Volume 103

Targeting Detached Corporate Intermediaries in the Terrorist Supply Chain: Dial 2339/13224 for Assistance?

The United States has for decades faced persistent and evolving threats from highly agile and adaptable terrorist organizations. Recognizing the need for more robust domestic counterterrorism efforts in the early 1990s, the U.S. government has since made significant use of the legal system to disrupt inchoate plots and degrade terrorists’ support structures. Among the tools most heavily used on this front have been the material support statutes and the International Emergency Economic Powers Act (“IEEPA”), which aim to deprive terrorists of necessary resources by targeting those who support or do business with them. Though used against hundreds of individuals to date, there has been a dearth of organizational prosecutions in this realm. Recognizing the crucial facilitating role corporate actors often play, the Department of Justice (“DOJ”) has long targeted neutral intermediaries to get at underlying crime, from tax evasion to drug trafficking. Recent cases suggest the DOJ is increasingly comfortable pursuing entities that do business with bad actors, including through novel applications of existing laws.

This Note argues that the material support statutes and IEEPA can and should be applied against corporate actors that do business with terrorists, as a means of both disrupting the terrorist “supply chain” and incentivizing greater private sector cooperation. Examining in particular the potential for prosecution of social media and content-hosting companies, encrypted messaging providers, and nontraditional financial intermediaries exploited by terrorists, this Note argues that a credible and carefully wielded threat of terrorism-related charges would be an important addition to prosecutors’ toolkits where appeals to good corporate citizenship fall flat. An effective all-tools counterterrorism strategy requires imagination and adaptation. This Note argues the material support statutes and IEEPA are tools that can be brought to bear against those that play the role of willing supporter or are otherwise indifferent to the harm they facilitate.

Religion Is Special Enough

In ways almost beyond counting, our legal system treats religion differently, subjecting it both to certain protections and certain disabilities. Developing the specifics of those protections and disabilities, along with more general theories tying the specifics together and justifying them collectively, has long been the usual stuff of debate among courts and commentators.

Those debates still continue. But in recent years, increasingly people have asked a slightly different question—whether religion should be singled out for special treatment at all, in any context, for any purpose. Across the board, but especially in the context of religious exemptions from generally applicable laws, many have come to doubt religion’s distinctiveness. And traditional defenses of religion’s distinctiveness have been rejected as unpersuasive or religiously partisan.

This Article offers a defense of our legal tradition and its special treatment of religion. Religious freedom can be justified on religion-neutral grounds; it serves the same kinds of values as other rights (like freedom of speech). And while religion as a category may not perfectly correspond to the underlying values that religious freedom serves, that kind of mismatch happens commonly with other rights and is probably inevitable. Ultimately, religious liberty makes sense as one important liberty within the pantheon of human freedoms. Religion may not be uniquely special, but it is special enough.

Information Gaps and Shadow Banking

This Article argues that information gaps—pockets of information that are pertinent and knowable but not currently known—are a byproduct of shadow banking and a meaningful source of systemic risk. It lays the foundation for this claim by juxtaposing the regulatory regime governing the shadow banking system with the incentives of the market participants who populate that system. Like banks, shadow banks rely heavily on short-term debt claims designed to obviate the need for the holder to engage in any meaningful information gathering or analysis. The securities laws that prevail in the capital markets, however, both presume and depend on providers of capital to perform these functions. In synthesizing insights from diverse bodies of literature and situating those understandings against the regulatory architecture, this Article provides one of the first comprehensive accounts of how the information-related incentives of equity and money claimants explain many core features of securities and banking regulation.

The Article’s main theoretical contribution is to provide a new explanation for the inherent fragility of institutions that rely on money claims. The existing literature typically focuses on either coordination problems among depositors or information asymmetries between depositors and bank managers to explain bank runs. This Article provides a third explanation for why reliance on short-term debt leads to fragility, one which complements the established paradigms. First, information gaps increase the probability of panic by increasing the range of signals that can cast doubt on whether short-term debt that market participants had been treating like “money” remain sufficiently information insensitive to merit such treatment. Second, information gaps impede the market and regulatory responses that can dampen the effects of a shock once panic takes hold. Evidence from the 2007–2009 financial crisis is consistent with the Article’s claims regarding the ways shadow banking creates information gaps and how those gaps contribute to fragility.

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