Congressional Intervention Research Articles

Ways and Means: Lincoln and His Cabinet and the Financing of the Civil War by Roger Lowenstein

Reviewed by: Ways and Means: Lincoln and His Cabinet and the Financing of the Civil War by Roger Lowenstein David K. Thomson Ways and Means: Lincoln and His Cabinet and the Financing of the Civil War. By Roger Lowenstein. (New York: Penguin Press, 2022. Pp. [xvi], 432. $30.00, ISBN 978-0-7352-2355-4.) Just days after the Army of the Potomac’s defeat at the battle of Chancellorsville in May 1863, a Harper’s Weekly article addressed the question of United States finance during the Civil War. The author asked how the United States government was paying for a conflict that would command expenses in excess of $2 million a day by the end of the war. “When the history of this war comes to be written,” the article noted, “no part of it will attract more attention or command more admiration than the chapters which relate to finance” (Harper’s Weekly, May 9, 1863, p. 290). Despite such an assertion and the wealth of scholarship pertaining to the American Civil War, little attention has been dedicated to this question of finance. To that end, in Ways and Means: Lincoln and His Cabinet and the Financing of the Civil War, journalist Roger Lowenstein attempts to address this financial question by offering a general overview of the Union’s financial war machine. Lowenstein’s Ways and Means examines the financial triumvirate of bonds, currency, and taxation that helped facilitate the Union’s financial success during the war. Central to Lowenstein’s analysis is the role played by Secretary of the Treasury Salmon P. Chase. A financial novice, Chase had devoted his antebellum career as a lawyer to advocating for the enslaved. Lowenstein explores Chase’s evolution (and associated political ambitions) as he navigated a war with a financial scope unlike anything the United States had ever dealt with. Chase’s hopes to finance the war, as in previous American conflicts, via northern financial houses in New York City and beyond fell apart by the fall of 1861. The suspension of specie payment throughout the North by year’s end spoke to the underlying financial concerns that the Abraham Lincoln administration faced by early 1862. Beyond congressional intervention to create a federal currency (the so-called greenback) with the passage of the Legal Tender Act in 1862, the war led to broader financial innovation. Philadelphia banker Jay Cooke, a relative financial unknown, was a central figure in this process. Cooke’s efforts to sell the various bond issues throughout the North (and even in parts of the occupied Confederacy as the war progressed) reflected a new era for American war finance and foreshadowed how the United States funded conflicts in the twentieth century. Financial agents invoked profit as a form of patriotism and facilitated sales to people of all classes. Bond issues provided nearly three-quarters of the more than $3 billion in Union war costs. Combined with a new banking system and the first real income tax in American history (which applied only to a small segment of the population), [End Page 152] the bond program illustrated the lengths to which the United States went to “sell” the war. Ways and Means also offers an overview of the financial processes of the Confederacy led by Chase’s counterpart, Christopher G. Memminger. Lowenstein provides a frank assessment of the challenges faced by the Confederacy despite small successes—most notably, the placement of a foreign loan during the war, something the United States government was never able to achieve. At heart, Confederate finances centered on the value of cotton. Though cotton was initially viewed as a great asset to Confederate economic power, the rebel government’s decision to extend a cotton embargo as an attempt to lure the British and French into the conflict on the Confederacy’s side proved to be a financial albatross by war’s end, as rampant inflation dogged the Confederacy to the tune of 9,000 percent. Ways and Means frames the financial transformations of the war as an overlooked story of the Republican Party’s ascent to power through the passage of many pieces of legislation. But Lowenstein’s notes point to a wide array...

