Monday, August 22, 2011
Joshua P. Fershee (North Dakota) has posted Reliably Unreliable: The Problems with Piecemeal Federal Transmission and Grid Reliability Policies, Center for Energy and Environmental Law, University of Connecticut School of Law Policy Paper, July 2011. The abstract:
In the past, electricity was considered a local concern, but over time major portions of the electrical grid have become regional, national, and even international in scope. Electricity regulation has evolved into a complex web of multijurisdictional oversight, and this evolution has created both tensions and opportunities. National legislation and regulation have helped increase reliability, diversify the fuel mix for electricity generation, and create a more open market for electricity. However, national regulation designed to enhance open markets also created opportunities for abuse. In addition, the increasing level of federal oversight has led to conflicts between state and federal entities as the traditional sense of local control over siting and delivery of electricity has been eroded.
A large portion of the current U.S. transmission system is between thirty and fifty years old. As the transmission grid ages, reliability concerns increase; an old grid is simply more likely to fail. Still, new transmission infrastructure is expensive, laborintensive, and complex. Further, there are significant concerns about whether upgraded and expanded transmission lines are the best way to improve safety and reliability.Certainly, with the advent of microgrids and other technologies, transmission lines are not the sole option. A multi-faceted approach that considers local and regional needs, as well as those of the nation as a whole, is necessary.
There are several areas in need of consideration. Recent federal legislation designed to address transmission siting has been well intended, but limited in scope. Further, recent court decisions have all but eliminated the potential effectiveness of the federal siting authority. In addition, cost allocation issues for new energy facilities have emerged as paramount in the relatively new era of competitive markets for power generation, and these issues have been exacerbated by recent energy policy developments. Finally, policies designed to address public safety and environmental concerns have impeded (or run the risk of impeding) broader policy goals, because the policies are often limited in scope and not part of a comprehensive package then ensures necessary synergies to improve grid reliability.
There is no shortage of effort at the state, regional, and federal levels to improve electricity grid reliability and safety. Unfortunately, in many cases, the efforts have been competitive with other energy-related policies (such as climate change initiatives and renewable energy mandates), and jurisdictional conflicts have obstructed, rather than facilitated, many such efforts. It is time for Congress to provide clear authority to someone to make and coordinate changes. A failure to act to preserve and improve the safety and reliability of our electric system would be a costly and avoidable failure. And that is something no one can afford.
Prof. Fershee had a very interesting presentation at SEALS last month too; check out this timely paper.
Wednesday, August 17, 2011
An interesting article on the New Urbanist Network about how the Postal Service plans to close 3,600 rural post offices.
For many communities, the closings may reduce activity in town or village centers. Even with diminishing mail volume, there are still many people who cross paths at the post office. The drawing power of post offices was recognized early by new urbanist developers such as Robert Davis in Seaside, Florida, and Buff Chace and Douglas Storrs in Mashpee, Massachusetts.
Jamie Baker Roskie
Monday, August 15, 2011
Sean Nolon (Vermont) has posted Negotiating the Wind: A Framework to Engage Citizens in Siting Wind Turbines, Cardozo Journal of Conflict Resolution, Vol. 12, p. 327, 2011. The abstract:
Electricity generated from wind turbines must be a central part of any renewable energy regime. The build out of any wind energy infrastructure policy relies on facility siting decisions at the local and state level. Local opposition in some areas has created an implementation impasse that is best addressed from a systematic perspective, recognizing that citizens play a central role in making significant land use decisions. Through this article, the author explores the nature of citizen opposition to locally unwanted land uses like wind turbines and proposes a suite of collaborative mechanisms to address concerns through effective citizen engagement in policy development and during local siting decisions. The author proposes a federal structure that provides incentives to encourage collaborative governance at the state and local level. The framework leaves state siting structures in place and provides resources to improve decision-making processes and the outcomes. By involving citizens effectively at the policy and siting level, the hope is that wind turbine siting decisions will be more effective. Instead of encouraging divisions among the levels of government, this model builds on their strengths and supports their weaknesses.
