The Constitution is based on popular sovereignty. But who are the People? Two hundred and twenty six years after the ratification of the Constitution, the answer to this question is still debated. This Note jumps into the fray, closely examining the Constitution itself and the history surrounding its adoption in order to reverse-engineer a coherent theory of American popular sovereignty as it was understood at the time of ratification and the adoption of the Bill of Rights. Did the state peoples exist as sovereigns before the Constitution? If yes, did the Constitution consolidate them into one unitary national people? If not, is there a national people in addition to the state peoples? In short, there is a national people, but it coexists with the sovereign state peoples. Furthermore, the national people must be interpreted through a lens of state peoples—the People is national in scope and importance, but it is defined in reference to the state peoples. The reservoir of reserved powers—those uses of governmental authority that are not expressly mentioned in the text of the Constitution—defaults to the state level. This balance of peoples means that the American system is one of limited sovereignty. Neither the federal nor the state governments can eliminate or alter the other; they reinforce each other in a structure that presupposes its perpetuity. Dual popular sovereignty is the essence of federalism, and it has broad implications for the fundamental distribution of power between the federal government and the states.
Note
Glass Versus Steagall: The Fight over Federalism and American Banking
In 1933, Congress passed the Glass-Steagall Act as a response to the Great Crash of 1929. Two basic responses to the banking crisis were on the table in the weeks prior to the Act’s passage: unification of the national banking system under federal control or preservation of the state unit banking system augmented by a full federal guarantee of deposits made in every American bank. The conflict between these two alternatives represented the final episode in the nearly 150-year-long struggle between state and federal authorities for control over the banking system.
The competition dated back to 1791 and posed the question of how the values and structure of American republican federalism should be engrafted onto the banking system. This Note begins by arguing that the answer, in 1791, was competitive dual federalism. It frames this federal-versus-state competition and then presents the two broad ideologies that drove the struggle, typified by Senator Carter Glass and Representative Henry Steagall. Next, this Note presents the so-called Vandenberg Amendment—adopted as part of the Glass-Steagall Act—as representative of a long-overlooked model of cooperative federalism for banking.
This Note concludes by suggesting that, contrary to the traditional scholarly account, the Glass-Steagall Act as shaped by the Vandenberg Amendment represented a fundamental change to the existing American banking structure, reversing the choice made in 1791 by rejecting a competitive dual federalism model in favor of a cooperative federalism one.
A Market-Based Tool to Reduce Systematic Undervaluation of Collateral in Residential Mortgage Foreclosures
This Note addresses the problem of the systematic undervaluation of collateral in residential mortgage foreclosures. Public policymakers have been wrestling with this problem for nearly a century. As a result of the perceived flaws in the typical foreclosure auction, public authorities have tried to supplement the auctions with various rules intended to encourage higher sale prices or to protect against substantial undervaluation. While each of the supplemental devices promulgated by public policymakers has its strengths and weaknesses, none of them has completely solved the undervaluation problem.
This Note uses the underlying principles of credit bidding in bankruptcy proceedings to develop a new market-based tool that can deter the systematic undervaluation of collateral in residential mortgage foreclosures. Deficiency forfeiture sales options—the tool developed in this Note—target the two main problems with foreclosure auctions: (1) accurately determining the fair market value of the underlying property and (2) incentivizing lenders to bid that value at the auction. Similar to credit bidding, the new tool proposed by this Note will result in a transfer of wealth from lenders to borrowers, but only if lenders bid or collude with or tolerate third-party bidders who bid below the fair market value of the underlying property at the foreclosure auction. The threat of this permanent transfer of wealth from the lender to the borrower should be an effective and efficient deterrent of systematic undervaluation of collateral in residential mortgage foreclosures, just as the threat of a transfer of value from a bankrupt estate to a secured creditor as a result of credit bidding deters undervaluation in bankruptcy proceedings.