Populists in power: trust in public institutions and support for strong leadership in the post-authoritarian democracies of Indonesia and the Philippines

ABSTRACT How does support for strong leadership affect institutional trust in post-authoritarian democracies? Studies suggest that fostering trust in public institutions is contingent upon citizens’ favourable evaluation of the government’s institutional performance, whereas individual’s cultural orientations and political values are seldom given much interest. However, the resurgence of leaders with ‘populist’ tendencies presents an empirical puzzle, which may reveal intriguing political patterns in the context of comparative democratization (and autocratization). This study theorizes that citizens’ need for economic deliverance and social stability develops agreeable attitudes towards prevailing public institutions even though political incumbents project authoritarian tendencies. Using public opinion data from the seventh wave of World Values Survey (WVS7), this study finds that citizens in Indonesia and the Philippines—two of the region’s post-authoritarian democracies i.e. fragile democracies with spells of authoritarian rule manifest high support for a political system with a strong leader unconstrained with electoral and congressional intervention. Consequently, this favourable attitude makes them more likely to express higher institutional confidence. Overall, the findings shed light on the paradoxes of contemporary politics confronted not only with authoritarian resilience, political illiberalism and personalist rule but also of the enduring nondemocratic psychological disposition among citizens in settings with troubled democratic transitions.

Increased utilization of teledermatology among Medicare Part B beneficiaries during the COVID-19 pandemic.

Enhanced telehealth flexibilities in response to the COVID-19 pandemic have prompted heightened use across many physician specialties; yet, national trends have not been assessed within dermatology, specifically. In this longitudinal review of 2017 to 2020 Medicare billing data, we identified a 210-fold increase in teledermatology evaluation and management (E&M) visits between 2019 and 2020, which helped to slightly offset the substantial 20.1% decline in in-person E&M visits. Teledermatology comprised an overall greater proportion of E&M visits in states with the largest declines in in-person visits. Teledermatology E&M visits were primarily comprised by established patient video visits (74.3%); yet, the relatively more substantial role of telephone-only visits in certain rural states may reflect limitations in technologic access in these areas. Asynchronous teledermatology (including store-and-forward dermatology) also increased by 34-fold in 2020, supporting its utility for evaluation of a changing lesion or for triage purposes. The findings underscore the growing role of telehealth in dermatologic care and are important given that certain telehealth flexibilities are set to expire at the end of the public health emergency without additional congressional intervention.

Political connections and the SEC confidential treatment process

SEC confidential treatment (CT) orders are regulatory exemptions that enable firms to redact proprietary information from SEC filings if the disclosure would cause competitive harm and if the information is immaterial to investors. This study examines the role of firms' political connections in the SEC's decisions to approve versus reject CT requests before and after Congressional intervention and internal SEC scrutiny into the CT process. CT requests from politically connected firms are less likely to be rejected before Congressional intervention and internal SEC scrutiny and are more likely to be rejected following these events. When the SEC rejects CT requests, firms must disclose the contents of the unapproved redactions. These disclosures are informative to investors, on average, and are less informative following Congressional intervention and internal SEC scrutiny. Together, these findings contribute to the literature on political influence in SEC oversight and disclosure regulation and provide unique evidence on the role of Congressional intervention in SEC decision making.

The Fed of the Future: A Framework to Optimize Short-Term Lending Practices

Underbanked individuals currently face significant risk when accessing short-term credit. While payday loans are the least expensive short-term credit option when compared to alternatives like overdraft fees, they can also have an extraordinarily high cost of borrowing. Unable to pay the cost of the loan, borrowers often find themselves in a vicious cycle that drives them further into debt. This Note sets forth a proposal as to how payday loans can be better regulated to create affordable access to short-term credit. Specifically, this Note advocates for congressional and Federal Reserve intervention in the payday lending market. This Note first analyzes the current regulatory environment for payday loans. It concludes that the CFPB’s attempts to regulate payday loans at the federal level have largely fallen short, while state attempts to regulate payday loans are threatened by recent OCC rulemaking. Without intervention, underbanked consumers’ access to shortterm credit may be threatened by usurious payday lenders. The potential for an unregulated market has created a need for federal intervention. On this basis, the second half of this Note argues that congressional intervention in setting a federal usury rate is not only justified, but necessary. This approach is not without its difficulties; a congressional usury rate may drive existing lenders out of the payday lending market for want of profit. Thus, to preserve efficient access to short-term credit, this Note proposes that the Federal Reserve create a short-term lending framework through the layered use of FedAccounts and FedNow.

