Articles

The Community Reinvestment Act and its Critics

Despite the depth and breadth of U.S. credit markets, low- and moderate-income communities and minority borrowers have not historically enjoyed full access to credit. The Community Reinvestment Act (CRA) was enacted in 1977 to help overcome barriers to credit that these groups faced. Scholars have long leveled numerous critiques against CRA as unnecessary, ineffectual, costly, and lawless. Many have argued that CRA should be eliminated. By contrast, I contend that market failures and discrimination justify governmental intervention and that CRA is a reasonable policy response to these problems. Using recent empirical evidence, I demonstrate that over the last decade CRA has enhanced access to credit for low-income, moderate-income, and minority borrowers at relatively low cost, consistent with the theory that CRA is helping to overcome market failures. I argue that the form of CRA’sbased approaches, on grounds of both efficiency and legitimacy. Comparing CRA to other credit market regulations and subsidies, I argue that CRA is a reasonably effective response to market failures and should not be abandoned. In sum, contrary to previous legal scholarship, I contend that CRA is justified, has resulted in progress, and should be retained.

How War Affects Only Non-War Cases

Does the U.S. Supreme Court curtail rights and liberties when the nation’s security is under threat? In hundreds of articles and books, and with renewed fervor since September 11, 2001, members of the legal community have warred over this question. Yet, not a single large-scale, quantitative study exists on the subject. Using the best data available on the causes and outcomes of every civil rights and liberties case decided by the Supreme Court over the past six decades and employing methods chosen and tuned especially for this problem, our analyses demonstrate that when crises threaten the nation’s security, the justices are substantially more likely to curtail rights and liberties than when peace prevails. Yet paradoxically, and in contradiction to virtually every theory of crisis jurisprudence, war appears to affect only cases that are unrelated to the war. For these cases, the effect of war and other international crises is so substantial, persistent, and consistent that it may surprise even those commentators who long have argued that the Court rallies around the flag in times of crisis. On the other hand, we find no evidence that cases most directly related to the war are affected.

We attempt to explain this seemingly paradoxical evidence with one unifying conjecture. Instead of balancing rights and security in high stakes cases directly related to the war, the justices retreat to ensuring the institutional checks of the democratic branches. Since rights-oriented and process-oriented dimensions seem to operate in different domains and at different times, and often suggest different outcomes, the predictive factors that work for cases unrelated to the war fail for cases related to the war. If this conjecture is correct, federal judges should consider giving less weight to legal principles established during wartime for ordinary cases, and attorneys should see it as their responsibility to distinguish cases along these lines.

Reconsidering the Evolution of Private Property

One of the most enduring questions about private property is why it develops. Strongly influenced by a short article by economist Harold Demsetz, property scholars recently have analyzed the evolution of private property in economic and social terms, and described it as a response to factors such as changes in relative prices, measurement costs, and the size and heterogeneity of user groups. In this Article, Professor Katrina Wyman argues that Demsetzian-inspired accounts of the evolution of private property tend to neglect the role of the state in property rights formation. Building on the extensive scholarship about the evolution of property rights, she emphasizes the need to take seriously the implications of the political process by which private property often is formed.

To underscore her theoretical argument about the evolution of private property, Wyman also offers a case study of contemporary property rights formation. For over six decades, an international movement has been underway to enclose the oceans, including marine fisheries. Drawing on original research, Wyman examines why individual transferable quotas and similar instruments have been slow to develop in U.S. coastal fisheries in federal waters since national jurisdiction over fisheries was extended to 200 miles from the shore in 1976.

In closing, Wyman underscores the richness of Demsetz’s pioneering account of private property and the scholarship that it has spawned. But she also suggests that there remains a large gap between how private property actually evolves and many of the prevailing theoretical understandings of the development of property rights. She argues in turn that filling this gap requires the development of a more robust positive theory of the evolution of private property that takes into account the political process through which private property often is formed, and more systematic empirical research into the development of property rights.

