BRUCE FEIN: Regulatory state endangers civil liberties

Category: Short-term Lending Published: Saturday, 27 February 2016 Written by Super User

President Richard M. Nixon contemplated ending the television licenses of The Washington Post, which were subject to renewal by the Federal Communications Commission, to retaliate against its Watergate reporting:

The main thing is the Post is going to have damnable, damnable problems out of this one, the president told John Dean on the Nixon tapes in September 1972. They have a television station And theyre going to have to get it renewed Well, the game has to be played awfully rough.

The newspaper was not deterred largely because Nixons political standing plunged and the Senate Watergate Committee began its own investigation which culminated in his resignation.

Shortly after 9/11, ATamp;T with alacrity complied with the National Security Agencys request to collaborate in the warrantless and legally dubious Stellar Wind program. On the Presidents say-so alone, the NSA intercepted communications when it was suspected that one communicant was Al Qaeda, an Al Qaeda affiliate, a member of an Al Qaeda affiliate, or working to support Al Qaeda and one of the communicants was outside the United States. ATamp;Ts eager cooperation at the expense of customer privacy was predictable. Its rates, mergers, and spectrum needs are subject to regulation by the Federal Communications Commission. And it had lucrative contracts with the federal government that it did not want to place at risk.

Qwest was the sole telecommunications company that resisted assisting Stellar Wind. It was a shadow of ATamp;T. According to CEO Joe Nacchio, Qwest lost a valuable NSA contract because of its non-cooperation.

The Executive Branch protected the phone companies for their Stellar Wind assistance by championing the FISA Amendments Act of 2008 that retroactively granted them immunity from the many pending civil suits seeking damages for their alleged complicity in constitutional or statutory violations.

President George W. Bushs infamous TARP program is another instance of de facto regulatory coercion of the private sector.

The date was Oct. 13, 2008. On one side of the table sat Treasury Secretary Henry Paulson, joined by Federal Reserve Chairman Ben Bernanke and Federal Deposit Insurance Corp. Chairman Sheila Blair a Murderers Row of bank regulators. On the other side sat the chief executives of the nations nine largest banks, with Bank of America at one end and Wells Fargo amp; Co. at the other.

During the meeting, each banker was handed a term sheet detailing how the federal government would buy stakes in their banks ($125 billion collectively in preferred stock), and impose new restrictions on executive pay and dividends. Secretary Paulsons talking points included the veiled fist observation that the investments would be forthcoming in any circumstance, and that it would be imprudent to opt out of the program because doing so would leave you vulnerable and exposed.

When the meeting ended, mirabile dictu, all the bankers signed on.

The Food and Drug Administration routinely violates the free speech advertising rights of pharmaceutical companies. The First Amendment is on the side of the drug companies. In Thompson v. Western States Medical Center (2002), for example, the Supreme Court invalidated restrictions on the advertisement of compounded drugs. Few if any pharmaceutical companies, however, will challenge sister advertising restrictions for fear of antagonizing the FDA, which has a stranglehold over their ability to market new drugs by vetting them for safety and effectiveness after billion dollar investments.

Most recently, the Department of Justice has exploited bank vulnerability to bank regulators in Operation Choke Point to persuade them summarily to terminate the accounts of customers or a group of customers in industries with reputations for fraud or overreaching, for instance, short-term lending. Representative Blaine Luetkemeyer (R-Mo) and Jeb Hensarling (R-Tx) have introduced legislation (HR 766) to diminish Operation Choke Points due process shortcomings by prohibiting federal banking agencies from requesting a depository institution to terminate a specific customer account absent a written and reasoned justification other than reputational risk.

These accounts of informal regulatory coercion are but the tip the iceberg. Ask any executive in a heavily regulated industry and they will provide a confidential list of the constitutional or statutory rights they leave unenforced to avoid the risk of covert regulatory retaliation.

Government lawlessness is an additional unquantifiable cost of the regulatory state.



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