Seeking Accountability, Legitimacy, and Transparency: Congressional Intervention in the Philippines’ South China Sea Policy

Abstract Why and how did the Philippine Congress intervene in the policies of Arroyo (hedging), Aquino III (balancing), and Duterte (appeasement) on the South China Sea disputes? In particular, why and how did the Philippine Congress challenge each president’s attempt to forge either cooperation or confrontation towards China? Guided by the domestic politics – foreign policy nexus, this article explores the dynamic role of the Philippine Congress in the country’s foreign policy process. It combines comparative case-study and content analysis methods to examine relevant congressional records, government documents, public speeches, and news reports. This article finds that the impetus behind Congress’ intervention was to seek accountability, legitimacy, and transparency via registering a bill or passing a law, filing legislative resolutions, holding congressional hearings, calling for impeachment proceedings, delivering privilege speeches, and issuing press releases. This article offers its empirical and theoretical contributions to broaden current understanding of the relationship between domestic politics and foreign policy.

In the Age of Decriminalization, Is the Odor of Marijuana Alone Enough to Justify a Warrantless Search?

The words “I smell the odor of marijuana” have historically granted police access to search persons and their vehicles without any further justification. However, with vastly differing marijuana and hemp laws quickly arising across America, courts have begun to disagree on how to approach search and seizure based on odor alone. An area of law that once seemed untouchable has now been challenged, creating a lack of uniformity across states and jurisdictions, and a need for resolution. The Fourth Amendment warrant exception of the plain-smell doctrine has consistently been used to “rubber stamp” governmental intrusion into fundamental rights. The legalization and decriminalization of hemp and marijuana for medical and recreational use makes the application of the plain-smell doctrine inconsistent and inadequate, and often prejudicial. Additionally, police use boilerplate language to bypass procedural mechanisms set in place for the protection of the people. The Article offers the solution of an odor-plus standard via alternate routes: Supreme Court decision or Congressional intervention. Under such a standard, officers may not use the smell of marijuana alone as reason for probable cause to conduct a warrantless search, but must also meet at least one other delineated criterion.

Equitable Monetary Relief Under the FTC Act: An Opportunity for a Marginal Improvement

Optimal remedies should be grounded in consumer harm. The caselaw interpreting the FTC's ability to obtain equitable monetary relief, however, has strayed far from this benchmark. Rather than requiring the FTC to show the marginal impact of deception, courts presume that everyone exposed to deception is harmed based on the fiction that the FTC has proven materiality. This approach is likely to overstate consumer harm in most circumstances involving a legitimate product, which will reduce the amount of beneficial marketplace information available to consumers. Several cases that challenge the FTC's legal authority to use 13(b) to obtain equitable monetary relief are awaiting certiorari determinations, which have led some to call for Congressional intervention to fix the statutory problem. Regardless of the outcome of this process, we see this turn of events as an opportunity for the FTC to recalibrate its consumer protection remedies to more closely mirror consumer harm. It should do so by focusing on the marginal impact of deception, a task that could be accomplished through Congressional action or on the FTC's own initiative. Regardless of the path, this marginal improvement would be an important one for consumers.

This Just Plain Smells

The words “I smell the odor of marijuana” have historically granted police access to search persons and their vehicles without any further justification. However, with vastly differing marijuana and hemp laws quickly arising across America, courts have begun to disagree on how to approach search and seizure based on odor alone. The legalization and decriminalization of hemp and marijuana for medical and recreational use makes the application of the plain-smell doctrine inconsistent and inadequate, and often prejudicial. Additionally, police use boilerplate language to bypass procedural mechanisms set in place for the protection of the people. The Article offers the solution of an odor-plus standard via alternate routes: Supreme Court decision, Congressional intervention, and through various avenues the local level. Under such a standard, officers may not use the smell of marijuana alone as reason for probable cause to conduct a warrantless search, but must also meet at least one other delineated criterion. With criminal justice reforms at the forefront of Louisiana politics, the author suggests that the state begin to lead the nation with policies such as the aforementioned standard, because the way it has been done just plain smells.

