Industry Capture

The phenomenon of regulatory agencies being captured by the industries that they are supposed to requlate has been an open secret for years. A case in point is found in this Village Voice report on how Andrew Cuomo's policies at HUD pushed Fannie Mae and Freddy Mac into risky loans. The story describes the amazing incestuous relationships of family members and campaign supporters at all the key players. It also describes how Cuomo pushed the mortgage giants into risky loans in the interest of racial justice, but also because high end mortgage companies didn't want the competition.

Then there are some stunning examples of policies that worked against economic justice:

Cuomo's fellow attorney generals in Illinois, California, and Massachusetts have filed lawsuits against Countrywide and other mortgage companies in the current crisis. And those lawsuits are aimed in part at the sucker punch called "yield-spread premium" that was thrown at millions of households who got mortgages from brokers. Brokers have taken over the origination market in recent years by aggressively advertising, and they decide which lenders get the business.

Cuomo hasn't sued anybody over these outrageous payments to brokers—which are based on the "spread" between the high interest rate that brokers persuade unwary borrowers to accept and the par or going rate they would ordinarily have to pay. If Cuomo did sue, it might make for an awkward moment or two in court, since it was Cuomo who issued a rule in 1999 that dozens of federal courts have since found legalized the yield-spread premiums. He was the first HUD secretary to say they were "not illegal per se," nullifying most of the 150 class-action lawsuits against them filed across the country.

What is missing from the Village Voice report is the contribution that the Bush administration's horrendous bankruptcy reform act made to the mortgage problem. The "reform" put a premium on protecting credit card companies from their own foolishness in giving credit to everyone at the cost of allowing families to lose their homes.

I'm a conservative and, yet, I think that the bankruptcy reform act was foolish and served the interest of financial companies at the expense of the public good. I'm not alone as Cranky Greg points out:

AIG is about to go under, and the Feds rescue AIG. Just a few short years ago, this Congress passed an onerous bankruptcy bill that makes it tougher for Americans to discharge debts through bankruptcy, largely at the behest of the big banks who recklessly issue credit cards. So if you aren't a big financial company, and run into trouble, you can't get much help with bankruptcy anymore. But if you are AIG and act irresponsibly, you get rescued by the Feds using money from Americans who can't even get a fair shake and a fresh start in Bankruptcy court.

How 'bout them apples?

Ironic.

The Shape of Things to Come

Sharia courts established in England.

They are being set up under the rubric of "arbitration", but the novelty is the application of foreign legal principles to a sub-community of the English people.

Not good.

"A Cloud No Bigger than a Man's Fist"

The Widget and the Wadget and I spent the latter part of last week in San Francisco doing the tourist thing.

San Francisco is a wonderful city full of great restaurants, views and activities. We did a harbor cruise, toured the submarine Pampinito, walked to Coit Tower, rode the cable cars, did Dim Sum in Chinatown and a bunch of other stuff.

Great fun.

It's too bad that it's hostile territory.

Mark Shea points to this article about oral arguments on an appeal that challenged San Francisco's resolution two years ago that officially labeled the Catholic church's moral teachings on homosexuality as "insulting to all San Franciscans," "hateful," "defamatory," "insensitive" and "ignorant." The article continues:

It said of the church's teaching on homosexuality, "Such hateful and discriminatory rhetoric is both insulting and callous, and shows a level of insensitivity and ignorance which has seldom been encountered by this Board of Supervisors."

As WND reported, Resolution 168-08 was an official response to the Catholic Church's ban on adoption placements into homosexual couple households, issued by Cardinal William Levada of the Congregation for the Doctrine of the Faith at the Vatican.

The board's resolution urged the city's local archbishop and the Catholic Charities of the Archdiocese of San Francisco to defy the Vatican's instructions, concluding with a spiteful reminder that the church authority that issued the ban was known 100 years ago as "The Holy Office of the Inquisition."

The resolution also took a shot at Levada, the former archbishop of San Francisco, saying, "Cardinal Levada is a decidedly unqualified representative of his former home city, and of the people of San Francisco and the values they hold dear."

And:

The anti-Catholic diatribe had been challenged in U.S. District Court on similar grounds, but District Judge Marilyn Hall Patel ruled in favor of the city, saying, in essence, the church started it.

She wrote in her decision, "The Congregation of the Doctrine of the Faith provoked this debate, indeed may have invited entanglement" for instructing Catholic politicians on how to vote. This court does not find that our case law requires political bodies to remain silent in the face of provocation."

She ruled that the city's proclamation was not entangling the government in church affairs, since the resolution was a non-binding, non-regulatory announcement.

Since no law was enacted, she ruled, city officials – even in their official capacity as representatives of the government – can say what they want.

"It is merely the exercise of free speech rights by duly elected office holders," she wrote.

Richard Thompson, president and chief counsel of the Thomas More Law Center, which is appealing the District Court decision on behalf of the Catholic League for Religious and Civil Rights and two Catholic residents of San Francisco, disagrees with Patel's decision.

"Sadly, the ruling itself clearly exhibited hostility toward the Catholic Church," he said in a statement. "The judge in her written decision held that the Church 'provoked the debate' by publicly expressing its moral teaching, and that by passing the resolution the City responded 'responsibly' to all of the 'terrible' things the Church was saying."

So, San Francisco believes that it is acceptable to single out a particular religious group among its citizens to describe them as "other", "foreign" and "un-San Franciscan"?

The hypocrisy is staggering given that these folks normally think that it is out of bound to call someone "un-American."

Patel's decision is further indication that there really is a "cloud" on the horizon. In Romer v. Colorado, the Supreme Court held that Colorado voters could not pass a state referendum forbidding the extension of affirmative action laws to homosexuals. That statute was struck down on the grounds that Colorado has unconstitutionally stigmatized one group to their injury.

But, heck, if its just Catholics and not the specially protected class of "homosexual that gets stigmatized, it seems to be all good. Chalk this up to the emerging trend of modern jurisprudence that defines "super-constitutional right" is abortion and the "super-protected class" is "homosexuals, which strange since neither is mentioned in the Constitution, but religion is.

Best of luck to the Thomas More Law Center.