Judicial Review and the Separation of Powers

A balance of power among the governing authorities in America requires a new look. Not so much as to the three federal branches of government, but rather as to our principle of federalism and the relationship between our states and territories and the three federal branches of government.

So expansive a territory as the United States requires greater guidance from above through the equally as expansive federal system of government. Our Article III courts may readily provide an initial and comprehensive source of a consistent, uniform and ever more evolving body of governing law.

In doing so, both judges and attorneys should view the law in an imaginative and creative manner that makes the most of both precedent and our founding legal precepts. Courage to look beyond one’s jurisdiction for a supporting argument when proper and prudent provides efficiency and, more importantly, an improvement to the community in which we live by encouraging polite discussion and debate.

Citizens can discuss government and the Rule of Law over the tea and coffee cup. We do not have to wait until the throes of an election to analyze our society and government. Let’s get started.

Lori Gayle Nuckolls, Esq.

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Let’s Return To The Fundamentals, Even At The Very Beginning!

The American Public has transformed in the past 50 years into a continent and attendant states and territories of true understanding, education and complexity. The talent, training and acuity of virtually each individual are virtually discernible at a glance.
In a time of increasing obligations of self-government, we owe much to our young people. Academic tracking with the very young is ethically feasible. College preparatory education, based in Classical Greek and Latin, should begin during preschool years. The children are there and so is the curriculum.
Lori Gayle Nuckolls

Should the Federal Government Pay Tuition for Higher Education to All for All?

This Story was originally published in October of 2017 and it discusses a subject matter of continued relevance. For, in an increasingly more complex society and government how do we maintain a democracy if each of our residents and citizens are not able to understand our world.

Admission to American colleges and graduate schools is duly regulated by several nongovernmental organizations, notably, entities such as The College Board, the Educational Testing Service and the American Bar Association. And, our secondary and elementary schools are similarly reviewed and ranked as to merit, both within political subdivisions and across the nation, by educators, journalists and governing officials.

Would an assumption of tuition payments for all American college and graduate programs by the Federal government undermine current private governance by those currently governing and affiliated with America’s private schools of higher education? Would it undermine the aura and efficacy of local history and culture within our publicly owned and governed colleges and universities?

Perhaps, the objectivity of the nongovernmental organizations responsible for admissions testing and school ranking in American higher education already provides and requires obligatory accuracy and fairness as to merit and quality across the nation in a way that state, local and private control of funding currently may not affect. Private and state decision-making in higher education must currently yield to duly enacted legislation and promulgated regulation, and a replacement of the monetary source for tuition, from the student, parent and or school to the Federal government, could not transcend present governmental procedures. Our schools would, in every respect, remain fully self-governing and retain due and fair competition.

The question then is whether Federal tuition runs only to the public good and public interest, and if the American economy can afford to pay the tuition of all college and university students? There seems to currently be neither an economic necessity nor an economic value in requiring students and parents, as the recipients of the goods and services of American colleges and universities, to make the tuition payments, when the ultimate beneficiary of educated Americans is America. Educated Americans determine America’s reputation and goodwill and the relative efficacy and value of its democratic government. In doing so, the American public receives goods and services provided by those who do not earn the true value of the service they provide over the course of their careers.

Salaries of ordinary citizens and residents barely pay living expenses, no less do these salaries provide for college tuition. And, it is hoped that American families contain more than one child. College graduates and licensed professionals earn less than professional athletes and corporate executives. Our governing officials, doctors and lawyers provide more to keep America sane and rational than do CEOs, pitchers and quarterbacks. How can CEOs and athletes work day-to-day without professionals and government officials overhead. And, non-managerial employees and traditional small business men and women, who would receive college tuition for their children, would still benefit from American capitalism. Students and graduates of the long existing 2-year colleges, who receive learning in the technical arts and vocations, would certainly provide more to the public good as interns during school years in subjects related to their studies than as employees of those within their community who offer the highest pay in part-time employment regardless of the task.

