August 2012 Archives

August 29, 2012

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On August 27, 2012, Loyola was fortunate to host a delegation of 20 Japanese lawyers and academics. These lawyers, all of whom have an interest in disability law and policy, spent the day at Loyola learning about American and California disability law. After an overview of the area from Professor Michael Waterstone (pictured, right), they heard from Professor Sande Buhai, Professor Jan Costello, Professor Michael Smith, and Professor Julie Waterstone (Southwestern) about the ways disability law is taught in American Law Schools. After lunch, there was a distinguished panel of practitioners who discussed their practice experience in this area. Wilmer Harris, a partner at Schonbrun DeSimone Seplow Harris Hoffman & Harrison, LLP, Chris Knauf, the founder and sole proprietor of Knauf Associates, and Autumn Elliot, an Associate Managing Attorney at Disability Rights California, participated in this panel. The delegation then visited the Disability Rights Legal Center at Loyola's Downtown Public Interest Center to hear about their work.

This session was part of an ongoing collaboration between Michael Waterstone and Professor Jun Nakagawa of Professor at Hokusei Gaukuen University and Professor Yoshimi Kikuchi at Waseda University. We look forward to working together on similar events in the future.

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August 27, 2012

Atik SJ.jpgBy Professor Jeffery Atik

As its subtitle suggests, Philip Coggan's book examines the relationship between debt and money and its implications for the 21st century economy. Coggan takes us through familiar territory (the nature of money) and familiar debates (Keynesianism vs. monetaristm), yet offers a novel framing that make this book a valuable read.

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Coggan has an unusual view of the fundamental divide in political economy. Rather than seeing class struggle everywhere, Coggan treats the conflict between creditors and debtors as the central fracture motivating politics, though he notes that -- all things being equal -- creditors tend to be wealthier (and fewer in number) than debtors.

In speaking of debt, Coggan slides (perhaps too easily) between private and public debt. The debt that interests Coggan is the burgeoning debt that tends toward default (as opposed to the under-remarked debt that is extinguished by repayment in the ordinary course). This is the persisting debt that in usual times is rolled over upon each maturation. He writes of unsustainable debt -- again, both private and public -- that will of necessity lead to some degree of default. In the case of public debt, the default scenarios include -- importantly -- devaluation, a course open to most states to reset the exchange value of the money in which a debt is expressed and thus unilaterally reduce the value of the debt (as expressed in some other value, such as gold or a harder currency).

For most states, there is a limit to this strategy. Devaluation has consequences. It may throttle domestic expectations, igniting inflation. And devaluation -- in a global society -- has consequences, distributing at least some of the lost value to other countries (by readjusting the terms of trade) as well as to the disappointed creditors. Devaluation will also make future borrowing more difficult.

But -- of late -- there appeared the possibility for at least one country to escape the devaluation trap. The United States has enjoyed an extraordinary privilege, in that its currency seemed to be highly valued notwithstanding its horrific trade deficits. This reflects its historical (though waning) primacy in world economic affairs. What matters now is the role of this particular national money as place for storage of value: China (as do Japan and others) continues to re-funnel its vast export earnings into dollar-denominated obligations of the U.S. Treasury, thus keeping prevailing U.S. interest rates low. Exchange values may reveal more about capital flows than trade balances, Coggan argues.

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August 23, 2012

The Project for the Innocent at Loyola Law School, Los Angeles was awarded a $250,000 grant from the Department of Justice's Office of Justice Programs that will fund the project's initiatives for two years. The project, founded by student volunteers and part of Loyola's Alarcón Advocacy Center, pursues claims of innocence on behalf of those who have been wrongfully convicted. Launched in 2008, the project made national headlines in 2011 for its work to secure the release of its first client, who served 17 years in prison for a murder he did not commit.

"I am so grateful to the Justice Department for its support," said Laurie Levenson, David W. Burcham Professor of Ethical Advocacy and director of the project. "The attorney general has made an incredible commitment toward pursuing justice. All of us at the Loyola Project for the Innocent will work our hearts out to ensure these cases are handled professionally and expeditiously."

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Students participating in the project review claims of innocence under the supervision of Professor Levenson and Adam Grant, senior fellow at the project. The project receives dozens of queries weekly from those who allege they have been wrongfully convicted, and its active case log continues to grow.

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August 22, 2012

Atik SJ.jpgBy Professor Jeffery Atik

The Euro crisis tests more than the viability of the current currency arrangements. The sovereign debt crisis affecting Greece and Ireland, Italy and Spain is also testing the limits of wider European democracy. The status quo will likely be abandoned. The open question is whether the Euro crisis will lead to deeper integration among the EU Member States (as an artifact of a Euro rescue) -- or whether a collapse of the Euro will signal a retreat from the past achievements of the European project.