Answers to Written Questions for the Record of David O. Taylor before the United States Senate Judiciary Committee, Subcommittee on Intellectual Property: The State of Patent Eligibility in America

Here I provide answers to written questions received from Senators Tillis, Blumenthal, and Hirono as part of their consideration of proposed amendments to the patent statute to address current problems with patent eligibility law. I explain why patent eligibility law is in a state of crisis, and in particular how my research has demonstrated risks of under investment in research and development as a result of the Supreme Court's changes to patent eligibility law. I analyze the impact of returning patent eligibility law to its historical scope, focusing on the impact on industry, consumers, and prices. I explain why congressional intervention is necessary, but why the proposed field of technology test is suboptimal. I highlight the role of Congress in addressing moral and ethical concerns with patenting some technologies. I discuss how the proposed change to the disclosure requirement is unnecessary, over-broad, and problematic. I also discuss the lack of a need to codify the double-patenting doctrine. Finally, I analyze potential due process and takings arguments related to the proposed amendments.

A Partial Fix of a Broken Guideline: A Proposed Amendment to Section 2G2.2 of the United States Sentencing Guidelines

Except for the federal criminal penalties for crack cocaine offenses, no specific non-capital penalty structure has been more widely criticized than USSG § 2G2.2 and the corresponding federal penal statutes, 18 U.S.C. §§ 2252 & 2252A. Together, those provisions govern penalties for child pornography offenses other than those involving actual production of child pornography. Indeed, one of the leading sources of criticism has been the United States Sentencing Commission, whose 300-plus-page report to Congress in December 2012 made a compelling case for changing both the guideline and, to a lesser degree, the statutes. The current sentencing guideline for non-production offenses is fundamentally broken, as evidenced by the fact that only 28.4 percent of defendants sentenced under section 2G2.2 receive within-range sentences and 69.1 percent of defendants receive downward variances or departures (unrelated to their substantial assistance or participation in a fast-track program). The vast majority of child pornography defendants receive downward variances from their guideline ranges based on sentencing judges’ subjective senses of what appropriate sentences should be. Because judges have no meaningful national benchmark from which to render sentencing decisions, widespread sentencing disparities exist – in conflict with the central purpose of the Sentencing Reform Act of 1984. In addition, because the current guideline fails to offer any meaningful benchmark, federal prosecutors around the country engage in a wide variety of different charging and plea-bargain practices resulting in significant sentencing disparities among similar defendants. Although the best solution to the problems with the current child pornography sentencing scheme would require congressional intervention, Congress appears unwilling to make any changes in the statutory handcuffs currently on the Commission. Therefore, I have set forth a detailed proposed amendment to section 2G2.2 that could be adopted by the Commission without congressional authorization. If the Commission does not amend the guideline, then my proposal provides a detailed roadmap for federal district judges to “vary” from the current, broken guideline pursuant to the authority granted by the Supreme Court in United States v. Booker and Kimbrough v. United States.

Patent Eligibility and Investment

Have the Supreme Court’s recent patent eligibility cases changed the behavior of venture capital and private equity investment firms, and if so how? This Article provides empirical data about investors’ answers to those important questions. Analyzing responses to a survey of 475 investors at firms investing in various industries and at various stages of funding, this Article explores how the Court’s recent cases have influenced these firms’ decisions to invest in companies developing technology. The survey results reveal investors’ overwhelming belief that patent eligibility is an important consideration in investment decisionmaking, and that reduced patent eligibility makes it less likely their firms will invest in companies developing technology. According to investors, however, the impact differs between industries. For example, investors predominantly indicated no impact or only slightly decreased investments in the software and Internet industry, but somewhat or strongly decreased investments in the biotechnology, medical device, and pharmaceutical industries. The data and these findings (as well as others described in the Article) provide critical insight, enabling evidence-based evaluation of competing arguments in the ongoing debate about the need for congressional intervention in the law of patent eligibility. And, in particular, they indicate reform is most crucial to ensure continued robust investment in the development of life science technologies.

The Rise of Aquaculture: Is Farmed Salmon a Healthier Alternative than Wild Salmon?

Increased population led to an increased demand for seafood, ultimately innovating the seafood industry and rise of aquaculture. This technique allows fish, such as salmon, to be farm-raised in controlled conditions in attempts to provide sustainable fish for consumers while allowing wild fish to repopulate. Aquaculture nevertheless initiated environmental and human health concerns, sparking a debate whether farmed salmon is a healthier alternative than wild salmon. This Note discusses such concerns and suggests tools to address them like increased federal agency regulation, congressional intervention, and genetically engineered salmon.