August 15, 2011 in Clean Energy, Environmental Law, Federal Government, Local Government, Planning, Scholarship, State Government, Sustainability, Wind Energy | Permalink | Comments (1) | TrackBack (0)
Thursday, August 11, 2011
Ilya Somin (George Mason) has posted Federalism and Property Rights, University of Chicago Legal Forum (2010 Symposium on Governance and Power), p. 1, 2011. The abstract:
Both the Supreme Court and leading legal scholars have often cited federalism as a reason to severely limit federal judicial enforcement of constitutional property rights. Defenders of the federalism rationale for judicial deference on property rights issues make two key arguments. One holds that abuses of property rights by state or local governments will be curbed by interjurisdictional competition, rendering judicial intervention unnecessary. The second is the superior knowledge and expertise of state and local governments relative to federal judges.
This article criticizes both claims. Part I explains why competitive federalism is unlikely to provide effective protection for property rights in land because property is an immobile asset. People who “vote with their feet” by leaving a jurisdiction cannot take their land with them. For this crucial reason, interjurisdictional competition will often fail to effectively protect property rights in land, though it may be more useful in the case of rights to mobile property.
Part II takes up the issue of diversity and expertise. While state and local governments may indeed have greater expertise than federal courts in assessing local conditions, federal judicial protection of property rights ultimately empowers not judges but property owners. It is the latter who will actually get to decide the uses of the land in question in cases where federal courts prevent state or local governments from condemning their property or restricting its use. Owners generally have greater knowledge of their land than local government officials do. Moreover, the local expertise rationale for judicial deference on property rights would, if applied consistently, justify judicial deference to state and local governments with respect to numerous other constitutional rights, including those protected by the First and Fourth Amendments.
Questions about federalism with respect to property and land use have been getting a lot of attention recently. This article looks like it will really contribute to those discussions. While other land use scholars are focusing on questions of federal vs. state vs. local regulation of property and land (i.e., legislative and administrative acts), Somin's article focuses on asking which level of government is appropriate to exercise judicial review of those acts. It will be interesting to compare.
August 11, 2011 in Constitutional Law, Economic Development, Eminent Domain, Federal Government, Judicial Review, Local Government, Property Rights, Property Theory, Scholarship, State Government, Supreme Court | Permalink | Comments (0) | TrackBack (0)
Wednesday, August 3, 2011
An interesting article in Wired magazine on a new report from the Leadership Conference on Civil and Human Rights on transportation equity:
According to the report, the average cost of owning a car is just shy of $9,500. That may not sound like much until you realize the federal poverty level is $22,350 for a family of four. One-third of low-income African-American households do not have access to an automobile. That figure is 25 percent among low-income Latino families and 12.1 percent for whites. Racial minorities are four times more likely than whites to use public transit to get to work.
Yet the federal government allocates 80 percent of its transportation funding to highways.
“This is the civil rights dilemma: Our laws purport to level the playing field, but our transportation choices have effectively barred millions of people from accessing it,” the report states. “Traditional nondiscrimination protections cannot protect people for whom opportunities are literally out of reach.”
Read the full report here.
Jamie Baker Roskie
Friday, July 22, 2011
The National Building Museum is hosting what looks like a particularly interesting program called The Public Memory of 9/11. It will explore two of my favorite subjects: public land use; and collective memory of the past.
The upcoming tenth anniversary of the 9/11 attacks offers an opportunity to consider how the sites in New York, Pennsylvania and Washington are memorializing and interpreting this event. Leading representatives—Alice Greenwald, Director, National September 11 Memorial & Museum; Jeff Reinbold, Site Manager, Flight 93 National Memorial and; Jim Laychak, President, Pentagon Memorial Fund— present the designs of the memorials and discuss the challenges in commemorating recent history. Brent Glass, director of the National Museum of American History, moderates the program. 1.5 LU HSW (AIA)
FREE. Pre-Registration required. Walk in registration based on availability.
Date: Tuesday, July 26, 2011
Time: 6:30 PM - 8:00 PM. If you'd like to attend this event you can RSVP online.