A parent’s future payment of tuition to American colleges and universities is a for-profit incentive in the American and international marketplace. Currently, parents look to a child’s academic achievement, and the competitiveness of admission to America’s colleges and graduate schools, as an incentive for business success. Federal tuition would lessen stresses unrelated to achievement, regardless of parental income. And, the once thought long entrenched competitive advantage of students attending private elementary and secondary schools, is, now, rarely a concern, for advances in teaching, curriculum and college recruiting have provided economies of scale within local governing political subdivisions, and create a just capitalism in education.

If America’s professionals and college graduates are deemed, as our governing principles intend, to grow and raise children who make the most of our academic institutions, how do these professionals provide for their children’s tuition, even in two professional households, and even if with only one child? How does such a family pay for its children’s college and graduate school attendance, even if they are, themselves, among the American socio-economic elite? And, are not these very children of American professionals and college graduates socially obligated, themselves, by our social contract as citizens and residents, to not squander what has been provided to them by their parents and secondary school educators?

The centuries-old legal principle of discerning the merit and value of prospective legal and or governmental reform, as I profess to personally coin and denominate: “experimentation among the States,” may be in order. For, it provides that, if not all Americans are ready for a proposed reform, one State, or a few, in the Federal Union might enact a variation upon the proposed reform, for review and evaluation by citizens and judges. Today, governmental payment of tuition to public colleges and universities, especially as recently announced in the State of New York, may provide a basis for Federal reform, especially by our current President and noted businessman Donald Trump. For, President Trump professes a belief in the economic competition, efficiency and small government that Federal tuition payments to all American schools of higher education would provide. This may be achieved by President Trump from now through the inauguration of his successor in 2025!

Lori Gayle Nuckolls

The Modern Democracy and The American Common Law

How do we reconcile traditional English common law principles of certainty and predictability in the law with American principles of fair and just judicial review at law and equity? Our American system of three branches of separate powers accords with the adversarial legal system of seeking impartial and objective judicial opinions. Neither the President nor the legislature imparts undue influence over the judiciary.

May we continue to ensure this unique type of good government in light of the size of the American population in current times resulting from, among many causes: modern technology and an increase in residential land ownership?  With greater access to education and information throughout the states and territories, the informal and unintended influence of the majority upon government is much greater than at the time of the adoption of the U.S. Constitution.

This debate requires a renewed inquiry into the dual purposes of American law in both resolving adversarial conflicts and in guaranteeing that the law achieves agreed upon social ends. Our community incrementally overtime determines our “ideas” and our “truths.”

 In this way, our Judge-made law fills the niches left by statute and executive policy (or one might say agency regulation).  The common law in America is derived from the public. From this our judges glean.

Society and Government?

How do we conquer the less than deserved value attributed to certain American professions, e.g., attorneys, physicians, and academics? What is the role of government and what is the role of the marketplace economy? Fair and just compensation for the value of the services provided is necessary to achieve American principles of a democratic society and government. We cannot believe that this absence of economic efficiency and economic equilibrium results from a  marketplace which will eventually find its own price. Perhaps, America should enact mandatory price-fixing and salary allocation for the learned professions to reflect costs and expenses incurred, both in academic preparation and as practitioners.  Professionals in government and the private sector represent a level of marketplace value that should be accorded value coextensive with that of business executives.

Democratic capitalism requires that corporate America self-govern in order to avoid governmental regulation, deemed more burdensome than  innovation. We must accord market value and  provide economic incentive to encourage the goods and services upon which society relies, our life necessities. Government is our primary necessity, democratic government. Without competitive economics, an economic barrier-to-entry exists and ordinary Americans cannot afford to serve as managers of our democratic republic.

Structural reform should begin with an increase in the salaries of governmental officials and learned professionals to equal that of mid-level, international corporate executives. For, the degree of productivity and quality of these two sectors of the economy could be no less than equal. In doing this, Americans, young and old, will be encouraged to more greatly participate in society and government. Productivity and achievement would bring value to the business community,  governmental subdivisions, and academic institutions.

This is justice and fairness in distributive economics. Competitive markets are guided by government toward equilibrium and this requires greater guidance in professional compensation.