The Fight Over Columbia Basin Salmon Spills and the Future of the Lower Snake River Dams

One of the nation’s most longstanding environmental-energy conflicts concerns the plight of numerous Columbia Basin salmon species which must navigate the Federal Columbia River Power System (FCRPS), a series of hydroelectric dams that make the basin one of the most highly developed in the world. Although the FCRPS dams produce a considerable amount of low-cost hydropower, the mortalities they cause due to the construction and operation of FCRPS dams led to Endangered Species Act listings for the basin’s salmon. Since those listings a quarter-century ago, the federal government has struggled to produce biological opinions that can survive judicial scrutiny, repeatedly failing to do so. The latest round of litigation resulted in renewed directive from the federal district court of Oregon to revise the current biological opinion and to spill water at several dams in the interim to facilitate salmon migration. The directive to spill was upheld by the Ninth Circuit in 2018, but the U.S. House of Representatives quickly voted to overturn that decision, and the Senate now has the matter under consideration. This article considers the latest round of Columbia Basin salmon litigation and the threat of congressional intervention. We also examine the fate of four Snake River FCRPS dams that have proved particularly hazardous to listed salmon. These dams provide no flood control, easily replaceable power, and barge navigation for which there are also ready substitutes. The article maintains that since these four dams can pass no reasonable cost-benefit test, Congress should not act to revise the court-ordered spills but instead order the lower Snake River dams removed, which would begin the restoration the listed Snake River salmon and result in the transformation of the economy of the Snake Basin in eastern Washington and Oregon, and in Idaho.

History and Relevance of Patronage, the Civil Service Reform and the Pendleton Act: The Rationale for Congressional Intervention

The ownership of land determined ones importance. However, the church was one of the largest single property holders in Italy. By the 11th century, Bishops were competing with wealthy rural families to become patrons” of local land – owners. To combat the political problems in 1867 The Tenure of Office Act was passed during Andrew Jackson term; Congress passed the Act in an effort to secure a greater role in the appointive process. The act specific that those appointed with the advice and consent of the Senate could only be removed from office with the Senate’s approval. Hence, the goal of this research is to examine the implications of political pressure on the evolutionary process with new emergent paradigm characterized by three anti-government values: personal accountability limited and decentralized government, and community responsibility for delivery or social services.

The Threat of Law: Regulatory Blackmail or an Answer to Congressional Inaction?

The administrative state has become an increasingly dominant force in American jurisprudence, at times wielding its power even beyond the reach of judicial and legislative control. Notwithstanding the fact that many legal scholars, regulated entities, and politicians have lamented the expanding role of the administrative state, regulatory agencies are more frequently flexing their newly acquired muscle and acting in contravention to traditional notions of checks and balances. In this Article, I examine a burgeoning administrative law phenomenon I term the “threat of law,” whereby an administrative agency unilaterally imposes its regulatory will on regulated entities outside of the traditional boundaries of its rulemaking authority. The regulatory body can exercise this threat of law by issuing regulations grounded in dubious statutory authority and daring regulated entities to challenge them in court. In the absence of Congressional action, regulated entities can be left with the options to comply with the disputable regulation, defy the regulation and face penalties and litigation, or fight an often protracted and expensive court battle to get the regulation overturned. The threat of law also ups the ante for an increasingly impotent Congress. By changing the status quo, the threat of law can push Congress to either act to change the questionable regulation or acquiesce. In order to illustrate the tangible pressure this threat of law can inflict on affected regulatees, this Article focuses on recent actions taken by the Treasury Department in response to the growing tide of corporate tax inversions, whereby entities historically domiciled in the United States move their headquarters to lower-tax jurisdictions. Treasury issued expansive notices attacking inversion transactions, pushing their regulatory powers to the limit. Even though Treasury may have lacked the power to act without congressional intervention, its actions produced a threat of law that, at least temporarily, had the same chilling effect on transactions as a legitimately exercised force of law. This Article will examine this attempt by Treasury to circumvent congressional action. It will explore the efficacy this threat of law can have on an agency’s ability to act swiftly in response to emerging challenges, particularly in the face of congressional gridlock. Moreover, this Article will address the implications an effective threat of law has on an agency’s statutory retroactivity powers, traditional notions underlying Congress’s perceived delegation of authority, and to the level of justiciability protections that these actions should be afforded.

