Better Bills

Yesterday, we asked why might Congressional bills be so long?


Despite the massive size of the financial reform bill, it may be the content, not the length, that is problematic.  From Monday's New York Times:

As Democrats close in on their goal of overhauling the nation’s financial regulations, several prominent experts say that the legislation does not even address the right problems, leaving the financial system vulnerable to another major crisis.

Some point to specific issues left largely untouched, like the instability of capital markets that provide money for lenders, or the government’s role in the housing market, including the future of the housing finance companies Fannie Mae and Freddie Mac.

Others simply argue that it is premature to pass sweeping legislation while so much about the crisis remains unclear and so many inquiries are in progress.

 Specifically, there IS a federal Financial Crisis Inquiry Commission that is supposed to be reporting on the causes of the crisis.  Congress created it and asked it to report in December of 2010.  Without a sound understanding of such causes, it would seem that a solution would be premature, no?  So why the rush to legislate before the report you asked for is due?


One reason, unfortunately, might be found in Congressional Quarterly's (subscription required) current cover story about how Democrats are looking to re-brand their populist image and tap into the public's general anger in time to avoid major losses in the up-coming November elections:

The debate over financial services regulation, which was engaged on the Senate floor last week and is expected to dominate Congress this month, is a template for the Democrats’ new game plan for rebranding and promoting some of their longstanding initiatives.

Whether bills have been considered thoroughly, and through the regular order, is a better yardstick by which to measure than length.

The British Elections

Jacob Weisberg of Slate has a piece on tomorrow British elections.  He asks a good question: why should we care (other than just the sporting aspect of electoral politics)?  Here's his take:

Our American campaigns have become decadent spectacles of horrifying length and expense characterized by 30-second attack ads, a class of parasitic professionals, and a running media freak show.

By contrast, Britain's feel pure. They are swift (four weeks!), substantive, and not entirely driven by fundraising. Spouses are treated as human beings and allowed their own lives. The electorate is informed and engaged. The candidates are more spontaneous and accessible.

Weisberg goes on to describe his experience covering the race, which has some interesting comparisons with our own long, expensive and seemingly vacuous elections featuring a bored, inattentive and too often uninformed electorate.

Why Congressional Bills Are So Long

Historian John Steele Gordon thinks he knows:

One reason, I cynically suspect, is precisely to make them unreadable...The political elite would rather work in the dark and is confident that the Washington press corps won’t go to the trouble of actually reading a bill that’s longer than War and Peace (and a lot less entertaining). As a political public-relations man once told me, “Nobody ever went broke underestimating the work ethic of the average reporter.”

But there are two other reasons. One is that a vast bill makes it easier to sneak in clauses that go unnoticed until they are law...The second reason is Washington’s increasing fascination with global reform rather than piecemeal reform. Only touchdowns, it seems, are now allowed in the game of political football; moving the ball down the field just won’t do.  The health-care debate would have been a lot shorter and a lot less politically divisive had both sides simply agreed to enact those reforms that a substantial majority of each house agreed with — such as of insurance abuses — and then saw what else was needed. Regulating derivatives would be a piece of cake if it were not tied to “financial reform” in general.

From my own experience in writing legislation (10 years in Congress), I'd say that Gordon, who is an excellent financial historian, has it mostly wrong.  

No one ever told us to write bills longer on purpose.  I'd say of the causes he identifies, the last (a preference for global over piecemeal reform) is the soundest.  The reason have more to do with the increasing size of the congressional agenda and the diminishing floor time, meaning that you can't do several bills on one topic any longer.  Once a financial reg bill is done, Congress won't want to take it up again, so everything needs to be loaded into one package.

British Elections - Brits prepare for minority government rule

I've always been fascinated by the British political system, which is generally referred to as a parliamentary democracy.  It's highly useful to study because it represents a different style of government that works well for a nation very much like our own, which uses a presidential system, and there's lots of useful lessons in comparing the way the British approach things to our own.

One aspect of the parliamentary system is that the ruling party is determined by parliamentary elections.  The leader of the party that wins the most seats becomes Prime Minister and forms a government.  The Prime Minister does not personally stand for election nationwide, although I suspect a lot of votes for local Members of Parliament ("MPs") are cast based on who the party's leader is rather than the local MP.  In short, there's no "ticket splitting" (voting for a congressional candidate from one party and a President from the other) the way we understand it in the US.

Still, the English will go to the polls on Wednesday, and for the first time since the 1970s are likely to split votes among three parties - the Conservatives (aka the "Tories"), Labour, and the Liberals.  Labour is the incumbent party, but the least likely of the three to win the most seats.  Accordingly, we'll likely see a minority government, where the party that wins the most seats will need to work with other parties to form a working majority.

We'll be watching and trying to learn from this...should be very interesting!'

For more, British historian Simon Schama breaks it down for the readers of the New Yorker.

Note: the picture above is the Prime Minister's official residence at number 10, Downing Street, in London.

Learning the Right Lessons

As I mentioned on Monday, I'm looking for some good stories related to derivatives that will help people understand the hubbub over them a little better.

Fareed Zakaria's column on Goldman Sachs is a good place to start.  As you've no doubt heard by now, Goldman has been sued civilly by the SEC and its executive were grilled by the Senate Permanent Subcommittee on Investigations in the past couple of weeks.