Lori Gayle Nuckolls, Esq.

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Á La Citizens United, Should Corporations Exercise Influence Commensurate With A Vote?

          One may understand why there are those who find the debate regarding Citizens United  troublesome regardless of whether one supports or does not support the decision of the U.S. Supreme Court allowing corporations to contribute to political campaigns. One question that arises is whether corporations are to be permitted virtually unrestricted and unfettered rights of political participation?  Do  corporations impose upon  the constitutional right to privacy, as an essential attribute of intangible property and a life-sustaining characteristic upon which individuals depend, when they participate in elections?

          Corporations do not possess a quality, property or characteristic as the sense of privacy that goes to innate, subconscious, free and unencumbered human thought and choice. Self-governance and self-sustainability, in behest of self-governance, are the founding requisites of a democratic republic. This right and privilege of every individual is founded upon the existence of personal integrity and privacy. If corporations are equal yet not so dependent upon a guarantee of this form of privacy, may American citizens maintain their privacy and freedom to participate without imposition? The state chartered corporation is a creature of statute that lacks the intuitive sense of  whether its thoughts and actions challenge its very survival and existence. Corporations exist absent the psyche. And, if corporations argue that business entities possess rights of property and privacy, American commercial law has long protected commercial confidentiality and intangible property interests through securities regulation, patent and copyright law, contract law among many.

         Historically, tradition provides the premise and understanding that modern corporations do not vote. So it difficult to justify and to establish the right of corporations to offer publicly disclosed campaign contributions similar in public influence and public suasion to a vote, if not to the election count. More essentially, around the globe, in history the ancient family and the ancient corporation were similarly governed as one corporeal entity, patriarchically, without the recognition of individual form. The Corporation sole was the pater, aggregated one with others.  Corporations and families have generational existence, in perpetuity, yet individuals do not, both historically and in the modern era. Says Sir Henry Sumner Maine: “Corporations never die, and accordingly primitive law considers the entities with which it deals, i. e. the patriarchal or family groups, as perpetual and inextinguishable. “ (Maine’s Ancient Laws, Chap. V. Disintegration of the Family).

          In discussing the historical transition, Maine states:

“Nor is it difficult to see  what is the tie between man  and man which replaces by degrees those forms  of reciprocity in rights and duties which have their  origin in the Family. It is contract. Starting  as from one terminus of history from a condition of society in which all the relations of Persons are summed up in the relation of the Family, we seem to have steadily moved towards a phase of social order in which all these relations arise from the free agreement of Individuals.”(Maine’s Ancient Laws, Chap. V. Disintegration of the Family).  For Maine, the Family and  the Corporation were both Groups, led patriarchically. There have come to be replaced by the Social Contract of one individual to another.

          One must observe the analogy of Maine with the Syllabus of the U.S. Supreme Court in Citizens United, 556 U.S. 310, quoting Syllabus at 2(a):

“(a) Although the First Amendment provides that ‘Congress shall make no law . . . abridging the freedom of speech,’ §441b’s prohibition on corporate independent expenditures is an outright ban on speech, backed by criminal sanctions. It is a ban notwithstanding the fact that a PAC created by a corporation can still speak, for a PAC is a separate association from the corporation. Because speech is an essential mechanism of democracy—it is the means to hold officials accountable to the people—political speech must prevail against laws that would suppress it by design or inadvertence. Laws burdening such speech are subject to strict scrutiny, which requires the Government to prove that the restriction ‘furthers a compelling interest and is narrowly tailored to achieve that interest.’ WRTL, 551 U. S., at 464.” Yet, is the Corporate contribution or Corporate PAC too great a legal fiction in the modern era to compete with human life forms in the expression of political opinion?