The European Union began as a common market for goods and services. A common European currency space is a more recent development -- the Euro serves as the currency of most (but not all) EU Member States. Adoption of the Euro has reduced trading costs, and has led to more transparent prices.

The Euro crisis is first and foremost a sovereign debt crisis, initially affecting a handful of EU Member States running unsustainable deficits. The sovereign debt crisis is itself an artifact of the establishment of the Euro -- neither Greece nor Spain would have been able to borrow as much in their former currencies (or on such favorable terms) as they were able to using the Euro. Prior to the Euro crisis, the financial markets valued Euro-denominated Member State obligations similarly. As the crisis developed, lenders became far more discriminating, demanding much higher Euro interest rates from weaker Member States (such as Greece and Spain) than from others.

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August 22, 2012

sj.jpgBy Seth Weiner, Co-Director of the Center for Restorative Justice

Beautiful music began to fill the Sacred Heart Chapel as dusk had fallen and guests from across California took seats in the pews. Lively conversations between many reunited long-time friends quieted as Rod Hickman, former secretary of the California Department of Corrections and Rehabilitation, approached the microphone and welcomed the crowd.

It was a picturesque beginning to the Responsibility, Rehabilitation and Restoration symposium on "Crime, Punishment and the Common Good in California," co-hosted by Loyola Law School's Center for Restorative Justice and the California Catholic Conference on August 3 and August 4. More than 600 attendees from all parts of California, including dozens of restorative justice advocates, gathered to learn about the on-going historic reforms in the state's criminal justice system. After sharing a meal in the early evening on a grassy lawn overlooking West Los Angeles and the ocean from the bluffs on LMU's Westchester Campus, attendees were welcomed to an evening of healing music, poetry and testimony of people affected by crime and the criminal justice system.

As the lyrics of the hymn repeated, "hold us in thy mercy," survivor of violent crime and restorative justice advocate Jaimee Karroll spoke into the microphone. "I am a survivor of child abduction and violent abuse when I was 9 years old. I have found personal healing from working with both crime survivors as well as offenders incarcerated for violent offenses, including abduction." She returned to her seat and the music continued. A man replaced her at the microphone. "I am responsible for the murder of another man. I have served many years in prison and am now working to help heal the kinds of harm I have caused. I pray to God every day for forgiveness." These testimonies were followed by that of a sister of an incarcerated brother, the mother of a murdered son, and the sister of a murdered brother. As each person spoke, they took a seat side by side the others. The hymn played on as the tragedy and triumph spread through the chapel.

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August 13, 2012

Atik SJ.jpg By Professor Jeffery Atik

The EU's Council has prepared its draft legislative package implementing the Basel III banking reforms -- known as CRD IV. Attention now shifts to the European Parliament for its response, expected this autumn. A complex process of reconciliation will follow. On one point the Parliament has drawn a line in the sand: the eventual CRD IV must contain significant limits on contingent compensation paid to bankers. The Parliament's starting point is a one-to-one ratio cap: bankers' bonuses cannot exceed annual salaries.

Basel III did not impose any limits on bankers' compensation -- although several European members of the Group of 20 had sought bonus restraints during the negotiation. Nor does Basel III restrict the ability of Europe -- or any other Basel party -- from imposing additional requirements on its banks. Europe's imposition of bonus limits in CRD IV may be described as "Basel III Plus" -- an additional term beyond the basic Basel III mandates.

There is a broad perception that the bonus culture of New York and London contributed to the 2007 financial crisis. Bankers seduced by the prospect of large contingent payments caused their firms to undertake inappropriate levels of financial risk. New limits on bonuses, in this telling, are needed to eliminate the distortion in risk appetite generated by prevalent compensation practices. But bonuses have their defenders -- and not just the bankers who receive them. There remain policymakers (albeit more likely those overseeing markets in New York and London) who continue to believe that bonuses are necessary to attract the creative talent that will drive economic growth.

There are several important divides in the European debate over bankers' bonuses. The first is between the United Kingdom and the continentals (particularly France and Germany). The UK may be particularly solicitous of preserving large bankers' bonuses from fear of driving financial activity to other, less-regulated markets. But there is certainly a cultural element in play as well. The French and Germans frequently criticize "Anglo-Saxon" business culture as leading to social irresponsibility. And who -- think the continentals -- really deserves such large checks at the end of the year?

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August 9, 2012

Levenson2.jpgBy Professor Laurie Levenson

[This article was originally posted in the Los Angeles Daily Journal.]

The fundamental rules of venue are not that difficult. The government must prosecute an offense in a district where the crime was committed. See U.S. Const. art. III, § 2, cl. 3; U.S. Const., Amend. VI; Fed. R. Crim. P. 18. Generally, venue requirements for criminal cases are set by statute. See 18 U.S.C. §§ 3234 - 3244. If a crime takes place in multiple venues, the prosecutor usually has discretion as to where to charge the crime.