Friday, July 15, 2011
From The White House blog:
President Obama knows that the hard work of strengthening American communities and revitalizing the American economy happens at the local level – in neighborhood schools and community colleges, at town meetings and neighborhood associations, through new start-ups and small businesses. That’s why the White House is excited today to announce the launch of the Strong Cities, Strong Communities Initiative.
Strong Cities, Strong Communities is a new interagency pilot initiative that aims to strengthen neighborhoods, towns, cities and regions around the country by strengthening the capacity of local governments to develop and execute their economic vision and strategies. Strong Cities, Strong Communities bolsters local governments by providing necessary technical assistance and access to federal agency expertise, and creating new public and private sector partnerships. By leveraging existing assets, providing new resources, and fostering new connections at the local and national level, Strong Cities, Strong Communities will support towns and cities as they develop comprehensive plans for their communities and invest in economic growth and job creation.
If you visit the blogsite, you can watch the "launch video" and read more about the community intiatives.
Jamie Baker Roskie
Wednesday, July 13, 2011
According to the folks at Smart Growth America, the House Appropriations Committee has passed legislation that would eliminate the EPA's Office of Smart Growth. You can visit the Committee's website to learn more about the bill. SGA has a website that allows you to e-mail your congressional representative, if you're so inclined. Presumably this is part of the campaign to defund the administration's Sustainable Communities Initiative.
I've blogged several announcements from the OSG, which co-hosts the annual New Partners for Smart Growth conference, and gives smart growth implementation assistance and grants and awards to local and state governments each year.
Jamie Baker Roskie
Tuesday, June 21, 2011
I'm excited to post this guest blog from Professor Timothy Mulvaney, a land use prof from Texas Wesleyan School of Law in Fort Worth. He's written extensively about judicial takings and exactions, and proivdes this timely and interesting post about yesterday's U.S. Supreme Court cert grant. This case has been somewhat under the radar, but could end up being very important. Thanks to Tim for the early and interesting analysis-- Matt Festa
Thank you very much for the opportunity to guest blog during this important week at the U.S. Supreme Court.
It is understandable that today’s headlines regarding the Supreme Court are devoted to several landmark decisions released yesterday, including rulings rejecting class certification in Wal-Mart v. Dukes and holding that the Clean Air Act displaces federal common law nuisance claims when it comes to greenhouse gas emissions in AEP v. Connecticut. But in addition to these major holdings, the Supreme Court also took the noteworthy step of granting certiorari in PPL Montana, LLC v. State of Montana. This case could have important implications for property, land use, natural resources, and environmental law.
In 2010, the Montana Supreme Court held that the State of Montana owns the beds of the Missouri, Madison, and Clarke Fork Rivers as an incident of state sovereignty. This ruling confirmed that PPL Montana is required to pay over $40 million in back-rent, as well as yet-to-be-determined future rent, for use of the rivers to generate hydroelectric power. PPL Montana claims that the riverbeds are private property, such that no rent to (or approval from) the State is necessary to conduct their operations. To determine whether these rivers are held in trust by the State or rather in private ownership turns on whether the rivers are considered “navigable.” The U.S. Supreme Court has defined waterways as “navigable” in the context of such a title dispute if the rivers were “used, or [were] susceptible of being used, in their ordinary condition, as highways for commerce, over which trade and travel [were] or may be conducted” when the relevant State was admitted to the Union.
In finding that all three rivers at issue met this “navigability for title” test when Montana entered statehood in 1889, the Montana Supreme Court cited to a litany of historical evidence, including the centuries-old journals of Lewis and Clark. As today’s brief AP story notes, PPL Montana disagreed, pointing “to accounts of the [Lewis and Clark] expedition’s arduous portages of canoes and supplies around waterfalls to argue that the contested stretches of water were not navigable.” The Montana Supreme Court’s opinion also drew PPL Montana’s ire by considering what the company alleges are flawed contemporary studies, as well as recent recreational uses of certain stretches of the rivers, to support the finding that the rivers are held in total by the state in trust for present and future generations.
One of the foremost experts in natural resources and water law, Professor Rick Frank, notes on Legal Planet that the U.S. Supreme Court has not addressed navigability in the context of state public trust claims for several decades. How the Supreme Court interprets its time-honored test and identifies what evidence is relevant in its application could have major ramifications for thousands of miles of inland lakes and waterways nationwide.