          For, the Corporate PAC is  twice removed from the individual shareholder or corporate employee relative to the individuals of the Corporation sole  comprising the Corporation aggregate.  In Maine’s lengthy language:

“English lawyers classify corporations as Corporations aggregate and Corporations sole. A Corporation aggregate is a true corporation, but a Corporation sole is an individual, being a member of a series of individuals, who is invested by a fiction with the qualities of a Corporation. I need hardly cite the King or the Parson of a Parish as instances of Corporations sole. The capacity or office is here considered apart from the particular person who from time to time may occupy it, and, this capacity being perpetual, the series of individuals who fill it are clothed with the leading attribute of Corporations—Perpetuity Now in the older theory of Roman Law the individual bore to the family precisely the same relation which in the rationale of English jurisprudence a Corporation sole bears to a Corporation aggregate. The derivation and association of ideas are exactly the same. In fact, if we say to ourselves that for purposes of Roman Testamentary Jurisprudence each individual citizen was a Corporation sole, we shall not only realize the full conception of an inheritance, but have constantly at command the clue to the assumption in which it originated. It is an axiom with us that the King never dies, being a Corporation sole.” (Maine, Ancient Laws, Chap. VII Corporations Sole).

          As the purpose of the public recognition of and grant of existence to corporations is premised upon public interest principles of encouraging specialization and expertise in corporate productivity that transcends generations and is duly and ever more increasingly regulated and reviewed by both government and the public, what is the rationale or public interest in permitting corporations to exercise a constitutional right it cannot do via human means in its acknowledged name and form? If the concern is that traditional corporate subterfuge would encourage greater underhandedness than publicly communicated opinion as currently permitted by Citizens United and governmentally regulated Lobbyists, then, there may be no recourse than time. In the future, the development of regulation that would permit corporations to achieve ends now sought through political expression would end competition with voters and still permit voter review of corporate conduct through representative government.

 

Lori Gayle Nuckolls, Esq.

Economic Equality in America

Some logic and rationality must be accorded to an aged old portion of the American economy that eventually equated Hollywood celebrities and major league professional ball players with millionaire railroad tycoons and corporate barons. Initially, the musicians, singers, actors, actresses, as well as players of baseball, basketball, football and hockey, were the heroes of blue-collar, working class America. They were those the hourly wage earner and family could look up to when education, books, newspapers and magazines were as beyond reach as a college education. Today, vocational and four-year colleges extend coast-to-coast. And, cable television and the Internet bring news regarding the facts and events of America and the world to all, regardless of level of education.

So, why the socio-economic divide between celebrities and our governmental, private and public leaders and academics? Is equal treatment something their America cannot afford?

America requires that economic power be, in formation and distribution, determined by performance and quality, before nation-state, gender and or other attributes if the economy is to be maintained. For performance and quality weigh most greatly in providing the work product upon which society depends. Government, law and regulation come before and prior to materialism and wealth. For, wealth cannot be obtained, utilized, regulated or maintained without a well-regulated representative democracy.

No sole ruler, neither the benevolent dictator nor monarch, can provide an enjoyable sense of wealth and riches to the modern public. Rather, required is a distribution of wealth, monies, and funds, based upon contribution to maintaining meritocratic access to government, private and public social institutions and organizations. For, democracy and its premise upon justice and fairness applies throughout society from top to bottom, however defined.

Rules honoring the distribution of compensation and attribution of value must be as equally enforceable and enforced as rules governing participation. For, wealth as evidenced by a tenderable coin of a sovereign realm has no value without acquiescence and deference by each individual to the rules of the nation. Excessive disparity cannot logically or reasonably exist at the expense of governing officials and academics who provide a greater source relied upon within the Union.

Lori Gayle Nuckolls, Esq.

The Purpose of a Constitution

The primary goals of American criminal law are, in an order most severely an exercise of state power and authority: (1) revenge, (2) retribution, (3) deterrence, (4) restitution and (5) rehabilitation. One must, thus, conclude that our country imposes a “moral law” upon all within its boundaries which sets forth absolute proscriptions and imposes certain duties and obligations. (Kant, Immanuel. Fundamental Principles of the Metaphysic of Morals, Preface.) Yet, these specific purposes and principles underlying American criminal law are not literally found in either the constitution of any state or of our nation. Rather, these constitutions set forth many more abstract principles and purposes, to establish a rule of, and by, law in behest of general good government, justice and the common weal.