Zakaria demonstrates that one doesn't have to opposed derivatives regulation to understand the dangers, however, inherent when one firm is made a scapegoat for an industry:

the rage surrounding the Goldman case can cloud our perspective and distort public policy. We're going through a familiar part of America's boom-and-bust cycle. Having been mesmerized during the go-go years, having unduly lionized and feted industries, firms, and people as they rode the wave, we now want to throw these people to the wolves. We need to step back for a moment and try to understand what happened and learn the right lessons.

Whether new regulations are warranted is best left to a blog dedicated to studying financial issues, but making sure our processes and methods of oversight are calibrated to learning the right lessons is of vital importance to all fans of good government.

Senate Committee Hearing - The History of the Filibuster

On April 22nd, the Senate Rules Committee held its first of a projected series of hearings on the filibuster.  The hearing focused on the filibuster's history and evolution as a rule and practice.  Witnesses included Professor Professor Sarah Binder (George Washington University), Robert Dove (former Senate Parliamentarian), Stanley Bach (former Library of Congress specialist on Senate procedures) and professor Greg Wawro (Columbia).

Chairman Charles Schumer (D-New York) opened by calling the current practice a "strait jacket" that is increasingly making the Senate a body where 60 votes is needed to accomplish more and more rather than the traditional majority of members present and voting.  He made clear that this had occurred under both parties and that the purpose was to determine whether changes were necessary rather than assigning blame (noting that he had likely made many anti-reform statements when Democrats were in the minority).

His Republican counterpart, Senator Robert Bennett (R-Utah), however, committed himself to defending the filibuster, noting that it gave the minority a "voice" and served as a check against one party rule even when that party held the presidency and majorities in both houses of Congress.  He was joined in this sentiment by Senators Robert Byrd (D-West Virginia), Republican Leader Mitch McConnell (R-Kentucky) and Pat Roberts (R-Kansas).

Only Senator Tom Udall (D-New Mexico), a leading advocate of reforming the rules, called for reforming not only the filibuster, but other related rules as well.


The statement of members and witnesses can be viewed here as well as some video of the hearing.

Just a  few highlights:
.
Dove: the filibuster is very characteristic of the Senate's role in our government, which is to slow consideration of measures and ensure thorough deliberation before enacting laws.
Bach: until 1917 the Senate never provided means to limit debate.  The trend towards increased filibusters is part of a larger trend of other devices employed by members to wring concessions such as the "hold" (blocking nominations from being voted on), more contested "motions to procced," etc.  In the past, a filibuster required members to stay on or near the floor and precluded anything else from being done.  Today, a Senator just files a notice with the appropriate leadership offices and the Senate agrees not to move forward.
Wawro: today's filibuster is a different animal than the one historically employed by the Senate.  In the past a determined majority could wear down a filibustering minority.  Modern practice does not allow for this, making the filibuster less a tool of delay as in years past rather than the 60 vote super-majority requirement it is today.

 A few things we might conclude then:

* The filibuster is neither a constitutional mandate nor a deliberately designed provision to protect the minority as some would have us believe.  Rather, it seems to have developed organically under the Senate's rules, which provided no means to terminate debate.  Further, today's filibuster is different not only in quantity, but quality as well, and something past generations of Senators wouldn't have recognized.  Because its operations imposes less of an imposition on the Senate and its members, which means it may be used less sparingly.

* Even so, the 60 vote super-majority requirement of today's Senate may simply be the contemporary manifestation of the founder's intent and design that the Senate would ensure full consideration of measures and guard against hastily conceived laws.

* Given the other procedural trends, perhaps the filibuster problem is actually a symptom rather than a cause of the Senate's ills - one implication is that these hearings should be expanded to look at a broader range of Senate procedural issues.

The Citizens United Case

Perhaps no Supreme Court case since Bush v. Gore has engendered such dyspeptic rage at Citizen United v. FEC, a 5-4 ruling that held laws prohibiting independent expenditures by corporations advocating on behalf of a candidate's election to be unconstitutional.

It may seem unusual that corporations have "free speech" rights that extend to elections.  It seems that it is this proposition is behind much of the outrage.  If you have a problem with that, however, you should have gotten angry a long time ago when the court first stated that proposition.  That such a right extends to corporate spending on behalf of a ballot proposal was announced many years ago in the First National Bank of Boston v. Bellotti case.  Extending the reasoning of Bellotti to advocacy for a candidate doesn't seem like such a leap if you accept the court's reasoning in these prior cases.  This did mean reversing its decision in Michigan Chamber v. Austin, a case that, itself, was not terribly consistent with the Court's previous rulings in this area.

For our purposes, the question however is what has been the affect on our government?  So far, we've seen no evidence that corporations have any interest in availing themselves of this newly declared liberty.  Right now the big winners appear to be the portion of the Washington bar specializing in campaign finance laws.

Congress is getting ready to take up legislation that will provide transparency to efforts by corporations to finance independent campaigns for or against one candidate (Note: corporations and labors may still not actually donate $ to the campaign itself - the activity must be truly independent).  Interestingly, it's liberal groups, however, that are voicing concerns about having to disclose their donors.

We'll keep watching corporate activity here to see what the impact of the ruling is.  As an in-house corporate lawyer, my own guess is not a whole lot as companies are (a) loath to spend money on politics unless it directly affects its short term bottom line, and (b) very risk adverse when it comes to the resultant publicity.