Yet there may be another issue lurking under the surface. In seeking the Supreme Court’s review, PPL Montana and several of its amici sought to frame the Montana Supreme Court’s decision as a “judicial taking.” You will recall that in the 2010 case of Stop the Beach Renourishment, Inc. v. Florida Department of Environmental Protection, the U.S. Supreme Court left the existence and scope of a judicial takings doctrine in a state of flux. To cull from a law review article I authored on Stop the Beach this past winter:
A four-Justice plurality endorsed a novel theory that would make the Takings Clause applicable to a wide collection of state court interpretations of state property law. Writing for the plurality, Justice Scalia declared that a state court’s opinion finding that an “established” property right “no longer exists” may amount to an unconstitutional taking. … Justice Kennedy, joined by Justice Sotomayor, wrote separately to suggest that only when the Constitution’s Due Process Clause proves “somehow inadequate” to protect landowners from the judicial elimination of their existing property rights should the questions surrounding the need for and scope of a judicial takings doctrine be addressed. … Though generally expressing grave doubts about the plurality’s judicial takings standard, Justice Breyer, joined by Justice Ginsburg, concurred in the judgment but found the issue of judicial takings “better left for another day.” [Justice Stevens recused himself.]
In its petition for certiorari, PPL Montana cited to Stop the Beach in asserting that, “[b]ecause [the Montana Supreme Court was] the operative force behind this land transfer [from private ownership to state ownership], it remains to be seen whether property owners in general have a Takings Claim or due process objection to [such a] land grab.” In support of PPL Montana’s petition, the Cato Institute joined the Montana Farm Bureau Federation in contending that the Montana Supreme Court adopted a retroactive rule that destroyed title already accrued in violation of the Takings Clause, calling the Court’s ruling a “thinly-disguised judicial taking.” For its part, the State of Montana maintained that nothing in the Montana Supreme Court’s decision contravened established property law, for PPL Montana’s “deeds and pleadings show it has no riverbed property to take” and the State “has claimed and received compensation for uses of navigable riverbeds for decades.”
It remains to be seen whether the U.S. Supreme Court will address the judicial takings question when it takes up PPL Montana, LLC v. State of Montana in the coming year. The certiorari stage documents are available here. It is anticipated that the parties and their amici will brief the case this summer, with oral argument likely to occur in the winter. Stay tuned to the Land Use Prof Blog for updated information.
It's been a big week at the U.S. Supreme Court; as we get closer to the end of the Term, decisions are rolling out. Some big cases came out yesterday, plus news of what might be a significant land use case in the next Term.
Among yesterday's decisions was American Electric Power Co. v. Connecticut, which held: "The Clean Air Act and the EPA action the Act authorizes displace any federal common-law right to seek abatement of carbon-dioxide emissions from fossil-fuel fired power plants."
Also, Wal-Mart Stores, Inc. v. Dukes et al. This case is not land use per se--it's a class action employment issue--but anyone involved in land use knows that Wal-Mart's fortunes are an important fact in the field. The Wal-Mart Wars involve a distillation of many of the major land use issues in current events. I was also pleased that the opinions extensively cited the expertise of the late Prof. Richard Nagareda, who inspired me as a scholar and teacher. Thanks to Troy Covington for the pointer.
In addition to these and other important opinions from the 2010 Term, the Court also granted cert yesterday to what might turn out to be a very important land use case. We are fortunate to have a timely guest-post on that, which I'll post next (scroll up!).
Sunday, May 29, 2011
David J. Reiss (Brooklyn) has posted Foundations of Federal Housing Policy, a chapter in the book COMMUNITY, HOME, AND IDENTITY, Michael Diamond, Terry Turnipseed, eds., 2011. The abstract:
Federal housing policy is heavily funded and made up of a morass of programs. This book chapter provides a taxonomy of goals for housing policy. The chapter first asks what the aim of housing policy is. In other words, what can a well-designed and executed housing policy achieve? The answer to this question is not at all clear-cut. Some argue that the aim of housing policy is to allow all Americans to live in safe, well-maintained and affordable housing. Others argue for a more modest aim – achieving an income transfer to low- and moderate-income families that mandates that the income transferred is consumed in increased housing. And yet others argue that the main aim is to create a nation of homeowner-citizens, a goal which hearkens back to Jefferson’s idealized “yeoman farmer” and continues through to George W. Bush’s "ownership society."