This November election, a proposed amendment of the Ohio constitution, which dates, in its present form, from as early as 1851, would provide credit for time served if an inmate agrees to participate in rehabilitation and guidance. Only those convicted for possession and or use and not sale of a controlled substance would be eligible.  This amendment would also revise the Ohio constitution to prohibit the criminalization of mere possession and or use at a level of severity accorded the treat of felony crimes, and, instead, deem mere possession and or use within the classification of misdemeanor.

The purpose of this and other specific provisions requested in the amendment would constitutionalize the governing principle that mere possession and use of illegal drugs, without the intent to sell, is a crime only against oneself and without the motive to profit from the criminal acts and self-flagellation of others. The premise is that the public good and public interest do not benefit from strict penal treatment based upon public motives of revenge or retribution. Rather, the public good is better served when those found only in use or possession are guided toward rehabilitative reform and a form of social inclusion not premised upon drug use.

One would deem these thoughts to be the moral philosophy or moral principles of the amendment, Issue 1 in Ohio on November 6th. But, should such specific purposes and principles rise to the level of a part of a state constitution?

Some suggest that the proper drafting and interpretation of a constitution should remain derived from the meaning of its original text at the time of adoption.  Some suggest that the interpretation and amendment should view the original text in our current era; that, the three branches of government should serve the public good by empirically revising a constitution’s text and principles to reflect subsequent human facts and events. An empirical view distinguishes from the a priori view of originalists.  Both views utilize wisdom and judgment.

Our nation upon its founding, and later the State of Ohio, constituted a democratic republic. Yet, constitutional amendments, state and federal, have made America more representative and more democratic. America once resembled the world of the Lords, Barons, landed gentry and serfs of Europe, when inheritance determined one’s whispering in the ear of the divine right monarch. On November 6, 2018, one need not own an interest, in any form, in real property in order to cast a ballot.

Then, should our view of state constitutions change? Our representatives are still our representatives. Yet, they are no longer per se, by virtue of social and economic class alone, the only ones among us with sufficient access to education and information to properly effectuate the duties and responsibilities of an elected official in our three branches of state government.

Should and must state constitutions provide greater and more specific guidance to our state legislators, should the constitutions “pull on the reins?” In modern times, not all state legislatures are comprised by America’s natural aristocracy, as the founding principle of American government envisioned and still required by Sir Edmund Burke. The great distribution of residents and commerce over the breadth of the American states and territories is so great that there are not enough formally educated natural aristocrats to go around. State Representatives are diverse, and their districts are more self-governing and self-sustaining than in the times of land baron dominance. They are no longer elected from rural areas without academic resources needed for participation in state government.  

Consequently, our complex society requires that even the most educated among us must look to theories of specialization and expertise. Our three branches of government, state and federal, rely upon career legal counsel and formal substantive divisions in each branch.

In returning to Issue one, should the Ohio constitution be more responsive to the changes in our society since its founding? Are the proposed revisions of Ohio law needed to guide a state legislature whose members will forever be less well versed than practitioners?  Or, with greater funding to provide additional legal counsel and substantive personnel, could the Ohio General Assembly readily delineate a similar program, itself, with fair review by its diverse representatives as provided in a democratic republic? In modern times, what is the purpose of a democratic constitution and what should it contain?

Lori Gayle Nuckolls, Esq.

 

 

 

 

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Economic Rights: the Basis of Freedom

Participatory democracy is something in which we should all believe. Humans began as “hunters and gathers,”  roaming alone in a hostile environment. As savages, we imposed an economy upon our coming together to trade fruits, berries, pelts and meats. Our economy produces the culture we share. America’s economy today is complex and global. Yet, we bargain still one human being with another. We share a common currency. Yet, we meet in an innumerable number of marketplaces. Still, we share in and exist in our one economy. Our neighborhoods should be thought the cornerstone of our economy.

The letter below is a comment I submitted today to several Federal agencies which collectively govern the American economy and its financial institutions.

