The Arithmetic of Justice: Calculating Restitution for Mortgage Fraud
The Mandatory Victims Restitution Act requires restitution for federal crimes involving property. In particular, the defendant is required to return any property taken, or, if return is impossible, to pay for the victim’s loss, which may be offset by a partial return of the property. In mortgage fraud cases, this usually entails calculating the lender’s loss — an unpaid loan — and offsetting that loss by the value of the collateral for the loan, which the lender recovers. The circuits disagree about how to value the recovered collateral as an offset to restitution: Should its value be determined by its appraised fair market value or, conversely, by its final foreclosure price when the victim-lender sells it? This Note concludes that courts should presumptively use the foreclosure price, except when that price can be shown not to approximate the value at the date of return.
Cause for Concern: Causation and Federal Securities Fraud
The Supreme Court's decision in Dura Pharmaceuticals dramatically changed federal securities fraud litigation. The Dura decision itself said little, but counseled lower courts to fashion new requirements of causation and harm modeled upon common law tort principles. These instructions have led lower courts to craft a series of confusing and inconsistent decisions that incorporate little of the reasoning upon which the common law principles are based.This Article accepts the Dura challenge and examines both common law causation principles and their applicability to federal securities fraud. In so doing, the Article identifies the failure of the federal courts properly to confront the complex causation challenges presented by securities fraud and the extent to which common law approaches to multiple and indeterminate causation offer guidance. Common law causation analysis further highlights the critical issue of harm specification. The Article demonstrates how, from Basic to Dura, the Supreme Court has refused to address the issue of what constitutes an appropriate economic loss, despite the fact that this determination is a necessary predicate to formulating a causation requirement. The Article goes on to show how, in Basic, the Court shifted the nature of actionable harm and, in so doing, exacerbated the complexity of causation analysis.Defining the appropriate harm involved in securities fraud is challenging. Drawing upon tort law principles, the Article considers several alternatives, ranging from artificial price inflation and ex post stock drop, to increased investment risk. The choice among these alternatives reflects policy judgments about the appropriate goals of private securities fraud litigation. In its final section, the Article considers current critiques of securities fraud litigation and demonstrates how these concerns should influence the scope of the private right of action.
Aggregate Implications of Labor Market Distortions: The Recession of 2008-9 and Beyond
The aggregate neoclassical growth model - with a labor income tax or "labor market distortion" that began growing at the end of 2007 as its only impulse - produces time series for aggregate labor usage, consumption, investment, and real GDP that closely resemble actual U.S. time series. Of particular interest is the fact that the model - with no explicit financial market - has investment fall steeply during the recession not because of any distortions with the supply of capital, but merely because labor is falling and labor is complementary with capital in the production function. Through the lens of the model, the fact the real consumption fell significantly below trend during 2008 suggests that labor usage per capita could get somewhat lower than it was at the end of 2009, and is expected to remain below pre-recession levels even after the "recovery."