Beginning with these possibilities, I identify and categorize various "principles" of American housing policy. This is an important exercise because 80 plus years of housing policy; hundreds of billions of dollars; and literally hundreds of different housing programs have all conspired to confuse the essential aims of American housing policy. This chapter seeks to clarify debates surrounding American housing policy as the Obama Administration puts its own stamp on this field.
Looks like a fascinating contribution on a very important topic.
Wednesday, May 25, 2011
Under the title "Million-Dollar Wasteland", the Washington Post has published a series of investigative articles attacking the effectiveness of HOME, HUD's principal source of targeted funding for community-based development of affordable housing. The reporters' data analysis lead them to conclude that more than 700 affordable housing projects granted more than $400 million in HUD funds are "delayed or abandoned." In a posted response, HUD says its own review shows that most of these supposedly failed projects are "actually completed and occupied." Unsurprisingly in this fiscal climate, congressional leaders have called for an investigation into the HOME program (Post follow-up story). No doubt more to follow.
Wednesday, May 18, 2011
Henry Rose (Loyola-Chicago) has posted The Due Process Rights of Residential Tenants in Mortgage Foreclosure Cases, 41 N. M. L. Rev. ___ (forthcoming 2011). Here's the abstract:
The purpose of this article is to explore the rights of tenants who reside in buildings undergoing foreclosure to receive notice and an opportunity to be heard when foreclosures threaten to terminate their tenancies. The federal Protecting Tenants at Foreclosure Act of 2009 (PTFA) will significantly reduce the incidence of residential tenancies being terminated as a result of foreclosure. However, PTFA offers weak procedural protections if the mortgagee or the person who acquires ownership pursuant to a foreclosure seeks to terminate the tenancies of residents in the foreclosed building. In those states that require judicial foreclosures, the Due Process Clause of the Fourteenth Amendment to the United States Constitution should afford tenants faced with termination of their tenancies due to foreclosure with notice and an opportunity to be heard before their tenancies are terminated. In states that allow non-judicial foreclosures, Due Process protections are not likely to be available to tenants due to a lack of state action in the foreclosure process. PTFA should be amended to afford all tenants, including those who reside in non-judicial foreclosure states, with notice and an opportunity to be heard before their tenancies are terminated pursuant to a foreclosure.
May 18, 2011 in Affordable Housing, Federal Government, Financial Crisis, Housing, Landlord-Tenant, Mortgage Crisis, Mortgages, Property, Property Rights, Real Estate Transactions, Scholarship | Permalink | Comments (0) | TrackBack (0)
Sunday, May 15, 2011
Courtesy of Mark Edwards at Property Prof, a link to what looks like an important and troubling report, Million-Dollar Wasteland: HUD's Mismanagement of America's Affordable Housing. Here's Edwards' initial reaction:
Given that Congress is looking for areas to budget-cut, I suspect this series could be a game-changer for HUD. That's unfortunate, because the need for affordable housing in the United States is enormous. No doubt there is waste at HUD. But I suspect that the committed and well-intentioned people at HUD are trapped in a downward spiral: they aren't given enough resources to adequately oversee the projects they fund; the projects they fund are wasteful; so their resources are cut.
Thursday, May 12, 2011
Royal C. Gardner (Stetson) has posted Lawyers, Swamps, and Money: U.S. Wetland Law, Policy, and Politics. It is the introduction to his new book of the same name from Island Press (2011). The abstract:
This paper is the table of contents and introduction to Royal C. Gardner, Lawyers, Swamps, and Money: U.S. Wetland Law, Policy, and Politics (Island Press 2011). The book is an accessible guide to the complex set of laws governing America's wetlands. After explaining the importance of these critical natural areas, the book examines the evolution of federal law, principally the Clean Water Act, designed to protect them.