Lincoln and the Politics of Slavery: The Other Thirteenth Amendment and the Struggle to Save the Nation by Daniel W. Crofts

Reviewed by: Lincoln and the Politics of Slavery: The Other Thirteenth Amendment and the Struggle to Save the Nation by Daniel W. Crofts Dwight T. Pitcaithley (bio) Lincoln and the Politics of Slavery: The Other Thirteenth Amendment and the Struggle to Save the Nation. By Daniel W. Crofts. (Chapel Hill: University of North Carolina Press, 2016. Pp. 356. $35.00 cloth; $34.99 ebook) On March 4, 1861, Abraham Lincoln took the oath of office as the sixteenth president of the United States. In the middle of his inaugural address he endorsed an amendment to the Constitution that had been passed by Congress only that morning. What would have been the first Thirteenth Amendment declared that Congress had no authority to interfere with slavery in the states where it already existed. Lincoln expressed his support for the so-called Corwin amendment by observing that he had “no objection to its being made express and irrevocable” (pp. 235–36). Long ignored by historians, the “other Thirteenth Amendment” has finally been treated to a detailed analysis by historian Daniel Crofts. In Lincoln and the Politics of Slavery, Crofts sets out to achieve two goals. The first is to present the political choreography behind the amendment; the second is to explore the contrast between the popular (and, sometimes, academic) perception of Lincoln as the Great Emancipator and Lincoln’s willingness on the first day of his administration to accept the institution of slavery as a permanent [End Page 291] part of the Union in fifteen states. What has been termed the Corwin amendment (named for Ohio representative Thomas Corwin) becomes, in Crofts’s telling of the tale, the Seward amendment. In this well-researched and well-crafted narrative, Crofts argues persuasively that the proposal to declare slavery off-limits to congressional intervention was designed by Senator, and soon to be Secretary of State, William Seward. For his part, Seward’s amendment was in keeping with the Founding Fathers who had desired the eventual abolition of slavery but acted only to prevent its expansion. Crofts further explains that Seward’s proposition aligned with the 1860 Republican platform, which disclaimed any interest in or authority to interfere with slavery in the states. Seward’s intent was to offer a solution to the problem of secession at little or no cost to Republican ideology. Crofts systematically builds the argument that the moderate wing of the Republican Party (which encompassed a majority, but not the entirety, of the party), led by Seward, wanted, needed even, to counteract the southern mantra that their party was filled with abolitionists. Since the formation of the Republican Party in 1854, many southern political leaders attempted to paint the new northern alliance as favoring slave insurrections and immediate abolition. Although Seward and Lincoln and their followers looked forward to the day the country would be rid of the institution of slavery, only a handful of Republicans could be termed abolitionists. For Seward, therefore, promoting his amendment constituted prima facie evidence that the incoming administration was willing to tolerate slavery where it already existed and that Lincoln’s administration posed no threat to slavery where it was protected by state authority. Crofts also takes a long look at Lincoln historiography, especially historians who, in his words, “depict Republicans as virtual abolitionists” (p. 12). To that end, Lincoln and the Politics of Slavery methodically and convincingly makes the point that Republicans consistently, with few exceptions, argued that they opposed the extension of slavery but had absolutely no designs on slavery in the states. In this regard, Crofts puts James Oaks’s Freedom National: The Destruction of Slavery [End Page 292] in the United States, 1861–1865 (2013) in his cross-hairs and, to this reviewer, presents the stronger argument. The Abolitionist Lincoln, Crofts persuasively insists, only gradually emerged with the onset and continuance of the war. Daniel Crofts presents in Lincoln and the Politics of Slavery the first full-scale modern analysis of the Seward/Corwin amendment. By exploring the origins of this all-important episode in the run up to the war, Crofts sheds important light on the fundamental political issue that divided the nation. One might wish he had explored the motivations...

