists-turned-"experts." Friedman is, of course, the most famous globalization cheerleader in the world, and in his new book, Hot, Flat, and Crowded: Why We Need a Green Revolution?and How It Can Renew America, he takes on energy policy, climate change, and globalization (again)...

9/11

Posted on September 11, 2008
Having experienced the terrorist attacks on 9/11 up close, this day always bring back haunting memories.My wife and I were both working at a firm that was about 5 blocks away from 2 World Trade Center. Our whole firm went outside after the first plane hit the WTC to see what was going on...

Media Bias Again

Posted on September 08, 2008
My post on media bias generated some good debate (especially in the comments to Megan McArdle's post). It also generated one utterly unhinged (and comically stupid) response by a guy named Brad at the Fire Megan McArdle blog.Before I get to Brad's response, I want to clear a couple things up...

Thoughts on the Frannie Bailout

Posted on September 07, 2008
It's too early to tell how successful the Frannie bailout will be. Its ultimate success or failure will largely hinge on how many small and regional banks become insolvent as a result of having to write down their preferred shares in Frannie. The fact that Paulson said they looked at this issue and decided to essentially wipe out preferred shareholders anyway makes me think that a significant wave of regional bank failures is quite unlikely...

Charles Wheelan's "Naked Economics"

Posted on September 06, 2008
With the dominant issue in the election being the economy, my nephew, who is a freshman in college, has decided that he wants to start studying economics in the spring semester. Wanting a slight head start, he asked me what books (not textbooks) he should read on his own this semester...

Take a load off, Fannie Mae

Posted on September 06, 2008
This seems appropriate right about now (h/t CalculatedRisk):And put the load right on me, indeed.

Fannie and Freddie to go into Conservatorship?

Posted on September 05, 2008
The WSJ is reporting that Fannie and Freddie will be put into a conservatorship, with the Federal Housing Finance Authority as conservator. So the plan is to put two gigantic and vital companies into a conservatorship that's unprecedented in both nature and size, and to appoint as conservator an agency that's been in existence for just over 5 weeks? And this is supposed to calm the markets?If we're going to nationalize the GSEs, just come out and nationalize them already.

Is There a "Liberal Media Bias"?

Posted on September 04, 2008
Glenn Greenwald, in a predictably grating bit of rhetorical overkill, says no:The very notion of the "Liberal Media" is one of the most inane myths in American politics -- something spat out and repeated in the lowest right-wing sewers for so long that it has become conventional wisdom...

First Impressions

Posted on September 02, 2008
I can't resist pointing this out. It's too perfect.Here's me, right after the press confirmed that Palin was the VP pick:[W]ith Palin, there's [a] danger that the press quickly settles on a "too inexperienced to be president" narrative, and spends the next few days talking about what a bad choice McCain made...

Assorted Links/Thoughts

Posted on September 01, 2008
1. How Good Are Experienced Presidents? Examines the historical data on governmental experience vs. presidential greatness. If the Obama campaign takes the bait on Palin and focuses on her extreme inexperience, we'll be hearing even more about the importance of "experience" to being a good president...

The Dangers of a "Surprise Pick"

Posted on August 29, 2008
Palin is definitely a "surprise pick" by McCain. The McCain campaign is clearly hoping that such an outside-the-box pick will generate a huge amount of media attention, as the press starts to inform viewers about Palin's background for the first time...

Price Tag for National Version of MA Health Care

Posted on August 28, 2008
$130 billion per year, according to MIT health economist Jonathan Gruber.

Why I'M not a fan of Cass Sunstein

Posted on August 25, 2008
Before taking issue with Kathy G's specific attack on Cass Sunstein, I noted that I'm also not a fan of Sunstein. I guess I should explain why. Sunstein is an excellent administrative law scholar (which is where he made his name), and a decent, if somewhat inconsistent, constitutional law scholar...

The Drunkard's Walk

Posted on August 24, 2008
I just finished Leonard Mlodinow's new book The Drunkard's Walk: How Randomness Rules Our Lives. It was very interesting, though not really what I expected. I expected a sort of Freakonomics for probability and statistics, and to a certain extent it was...

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