Readers will first learn the basics of administrative law: how agencies receive and exercise their authority, how they actually make laws, and how stakeholders can influence their behavior through the Executive Branch, Congress, the courts, and the media. These core concepts provide a base of knowledge for successive discussions of:
the geographic scope and activities covered by the Clean Water Act; the curious relationship between the U.S. Army Corps of Engineers and the Environmental Protection Agency; the goal of no net loss of wetlands; the role of entrepreneurial wetland mitigation banking; the tension between wetland mitigation bankers and in-lieu fee mitigation programs; enforcement issues; and wetland regulation and private property rights.
The book concludes with policy recommendations to make wetlands law more effective.
Looks like a new key resource for anyone intersted in wetlands law.
May 12, 2011 in Coastal Regulation, Environmental Law, Environmentalism, Federal Government, Property Rights, Scholarship, Supreme Court, Takings, Water, Wetlands | Permalink | Comments (0) | TrackBack (0)
Tuesday, May 3, 2011
While waiting for the first stack of ungraded final exams to hit my desk this week, I’ve been following developments in a dispute between Illinois and Missouri over flooding along the Mississippi River. Rising floodwaters in the region presented federal government officials with a difficult choice. If they took no action, severe flooding would likely destroy the small town of Cairo, Illinois. If they intentionally broke a downstream levee, they would save Cairo from ruin but would allow floodwaters to devastate 90 homes and 200 square miles of farmland in Missouri. I plan on discussing this simple dilemma to introduce the concept of cost-benefit analysis to my Land Use students this Fall.
The conflict has centered on whether to activate the Birds Point-New Madrid Floodway, a 130,000-acre area in southeast Missouri. In the 1920s and 1930s, the federal government paid private landowners an average of $17 per acre to acquire “flowage rights” throughout the floodway. The acquisition of these rights, authorized under the 1928 Flood Control Act, entitles the federal government to purposely divert water from the main channel of the Mississippi River onto the burdened properties when necessary to prevent flooding elsewhere.
For the past week, Illinois and Missouri have been battling in court over whether the federal government should fill the floodway with water for the first time since 1937 to prevent flooding in Cairo. Missouri’s attorney general filed a complaint in U.S. District Court last week seeking a court order to prevent intentional flooding of the floodway, arguing that it was unjustified and would cause water pollution in violation of the Clean Water Act. The District Court denied Missouri’s request, and Missouri’s appeals to the Eight Circuit Court of Appeals and U.S. Supreme Court also failed. With the legal obstacles cleared, the U.S. Army Corps of Engineers used explosives to blast a two-mile-wide hole in a river levee last night and began floodwaters pouring into the floodway.
According to Bloomberg, the U.S. Government believes that flooding the floodway will cause about $314 million in damage and contamination but will avoid more than $1.7 billion in damage in Cairo and other communities along the river. Based on those figures, landowners within the floodway were the least-cost avoiders in this context and sacrificing their land uses to protect more valuable uses upstream probably maximizes social welfare. Not surprisingly, many of the private individuals residing or working within the 200-square-mile floodway were more focused on their own losses. A local newspaper article suggests that some landowners intend to file a takings claim against the federal government for breaking the levee.
Ironically, the concept of externalities or “spillover” effects takes on a double meaning in this case. The question of whether or not to flood the floodway required government decision makers to consider both the literal and figurative spillover effects of each option!
Sunday, April 24, 2011
Itzchak E. Kornfeld (Hebrew University of Jerusalem) has posted Of Dead Pelicans, Turtles, and Marshes: Natural Resources Damages in the Wake of the BP Deepwater Horizon Spill, Environmental Affairs, Vol. 38, No. 2. The abstract:
This Article posits that in its role as the lead agency among the United States’ natural resources trustees, the National Oceanic & Atmospheric Administration’s piecemeal assessment of natural resources damages, i.e., valuing one dead bird at a time or the death of just a tract of marsh, fails to consider the inherent worth or the value of the entire ecosystem. Valuing the destruction of the entire ecosystem as a result of the BP Deepwater Horizon well blowout is the best way to assess the damage in the Gulf Coast, particularly in south Louisiana. That crude oil spill re-sulted in an estimated 53,000 barrels per day, and a total volume of 4.9 million barrels that despoiled the waters of the Gulf of Mexico and the surrounding shorelines. As a consequence of the spill, thousands of birds, turtles, fish, and marshlands were left to die.