Lori Gayle Nuckolls, Esq.
1237 Paddock Hills Avenue
Cincinnati, Ohio 45229-1219

Lori.Nuckolls@post.harvard.edu
lnuckoll@wellesley.edu
lorigaylenuckolls@cinci.rr.com
513-305-7902
September 16, 2018
Legislative and Regulatory Activities Division
Office of the Comptroller of the Currency 400 7th Street SW, Suite 3E–218
Washington, DC 20219
Sent via email to: VolckerReg.Comments@ occ.treas.gov, Re: Docket ID OCC–2018–0010

Ann E. Misback
Secretary
Board of Governors of the
Federal Reserve System
20th Street and Constitution Avenue NW
Washington, DC 20551
Sent via email to: regs.comments@ federalreserve.gov, Re: Docket No. R–1608; RIN 7100–AF 06

Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street NW
Washington, DC 20429
Sent via email to: comments@FDIC.gov, Re: RIN 3064–AE67

Brent J. Fields
Secretary
Securities and Exchange Commission
100 F Street NE
Washington, DC 20549–1090.
Sent via email to: rule-comments@ sec.gov, Re: File Number S7– 14–18

Christopher Kirkpatrick
Secretary
Commodity Futures Trading Commission
1155 21st Street NW
Washington, DC 20581.
Sent via email to: https://comments.cftc.gov, Re: RIN 3038–AE72

Re: Proposed Revisions to Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships with, Hedge Funds and Private Equity Funds

Dear Agency Administrators,

I write in reference to the proposed revision of the 2013 Volcker Rule, 12 C.F.R. Part 44, collectively by the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve, the Federal Deposit Insurance Corporations, the Securities and Exchange Commission and the Commodity Futures Trading Commission, (individually, an ‘‘Agency,’’ and collectively, the ‘‘Agencies’’). Please consider this letter to be a formal submission of comments upon this proposed rule amendment in response to the Notice of proposed rulemaking published by your Agencies in the Federal Register, on July 17, 2018, 83 Fed. Reg. 33432. All citations herein to proposed amendments to the Code of Federal Regulations reference the proposed rules of the Comptroller of the Currency only and parallel citation to the proposed rules of all Agencies has not been attempted.

The Purpose of the Proposed Amendment of the Volcker Rule

The Agencies state that the rationale and premise for the amendment of the Volcker Rule is the learning and improvement of the largest banking entities since the 2013 amendment of the Bank Holding Company Act (the “BHC Act”) and the 2013 amendment to the Volcker Rule promulgated thereunder. In that, since 2013, the Agencies have found that the banking entities have engaged in detailed compliance under the 2013 BHC Volcker Rule. These requirements were intended to prevent great economic loss and distress from speculative, proprietary trading by the banking entities. (83 Fed. Reg. 33432, 33434 (July 17, 2018)).

The Agencies profess that the banking entities are more sophisticated, more prudent and consequently, less of a threat to the safety and soundness of the financial system if engaging in the purchase and sale of securities for their own account. Thus, the Agencies are amending the 2013 Volcker Rule to lessen the regulatory burden of reporting proprietary trading in order that compliance resources may be directed, instead, to profit making commercial activities. (83 Fed. Reg. 33432, 33434 (July 17, 2018)). The Agencies propose that the extent of reporting compliance required be determined by the monetary value of assets available to each individual banking entity for trading. The amendment creates three categories of banking entities with three different levels of reporting compliance. Id.

My comments are offered in request that the Agencies reflect upon the amendment of the Volcker Rule as it would govern those banking entities with no more than $1 billion in available trading assets, globally, including affiliates. This is the third and smallest designated tier of banking entities both within the American economy and international banking, subject to the proposed amendment of the Volcker Rule. The Agencies have designated these smallest of banking entities to be by definition those entities with ‘‘limited trading assets and liabilities.” (83 Fed. Reg. 33437 (July 17, 2018))(to be codified at 12 C.F.R. § 44.2(t)).

