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Deregulation and the Subprime Crisis

Many popular and academic commentators identify deregulation as a cause of the 2007–2008 financial crisis. Some argue that the Gramm-Leach-Bliley Act (“GLBA”) and the Commodity Futures Modernization Act of 2000 (“CFMA”) removed barriers to risk-taking by commercial and investment banks, while others contend that these statutes limited regulators’ ability to respond to changing market conditions. A more general argument is that stringent regulation of banking from the New Deal to the late 1970s produced a quiet period in which there were no systemic banking crises, but subsequent deregulation led to crisis-prone banking.

This Article examines the deregulation hypothesis in detail and concludes that it is incorrect. The GLBA and the CFMA did not remove existing restrictions that would have prevented the principal practices implicated in the subprime crisis, but instead codified the status quo. Although the two statutes prevented regulators from banning affiliations between commercial banks and securities firms and curbing over-the-counter derivatives markets, those actions would likely not have prevented the crisis or significantly reduced its severity.

The Article further argues that the era of stable banking was the result of a benign and predictable macroeconomic environment, not regulation of deposit interest rates. That era ended with the severe inflation and interest rate volatility of the 1970s. Policymakers had to either ease restrictions on the interest rates banks could pay their depositors or force savers to lend to banks at negative real rates of return. Interest rate risk caused both bank failures and bank deregulation.

Textualism and Statutory Precedents

This Article seeks to shed light on a little-noticed trend in recent U.S. Supreme Court statutory interpretation cases: the Court’s textualist Justices—or at least some subset of them—have proved remarkably willing to abandon stare decisis and to argue in favor of overruling established statutory interpretation precedents. This is especially curious given that statutory precedents are supposed to be sacrosanct. Congress, rather than the Court, is the preferred vehicle for correcting any errors in the judicial construction of a statute, and courts are to overrule such constructions only in rare, compelling circumstances. What, then, accounts for the textualist Justices’ unabashed willingness to overrule statutory precedents in recent years? And how can this practice be reconciled with textualism’s core aims of promoting clarity and stability in the law?

This Article advances a threefold thesis. First, it argues that the textualist Justices view precedents that create a test for implementing a statute (e.g., the “motivating factor” test for Title VII violations) as different from ordinary text-parsing statutory interpretation (e.g., “labor” means “manual labor”). More specifically, textualist jurists regard what I call “implementation test” precedents as akin to common-law decision-making, rather than statutory interpretation—and seem to have created a de facto “implementation-test exception” to the heightened stare decisis protection normally afforded statutory precedents. Second, the Article links textualist Justices’ proclivity for overruling to an oft-unspoken predicate assumption of textualism—that is, that there is a singular “correct answer” to every question of statutory interpretation. This assumption may make it especially difficult for textualist jurists to accept the idea that an incorrect statutory interpretation should be left in place simply because it was first in time. Last, the Article notes that some textualist jurists see themselves as “revolutionaries,” whose function is to overthrow the old, corrupt jurisprudential order, including outmoded precedents reached through the use of illegitimate, atextual interpretive resources.

Ultimately, the Article both supports and critiques textualist Justices’ approach to statutory precedents. On the one hand, it argues that a relaxed form of stare decisis for implementation test precedents makes sense for many reasons, as long as special deference is given to implementation tests that Congress has expressly endorsed. At the same time, it rejects textualists’ attempts to overrule non-implementation test precedents based on simple disagreement with the original interpretation.

“Don’t Elect Me”: Sheriffs and the Need for Reform in County Law Enforcement

Most state constitutions require that counties have an elected sheriff who serves as the county’s chief law enforcement officer. The sheriff’s office is over a thousand years old and today has strong cultural associations with independence and populism. Ironically, however, the sheriff’s office has not been studied in the legal literature on policing as an entity separate and distinct from municipal police departments. This Note attempts to remedy that deficiency by identifying the unique pathologies of the American sheriff and proposing dramatic reforms to county law enforcement.

Although his elected status creates a perception that the sheriff is a local county officer, this Note argues that this perception is inaccurate because the sheriff is independent of the county and is actually, in many important ways, an agent of the state. The sheriff’s hybrid state-and-local status creates misalignments between different levels of government that obstruct efforts to hold the sheriff accountable.

County law enforcement is in need of reform. This Note argues that elections are not functioning as an effective accountability mechanism and that county government must be given power to act as a check on county law enforcement. This Note further argues that, although the sheriff in his current form is emphatically not the officer for the job, the county is actually the best level of government at which to provide policing. This Note discusses the merits of two models of achieving consolidation of policing to the county level, with insights gleaned from America’s experiences with sheriffs.

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