Saturday, April 23, 2011
David J. Reiss (Brooklyn) has posted Fannie Mae, Freddie Mac, and the Future of Federal Housing Finance Policy: A Study of Regulatory Privilege, published in the Alabama Law Review, vol. 61 (2010). The abstract:
The federal government recently placed Fannie Mae and Freddie Mac, the government-chartered, privately owned mortgage finance companies, in conservatorship. These two massive companies are profit-driven, but as government-sponsored enterprises they also have a government-mandated mission to provide liquidity and stability to the United States mortgage market and to achieve certain affordable housing goals. How the two companies should exit their conservatorship has implications that reach throughout the global financial markets and are of key importance to the future of American housing finance policy.
While the American taxpayer will be required to fund a bailout of the two companies that will be measured in the hundreds of billions of dollars, the current state of affairs presents an opportunity to reform the two companies and the manner in which the residential mortgage market is structured. Few scholars, however, have provided a framework in which to conceptualize the possibilities for reform.
This Article employs regulatory theory to construct such a framework. A critical insight of this body of literature is that regulatory privilege should be presumed to be inconsistent with a competitive market, unless proven otherwise. The federal government's special treatment of Fannie and Freddie is an extraordinary regulatory privilege in terms of its absolute value, its impact on its competitors and its cost to the federal government. Regulatory theory thereby clarifies how Fannie and Freddie have relied upon their hybrid public/private structure to obtain and protect economic rents at the expense of taxpayers as well as Fannie and Freddie's competitors.
Once analyzed in the context of regulatory theory, Fannie and Freddie's future seems clear. They should be privatized so that they can compete on an even playing field with other financial institutions and their public functions should be assumed by pure government actors. While this is a radical solution and one that would have been considered politically naive until the recent credit crisis, it is now a serious option that should garner additional attention once its rationale is set forth.
An important and innovative analysis; we're fortunate to have a number of sophisticated takes on the transactional finance system coming out right now.
April 23, 2011 in Affordable Housing, Development, Federal Government, Finance, Financial Crisis, Globalism, History, Housing, Mortgage Crisis, Mortgages, Scholarship | Permalink | Comments (0) | TrackBack (0)
Andrea J. Boyack (George Washington) has posted Laudable Goals and Unintended Consequences: The Role and Control of Fannie Mae and Freddie Mac, forthcoming in the American University Law Review. The abstract:
The United States is struggling to emerge from an era of loose mortgage underwriting standards – lapses in credit analysis that led to origination and securitization of toxic loans. The fallout has been crippling, costing borrowers their homes, investors their money, and the government its taxes.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) passed last summer was the first comprehensive effort to address the problems in the system that led – in sequence – to the subprime crisis, the housing crisis, and the financial crisis. The Dodd-Frank Act, which contains over 2,300 pages of legislation, is very broad as well as very detailed – even though hundreds of rulemakings have yet to completely define its parameters. But this extensive legislation deliberately did not deal with the biggest elephant (or perhaps elephants) in the room: Fannie Mae and Freddie Mac. These government sponsored enterprises (GSEs), behemoths of the secondary mortgage market, are currently in conservatorship and have (so far) cost taxpayers over $130 billion. Yet our current residential mortgage market is utterly dependent upon them for credit and liquidity. With political pressures to stop taxpayer bailouts and the reality of a frozen mortgage market should Fannie Mae and Freddie Mac cease to exist, when it comes to the GSEs, the administration feels damned if they do and damned if they don’t.
For decades, the U.S. mortgage finance system was the envy of the world – the only industrialized nation to have a significant segment of housing costs covered by private capital through a securitization investment system. The United States is the only country to routinely offer homebuyers 30-year fixed-rate pre-payable mortgage loans. Better capital accessibility has made more homeownership opportunities more available to more Americans. The GSEs have performed a vital role in financing the production of rental housing as well. Our real estate capital markets set the gold standard worldwide for what is possible in freeing trapped asset values and increasing the wealth of borrowers and investors alike.