Creating a regulatory safe harbor, the amendment would exempt these smallest of banking entities, possibly for the first time, from all proprietary trading reporting compliance. Under the safe harbor, the small banking entities are not required to routinely file periodic proprietary trading reports with their respective agency. And, the small banking entities must only do so after notice of regulatory inquiry, and a request for evidence of compliance ex post facto. The amendment proposes to transfer the burden of proof as to proprietary regulatory compliance from the small entity to the Agency. (83 Fed. Reg. 33432, 33450 (July 17, 2018)).

The Agencies only grant this safe harbor to the small banking entities. This is done through the recognition by the Agencies of a “presumption of compliance.” (83 Fed. Reg. 33460 (July 17, 2018)(to be codified at 12 C.F.R. § 44.20(g)). No small banking entity would bear the burden of demonstrating affirmatively on a periodic basis that its proprietary trading is in due compliance with governing regulatory proscriptions. The safe harbor also exempts the small entity from all compliance requirements as to potential conflict of interests. (83 Fed. Reg. 33432, 33441 (July 17, 2018)). With respect to large and mid size banking entities, as the first and second tiers regulated, the amendment merely lessens and does not completely remove requirements as to proprietary trading reporting and conflict of interest. (83 Fed. Reg. 33432, 33441 (July 17, 2018)).

As the Notice states:
“[an] Agency may exercise its authority to rebut the presumption of compliance and require the banking entity to comply with the requirements of the rule applicable to banking entities that have moderate trading assets and liabilities. The purpose of this presumption of compliance would be to further reduce compliance costs for small and mid-size banks that either do not engage in the types of activities subject to section 13 of the BHC Act or engage in such activities only on a limited scale.”

83 Fed. Reg. 33432, 33437 (July 17, 2018). I support the stated objectives of the Agencies in formulating the amendments to the Volcker Rule in theory, yet I am uncertain and quite doubtful that these objectives will be fully achieved in practice without too great a compromise of the public interest.

As published in the Federal Register, with respect to the Volcker Rule:

“the Agencies are issuing this proposal … to amend the 2013 final [Volcker] rule [promulgated pursuant to section 13 of the Bank Holding Company Act, the “BHC Act”], in order to provide banking entities with greater clarity and certainty about what activities are prohibited and [the Agencies] seek to improve effective allocation of compliance resources where possible. The Agencies also believe that the modifications proposed herein would improve the ability of the Agencies to examine for, and make supervisory assessments regarding, compliance relative to the statute and the implementing rules. While section 13 of the BHC Act addresses certain risks related to proprietary trading and covered fund activities of banking entities, the Agencies note that the nature and business of banking entities involves other inherent risks, such as credit risk and general market risk. To that end, the Agencies have various tools, such as the regulatory capital rules of the Federal banking agencies and the comprehensive capital analysis and review framework of the [Federal Reserve] Board, to require banking entities to manage the risks associated with their activities. The Agencies believe that the proposed changes to the 2013 final rule would be consistent with safety and soundness and enable banking entities to implement appropriate risk management policies in light of the risks associated with the activities in which banking entities are permitted to engage under section 13.”

(83 Fed. Reg. 33432, 33434 (July 17, 2018))(emphasis added). The proposed Volcker Rule amendment proposes to balance the principles governing the substantive public rights granted by federal law to the banking entities with public concern for the safety and soundness of the American banking system. The public interest includes the wellbeing of the global macroeconomic economy of the United States in the world, as well as the wellbeing of the microeconomic economy of the small community depository institution in rural and provincial American geographic areas. To achieve the purpose of the proposed Volcker Rule, the Agencies must safeguard both the American economy and individual financial institutions.

The Rationale for the Volcker Rule

The Volcker Rule is founded upon the perceived need to prevent depository institutions and their defined affiliates from engaging in speculative, proprietary trading, deemed inherently too risk averse for the banking system. The Agencies offer a revision of compliance obligations incumbent upon banking entities engaged in certain proprietary trading activities which are expressly exempted from the general prohibitions by law. In doing so the Agencies would lessen the compliance and reporting requirements of banking entities concerning information regarding their proprietary trading activities
Still, the proposed amendment of the Volcker Rule remains conservative in that it would reinforce the time honored prohibitions begun with the Banking Act of 1933 (popularly known as the “Glass-Steagall Act”). (83 Fed. Reg. 33432, 33436 (July 17, 2018)).

