Dodd-Frank turns four today. Proponents marketed the law as the response to the financial crisis of 2007 to 2009, even though it included many unrelated items and left out many matters central to the crisis. It is not surprising that four years later, Dodd-Frank is still flawed. A recent poll conducted on behalf of Better Markets found that sixty percent of the respondents support "stricter federal regulation on the way banks and other financial institutions conduct their business." Only ten percent of survey respondents think the federal government is doing a good job regulating the financial industry using the powers it has already, so additional authority for the government is not the answer. A more effective approach would be to allow the markets to do what they do best--allocate resources to their most productive use and punish firms that are not delivering products and services that people want and need at prices they are willing to pay. Government regulations often impede these healthy market functions. An intense government regulatory regime, such as the one embodied in Dodd-Frank, comes with deep government relationships with large financial institutions and implicit or explicit guarantees that the government will be there to clean up those firms' meeses. Taxpayers bear the cost of this regulatory regime, but so do the consumers and Main Street companies that financial markets are supposed to serve.
July 2014 Archives
By Olivia Davidson
Summer Intern, Manhattan Institute's Center for Legal Policy
Two weeks ago, supposed baseball fan Andrew Rector filed a defamation lawsuit against Major League Baseball, ESPN, commentators Dan Shulman and John Kruk, and the New York Yankees for $10 million. Rector, who was caught sleeping on camera during a Yankees-Red Sox game on April 13th, claims that the commentators "unleashed an avalanche of disparaging words" commenting on his weight and ability to sleep through a home run.
Defamation is not a crime, but a tort, and for a statement to qualify as slander (a defamatory statement that is spoken), the following elements must be proven, writes attorney Emily Doskow:
"Published" means that a third party heard or saw the statement...
A defamatory statement must be false -- otherwise it's not considered damaging. Even terribly mean or disparaging things are not defamatory if the shoe fits...
The statement must be "injurious". Those suing for defamation must show how their reputations were hurt by the false statement -- for example, the person lost work; was shunned by neighbors, friends, or family members; or was harassed by the press...
"Unprivileged": Lawmakers have decided that in [some] situations, which are considered "privileged," free speech is so important that the speakers should not be constrained by worries that they will be sued for defamation...
In Rector's case, the alleged slander is evidently published and unprivileged, though whether or not it was injurious and false remains to be determined by the Court. According to a NY Times article,
Mr. Rector maintains the announcers used words like 'fatty' and 'stupid' to describe him, but neither Mr. Shulman nor Mr. Kruk uttered such insults in the clip [of their commentary]. It is unclear whether they commented later in the game on Mr. Rector's lengthy nap, implying perhaps the falsehood lies in Rectors idiosyncratic and frequently grammatically incorrect complaint.
Undeniably, following the upload of the clip to Youtube by MLB, Rector was subject to public ridicule, being called 'Sleeping Beauty' by one Twitter user. Rector goes as far as to say he has "suffered substantial injury" to his "character and reputation," as well as "mental anguish, loss of future income and loss of earning capacity." Rector's mother supported his claims saying he had missed work because of the public scorn he had experienced and that "everyone made fun of him everywhere he went."'
Rector is also suing for intentional infliction of emotional distress which requires an intentional or reckless act, outrageous conduct, causation and sufferance of emotional distress by the plaintiff.
As Texans for Lawsuit Reform wrote, "Lampooning the lawsuit industry has become an industry unto itself." We'll have to see if Rector has what it takes to make it in this business and win his plea.
Now that the Supreme Court's flurry of opinions for the last term is out, we can start thinking ahead to the new term. The Court will consider a case based on a provision of the Sarbanes-Oxley Act, which was the legislative response to the Enron-era accounting scandals. The law is now being used to pursue fish destruction--a type of fraud that most certainly was not within Sarbanes-Oxley's intended reach.
The ruling in Erica P. John Fund v. Halliburton got lost among the other opinions released at the end of the Supreme Court's term. The case had already been to the Supreme Court once on a separate issue. This iteration presented the Court with the opportunity to fundamentally rethink its own role in generating securities class actions. Instead, the Court made only peripheral changes that slightly limit the leverage that class action attorneys have against a corporation after a drop in its stock price.