Despite these basic rules, interesting venue issues arise all the time. In the past year, there have been several cases addressing venue challenges in federal court. For example, in United States v. Gonzalez, 2012 U.S. App. LEXIS 13149 (9th Cir. 2012), the Ninth Circuit once again ruled on a challenge to venue in a conspiracy case. Circuit Judge Richard C. Tallman began his opinion by noting that "[d]etermining where an offense occurred can be quite tricky - particularly for continuing crimes, like conspiracy, where the conspirators' activities often have a ripple-like effect that may involve numerous districts." Id. at *1.

In Gonzalez, defendant was charged with conspiring to sell drugs. During the alleged conspiracy, Gonzalez never set foot in the district where the crime was charged. Rather, venue was based upon two telephone calls to Gonzalez's cell number that a confidential informant ("CI") made at the direction of the Drug Enforcement Administration ("DEA"). Nothing in the stipulated facts indicated whether Gonzalez knew or suspected that the CI was calling from another district at the time of the calls. However, the Ninth Circuit panel held that it did not matter. Because the calls were used to negotiate the sale and delivery of drugs, venue was proper in the district from which the calls were made.

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August 7, 2012

Jessica Levinson Summary Judgments Blog.jpgBy Associate Clinical Professor Jessica Levinson

[This post originally appeared on KCET's SoCal Focus Blog.]

One of my least favorite things about the ballot initiatives process is the huge sums that those in favor and against these measures typically shell out during the election cycle. This is particularly true for the initiatives which, like bad pennies, just keep coming back every few election cycles. Proposition 32, the so-called "Paycheck Protection" initiative is no exception.

The measure, if approved, would prohibit union and corporate contributions to state and local officials (which may be only a minor problem for these groups because they can just make independent expenditures), prohibit contributions from government contractors to politicians who have a say over their contracts, and prohibit corporations and unions from using automatic payroll deductions for political purposes without their members' permission. That last prohibition will likely cut the legs out from under unions when it comes to their ability to raise and spend political funds. Under our current campaign finance system such a decrease in fundraising and spending ability correlates to a marked drop in political power.

If Prop 32 sounds familiar, it should. We've seen it before in 2005 and in 1998. In less than 15 years we've seen the same idea on the ballot three times. And yet, here we are again -- fundraising, spending, and fighting.

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August 6, 2012

Atik SJ.jpg By Professor Jeffery Atik

On prior occasions, European implementation of the Basel bank regulatory system had proceeded rather mechanically. The Europeans actively participated in the Basel II process, reached agreement with the world's other major banking powers, and then faithfully enacted Basel norms into EU law. This has not been the case with the latest product of Basel: Basel III. While Europe once again exerted its influence during the negotiation, it has been decidedly less determined to give full effect to its Basel III undertakings in EU legislation. And the reason -- it should be no surprise -- is politics.

The linkage between Basel III and the European implementation (known as CRD IV) involves three levels of politics: global, European and national. The uncharacteristic European reluctance to carry out the Basel III mandates to the letter results from the varying distributions of influence at each level of the lawmaking game. A case in point: so-called 'bancassurance' -- financial conglomerates that are part bank, part insurance company. France's Societe Generale and Credit Agricole are two large examples of 'bancassurance'.

The treatment of bancassurance was a sticking point in the Basel III negotiations. The United States and others (including the United Kingdom, an EU member state) identified the problem of 'double counting' equity capital in bancassurance. Basel III requires banks to maintain adequate amounts of high-quality (Tier 1) equity capital. This capital acts as a loss-absorbing buffer, protecting depositors and other bank creditors. In a similar spirit, insurance regulators demand that insurers maintain adequate equity to protect policyholders in the event insurers experience losses.

The banking business and the insurance business share many common characteristics: both take in capital (from depositors and policyholders, respectively), both invest capital, and both pay out capital (upon maturity or insured event, respectively). But the businesses also are quite distinctive. Banks lose money through improvident lending; insurance companies lose money through poor underwriting or unexpected casualties. Banks typically invest over a shorter time horizon than insurance companies. While in theory these distinctions might make banks and insurance companies good financial complements (or not), the historic outcome in many jurisdictions (including the United States) has been the separation of banking and insurance. In other jurisdictions (France, for example), mixed companies -- the bancassurance -- have thrived.

Although Basel III did not ban the bancassurance business model, it did make it more difficult to carry off. In order to avoid 'double-counting', Basel III requires banks to deduct from what otherwise would have been qualifying Tier 1 capital the capital serving as 'reserves' for purpose of meeting the mandates of insurance regulation. And there is a certain amount of appeal to this approach: capital protecting bank depositors cannot simultaneously protect insurance policy holders.

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