For the past half-century, legal and policy efforts to address unequal educational opportunity have largely focused on disparities between schools in the same district or between districts within a state. But the most substantial component of educational inequality across the nation is not disparities within states but disparities among states, a problem long neglected in constitutional law and public policy. In a companion article, Professor Liu argues that the Fourteenth Amendment obligates Congress to ensure that every child has adequate educational opportunity to achieve equal national citizenship. This Article examines the empirical and policy dimensions of the problem of interstate inequality. It analyzes disparities across states in terms of educational standards, resources, and outcomes, showing that the disparities disproportionately burden children who are poor, minority, or limited in English proficiency. Further, it demonstrates that interstate disparities in school spending have more to do with the ability of states to finance education than with their willingness to do so, highlighting the need for a robust federal role in promoting greater equality. Yet federal education policy has done little to ameliorate interstate disparities in education standards and resources; in fact, significant elements of current policy tend to reinforce rather than reduce such disparities. The Article thus urges Congress to pursue, within an existing framework of cooperative federalism, reforms that create national education standards and an expanded federal role in school finance to serve as building blocks of a national policy to guarantee all children educational adequacy for equal citizenship.

The crime of fraud has been underdescribed and undertheorized, both as a wrong and as a legal prohibition. These deficits contribute to contention and uncertainty over the practice of punishing white-collar crime. This Article provides a fuller account of criminal fraud, describing fraud law’s open-textured, common law, and adaptive qualities and explaining how fraud law develops along its leading edge while limiting violence to the legality principle. The legal system has a surprising, often overlooked methodology for resolving whether to treat novel commercial behaviors as frauds: Courts and enforcers often conduct an ex post examination of whether an actor’s mental state included “consciousness of wrongdoing.” The Article summarizes this methodology’s history and contemporary applications before moving to the question of its justification. Among possible normative justifications for this unusual fault methodology, one fits best and involves the fewest complications: An actor’s pursuit of a novel course of conduct (that involves, as with all fraud, some deception causing or threatening harm), in the face of actual knowledge that prevailing norms reject that behavior, renders the actor equivalently blameworthy to an actor who intentionally pursues a course of conduct that the law has previously described as fraud. The Article concludes that ex post decisionmakers should continue to apply this methodology, despite its imperfections; that importing the methodology into fraud’s conduct rules would be possible but also perilous; and that the methodology identifies the subset of frauds for which criminal sanctions are justified if one purpose of sanctioning fraud is to assess blame.

“Welfare polls” are survey instruments that seek to quantify the determinants of human well-being. Currently, three welfare polling formats are dominant: contingent valuation (CV) surveys, quality-adjusted life year (QALY) surveys, and happiness surveys. Each format has generated a large, specialized, scholarly literature, but no comprehensive discussion of welfare polling as a general enterprise exists. This Article seeks to fill that gap.

Part I describes the trio of existing formats. Part II discusses the current and potential uses of welfare polls in governmental decisionmaking. Part III analyzes in detail the obstacles that welfare polls must overcome to provide useful well-being information, and concludes that they can be genuinely informative. Part IV synthesizes the case for welfare polls, arguing against two types of challenges: the revealed-preference tradition in economics, which insists on using behavior rather than surveys to learn about well-being; and the civic republican tradition in political theory, which accepts surveys but insists that respondents should be asked to take a “citizen” rather than “consumer” perspective. Part V suggests new directions for welfare polls.

This is an Article about using reputation-tracking technologies to displace criminal law enforcement and improve the tort system. The Article contains an extended application of this idea to the regulation of motorist behavior and examines the broader case for using technologies that aggregate dispersed information in various settings where reputational concerns do not adequately deter uncooperative behavior.
The Article proposes a compulsory “How’s My Driving?” program for all motor vehicles. Although more rigorous study is warranted, the initial data from voluntary “How’s My Driving?” programs is quite promising, suggesting that the use of “How’s My Driving?” placards on commercial trucks is associated with fleet accident reductions ranging from 20% to 53%. By delegating traffic regulation to the motorists themselves, the state might free up substantial law enforcement resources, more effectively police dangerous and annoying forms of driver misconduct, reduce information asymmetries in the insurance market, and alleviate road rage and driver frustration.

The Article addresses obvious objections to the displacement of criminal traffic enforcement with a system of “How’s My Driving?”-based civil fines. Namely, it suggests that using the sorts of feedback algorithms that eBay and other reputation tracking systems have employed can ameliorate the problems associated with false and malicious feedback. The Article also explains why driver distraction costs would be manageable and addresses privacy and due process implications of the proposed regime.