Over the past decade, this system undoubtedly became unhinged – and it is critical to reform its failings. But a complete wind-down of the government sponsored enterprises that are the linchpin of our housing finance system goes too far. Subtracting Fannie Mae and Freddie Mac from the finance equation may very well be market suicide, and the repercussions for borrowers, communities and investors would be dire indeed. Furthermore, this extreme step is unnecessary: the system’s failures can be adequately (and better) addressed within the GSE framework.
Undoubtedly there is still ample dirty “bathwater” to throw out as we reform the mortgage finance market system. But it would be an excruciating mistake to bow to political pressures and throw out the “baby” too. Current and future mortgage borrowers will only be adequately “protected” if they are empowered through access to capital, appropriately constrained by valid underwriting criteria. A well functioning market – rather than political scapegoating – is the best way to emerge from the recession and protect future buyers and investors alike.
This article first discusses the history and purposes of the GSEs and what went wrong with the system that led to the 2008 conservatorship and bailout. With reference to the Obama Administration’s February 2011 Report to Congress, “Reforming America’s Housing Finance Market,” Part II analyzes proposals to reform and wind down the GSEs in light of their likely legal and market impact. Part III offers some general suggestions on better approaches to crafting America’s future mortgage market and advocates for solutions more precisely tailored to remedy apparent systemic problems while achieving the identified policy goals.
One of several interesting articles coming out this year that will add to our knowledge about Fannie, Freddie, and the mortgage crisis. An interesting take on reforming the system from within--check it out.
April 23, 2011 in Federal Government, Finance, Financial Crisis, History, Housing, Mortgage Crisis, Mortgages, Politics, Real Estate Transactions, Scholarship | Permalink | Comments (0) | TrackBack (0)
Monday, April 11, 2011
Blake Hudson (Stetson) has posted Federal Constitutions and Global Governance: The Case of Climate Change, forthcoming in the Indiana Law Journal, Vol 87 (2012). The abstract:
Federal systems of government present more difficulties for international treaty formation than perhaps any other form of governance. Federal constitutions that grant subnational governments exclusive regulatory authority over certain subject matters constrain national governments during international negotiations - a national government that cannot constitutionally bind subnational governments to an international agreement cannot freely arrange its international obligations. At the same time, federal nations that grant subnational governments exclusive control over certain subject matters are seeking to maximize the benefits of decentralization in those regulatory areas. The difficulty lies in striking a balance between global governance and constitutional decentralization in federal systems. For example, recent scholarship demonstrates that U.S. federalism may jeopardize international negotiations seeking to utilize global forest management to combat climate change, since subnational forest management is a constitutional regulatory responsibility reserved for state governments. This article expands that scholarship by undertaking a comparative constitutional analysis of five other federal systems - Australia, Brazil, Canada, India, and Russia. These nations, along with the U.S., are crucial to climate negotiations since they account for 54 percent of the world’s total forest cover. This article reviews the constitutional allocation of forest regulatory authority between national and subnational governments in these nations to better understand potential complications that federal systems present for global climate governance aimed at forests. The article concludes that federal systems that maintain three key elements within their constitutional structure are most capable of agreeing to an international climate agreement that includes forests, successfully implementing that treaty on domestic scales, and doing so in a way that maintains the recognized benefits of decentralized forest management at the local level - 1. national constitutional primacy over forest management, 2. national sharing of constitutional forest management authority, and 3. adequate forest policy institutional enforcement capacity. The article also establishes the foundation for further research assessing how the constitutional structures of federal systems lacking key elements may be adjusted to achieve more effective climate and forest governance.
Prof. Hudson is also part of the group--with Lincoln Davies (Utah), Brigham Daniels (BYU), Lesley McAllister (San Diego), and our guest Hannah Wiseman (Tulsa)--who very recently relaunched the Environmental Law Prof Blog on our Law Professor Blogs Network. Welcome and congrats to them, and check out Prof. Hudson's paper.