Executive-Legislative Conflict and Regulation Outcomes: The Case of the U.S. FCC

In the context of regulatory decisions, the political conflict between executive and legislative branches has been significant. The relative ideological stances and power resources of federal agencies and Congress determines regulation outcomes. In particular, when agencies earn sufficient political support from policy stakeholders by relying on procedural justice, they are able to secure the regulatory outcomes they desire without congressional intervention. Because legislators are highly concerned about their reelection prospects, policy stakeholders` political support is an important power resource for agencies. Legislators are likely to embrace regulatory decisions made by agencies supported by policy stakeholders even if they disregard congressional preferences. This article provides evidence for this proposition by reviewing media concentration regulation policies of the U.S. Federal Communications Commission.

The Threat of Law: Regulatory Blackmail or an Answer to Congressional Gridlock?

The administrative state has become an increasingly dominant force in American jurisprudence, at times wielding its power even beyond the reach of judicial and legislative control. Notwithstanding the fact that many legal scholars, regulated entities, and politicians have lamented the expanding role of the administrative state, regulatory agencies are more frequently flexing their newly acquired muscle and acting in contravention to traditional notions of checks and balances.In this Article, I examine a burgeoning administrative law phenomenon I term the “threat of law,” whereby an administrative agency unilaterally imposes its regulatory will on regulated entities outside of the traditional boundaries of its rulemaking authority. The regulatory body can exercise this threat of law by issuing regulations grounded in dubious statutory authority and daring regulated entities to challenge them in court. In the absence of Congressional action, regulated entities can be left with the options to comply with the disputable regulation, defy the regulation and face penalties and litigation, or fight an often protracted and expensive court battle to get the regulation overturned. The threat of law also ups the ante for an increasingly impotent Congress. By changing the status quo, the threat of law can push Congress to either act to change the questionable regulation or acquiesce.In order to illustrate the tangible pressure this threat of law can inflict on affected regulatees, this Article focuses on recent actions taken by the Treasury Department in response to the growing tide of corporate tax inversions, whereby entities historically domiciled in the United States move their headquarters to lower-tax jurisdictions. Treasury issued expansive notices attacking inversion transactions, pushing their regulatory powers to the limit. Even though Treasury may have lacked the power to act without congressional intervention, its actions produced a threat of law that, at least temporarily, had the same chilling effect on transactions as a legitimately exercised force of law. This Article will examine this attempt by Treasury to circumvent congressional action. It will explore the efficacy this threat of law can have on an agency’s ability to act swiftly in response to emerging challenges, particularly in the face of congressional gridlock. Moreover, this Article will address the implications an effective threat of law has on an agency’s statutory retroactivity powers, traditional notions underlying Congress’s perceived delegation of authority, and to the level of justiciability protections that these actions should be afforded.

A Theory of Market Design: The Split Market Paradigm.

The cost of systemic risk in the over-the-counter (OTC) derivatives market is described and estimated. Modern portfolio theory (MPT), applied to OTC derivatives, predicts this cost, which has been growing since 1970. This cost grew because Congress blocked MPT’s predicted market forces. Without Congressional intervention, derivatives dealers would either have held dramatically smaller portfolios or made OTC derivatives negotiable. We estimate the global market has reached an un-booked negative market value, the implied capital cost of derivatives’ credit risk, substantially in excess of $250 billion today. At the banking lobby’s behest, Congress serially altered the bankruptcy code, transferring derivatives’ implied credit risk from derivatives dealers to others. However, the burden of the transferred credit risk was not reassigned. Thus the risk is not accounted for and not supported by bank capital. Worse, since derivatives are credit-riskless for derivatives dealers, these dealers create more derivatives than if they bore the cost, creating systemic risk.This risk, and the resulting changes in bankruptcy code, are unnecessary. If the dealer community were to modify the structure of OTC derivative instruments, derivatives’ credit risk would be dramatically reduced. Without Congress’ intervention, this might have happened long ago.The article is organized as follows. The introduction summarizes the article. The second section describes how OTC derivatives create temporary excess credit risk. The third section describes government intervention in this market and the resulting permanent systemic risk. Section four estimates the current size of systemic risk. The final section concludes.