The core strategy animating “How’s My Driving?” for Everyone is to use technology to transform loose-knit environments, where reputation often fails to constrain antisocial behavior, into close-knit environments, where reputation constrains misbehavior more effectively. Using such technologies, society can replace state policing with citizen policing and laws with norms. The Article concludes by examining various nondriving applications of feedback technologies to help regulate the conduct of soldiers, police officers, hotel guests, sports spectators, and participants in virtual worlds, among others.

This Article argues that the Fifth Amendment’s Takings Clause should apply differently to local governments than to higher levels of government. The Takings Clause is at the heart of an increasingly contentious debate between property rights advocates and proponents of deference to government regulation. More often than not, the terms of the debate have focused on a traditional economic account of the Takings Clause. Property rights advocates argue that expanding the compensation requirement is necessary to force the government to internalize the costs of its actions, ensuring that regulations will occur only where benefits exceed costs. Others, however, argue that governments respond to political and not monetary costs, so that a compensation requirement will not influence government decisionmaking in any predictable way. Public choice theorists, in particular, argue that regulations are more likely to result from special interest group rent-seeking, while costs are passed on to taxpayers generally. Where the public choice theory critique applies, compensation will not serve as a meaningful check on regulatory incentives.
This Article argues that the strength of the public choice critique rises and falls with the level of government. Local governments are largely majoritarian and specifically responsive to local homeowners. Because local governments also receive most of their revenue from local property taxes, forcing local governments to compensate under the Takings Clause will, in fact, force them to internalize the costs of their actions. However, local governments’ regulatory incentives are subject to their own specific distortions. Local governments are risk averse, so the prospect of a large takings judgment may over-deter them from acting. Local government regulations also tend to impose significant positive and negative externalities on neighboring communities. This Article therefore proposes (1) ratcheting down compensation for takings by local governments to account for their risk aversion, and (2) creating
a form of intergovernmental liability to allow local governments to capture the positive externalities of their actions and to force them to pay for the negative externalities.

Over the past decade, drug makers have settled patent litigation by making large payments to potential rivals who, in turn, abandon suits that (if successful) would increase competition. Because such “pay-for-delay” settlements postpone the possibility of competitive entry, they have attracted the attention of antitrust enforcement authorities, courts, and commentators. Pay-for-delay settlements not only constitute a problem of immense practical importance in antitrust enforcement, but also pose a general dilemma about the proper balance between innovation and consumer access.
This Article examines the pay-for-delay dilemma as a problem in regulatory design. A full analysis of the relevant industry-specific regulatory statute, the Hatch-Waxman Act, yields two conclusions. First, certain features of the Act widen, often by subtle means, the potential for anticompetitive harm from pay-for-delay settlements. Second, the Act reflects a congressional judgment favoring litigated challenges, contrary to arguments employed to justify these settlements. These results support the further conclusion that pay-for-delay settlements are properly condemned as unreasonable restraints of trade. This analysis illustrates two mechanisms by which an industry-specific regulatory regime shapes the scope of antitrust liability: by creating (or limiting) opportunities for anticompetitive conduct as a practical economic matter, and by guiding as a legal matter the vigor of antitrust enforcement in addressing that conduct.

In practice, the problem of law enforcement is half a matter of what the government does to catch violators and half a matter of what violators do to avoid getting caught. In the theory of law enforcement, however, although the state’s efforts at “detection” play a decisive role, offenders’ efforts at “detection avoidance” are largely ignored. Always problematic, this imbalance has become critical in recent years as episodes of corporate misconduct spur new interest in punishing process crimes like obstruction of justice and perjury. This Article adds detection avoidance to the existing theoretical frame with an eye toward informing the current policy debate. The exercise leads to several conclusions. First, despite recent efforts to strengthen laws governing obstruction and perjury, sanctioning is relatively inefficacious at discouraging detection avoidance. Sanctions send a mixed message to the offender: Do less to avoid detection, but to the extent you still do something, do more to avoid detection of your detection avoidance. The Article argues that detection avoidance is often more effectively deterred through the structural design of evidentiary procedure (inclusive of investigation). Specifically advocated are devices that exploit the cognitive psychological shortcomings of individuals and the sociological fragility of their collusive arrangements.