Once again, Erik is pushing us all on our earlier posts.  He asks me:

Kim: Congress seeking to take credit and shift blame is not unique to financial regulation. It happens all the time in national security. What to do? Are reforms to the legislative process in order? Is it the job of courts to hold Congress’s feet to the fire? Maybe strike down overbroad or vague provisions and send them back to Congress? Or is that too draconian?

Not only is responsibility-shifting legislation not unique to financial regulation, it appears to be relatively less common there.  Legislators are reluctant to cede control over policy that permits a narrow tailoring of benefits to constituents (including a narrow tailoring of exemptions from legislation).  Most of the time, financial regulation appears to provide exactly these sorts of opportunities. 

But, as always, there are exceptions.  For example, the legislative history of the PSLRA (detailed by Grundfest and Pritchard, as well as by Baker and me) suggests that Congress left the "strong inference" provision of the Private Securities Litigation Reform Act of 1995 strategically incomplete.  But, two extremely powerful interest groups--trial lawyers and issuers of securities--were on competing sides of that issue. If possible, rational legislators might go to great lengths (including delegating responsibility to the courts through vague or ambiguous statutory language) to avoid fully alienating either group.

As I noted in my post yesterday, the political conditions leading up to Dodd-Frank were ripe for a responsibility-shifting delegation. The benefits of financial regulation are widely dispersed and barely noticed and a powerful interest group (financial institutions) has an intense interest in the legislative outcome. But, in the wake of the financial crisis, financial regulation has become a high public salience issue, limiting Congressional options. Whether there is similar evidence of responsibility shifting in Dodd-Frank awaits a detailed review of the legislative history. 

So, what to do?  Few things in life are too draconian for me, as you should know by now, Erik.  We develop a three-part test to determine whether a statutory provision is incomplete for strategic reasons, meaning that lawmakers created an intentionally incomplete statute in an attempt to shift responsibility for the negative impacts of law to other governmental branches (the presumption is that they did not).  If all three prongs of the test are met, then the court should penalize lawmakers by holding that the provision is so incomplete that it amounts to an unconstitutional delegation of legislative authority.  Anyone familiar with non-delegation jurisprudence can easily predict the likelihood (about zero) that the courts would follow this path.

Finally, would I have voted for the Act?  If I were a law professor, no, for all of the reasons I mentioned yesterday (sometimes, in my dreams, law professors are invited to vote on important legislation and cases, given free NCAA Final Four tickets, or flown to the Tour de France mountain stages.)

If I were a democratic senator, yes.  I would vote for it and give a speech about ending “too big to fail” and restoring American confidence in the financial system.  If I were a republican senator, no.  I would vote against it and give a speech about how the legislation doesn’t do enough to reign in the big banks or put a stop to Wall Street bailouts.  

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