The Agencies expressly state that the new rights as to proprietary trading reporting compliance must abide preexisting prohibitions regarding certain types of securities activity. Most importantly, no trading activity by a banking entity may: (1) create a conflict of interest between the banking entity and a customer; (2) directly or indirectly create a material exposure to a high-risk asset or high-risk management strategy; nor (3) create a threat to the safety or soundness to the banking entity or the United States. Id.

The Glass Steagall Act provided, in Sections 2 and 20, that a depository institution, or bank, could not affiliate in any manner with any corporation engaged primarily in the issue flotation, underwriting, public sale, or distribution of stocks, bonds or other securities. This created the existing barrier against conflict of interests by prohibiting an officer or director of a corporation involved in such securities activity from serving as a bank officer or director. Similarly, Sections 16 and 21 of the Glass Steagall Act created a reciprocal prohibition by preventing banks from issuing securities and by preventing underwriters from accepting deposits.

The Volcker Rule Amendment Lacks Guidance for Small Banking Entities

Even with the continued conservatism as to small banking entities, there is an absence of concern in both the Notice and the proposed regulation for the extent to which the amendment leaves small banking entities without the didactic guidance of federal regulation and compliance. The Agencies offer in explanation that the small banking entities do not in engage in proprietary trading to an extent necessary to merit the cost, time and effort required in complying with current regulation. And, foremost, little regulation of the smaller entities is indicated for the sake of the safety and soundness of the banking industry and American economy. The practices of small banking entities have not proved a source of economic risk and loss with systemic implications, as have, to a truly great extent, the commercial activities of the mid and larger size banking entities.

The safe harbor presumption of compliance provides small banking entities with reduced cost of compliance, for reasons that reducing their compliance burdens as well as reducing and more greatly systematizing compliance of the mid and larger size banking entities will promote profit and economic growth without risk. Yet, small banking entities more greatly defer to and rely upon agency expertise. Small entities have reduced access to the information gleaned from periodic compliance as well as the due diligence periodic compliance requires. The Agencies should supplement the newfound freedom from affirmative regulatory compliance, which the presumption of compliance provides, with greater oversight, guidance and public education as to the role and function of small banking entities in cities and their communities. The Agencies should transition the small banking entities, which with the larger entities merit the reduction in regulatory compliance, into the greater commercial activity and profit envisioned by the amendment.

Adhering to and satisfying the detailed requirements of regulations has over many years provided learning through compliance for the smaller entities beyond the information and management resources of larger entities, regardless of market. Such remains true for the larger banking entities. For example, the amendment requires the larger banking entities to self-tailor an in-house reporting system that would require analysis of regulation and the entity’s commercial activities, a six-pillar compliance program. (83 Fed. Reg. 33436 (2018)) (proposed to be codified at 12 C.F.R. § 44.20(a)) and (83 Fed. Reg. 33560-33563 (2018))(proposed to be codified at app. to 12 C.F.R. Part 44). The larger entities would be required to analyze: (1) written policies and procedures; (2) internal controls; (3) managerial structures; (4) independent compliance reviews; (5) training and recordkeeping; and (6) metrics reporting requirements. (83 Fed. Reg. 33432, 33439 (July 17, 2018)). The Agencies provide guidance to the larger entities in imposed regulatory obligations found in the Appendix as published in the Notice and proposed rule. Yet, if the small entities are expected to be guided by these provisions without obligation, the level of their regulatory burden is not minimized, yet presumably increased as the financial markets changes over time and they must self-regulate.

While small entities are not so anonymously amorphous as to require as extensive a review and reporting system as those much larger, the small entities will no longer conduct business under the same incentive for compliance as once before. Even without an inability to self-govern and delegate in-house measures for avoiding improper proprietary trading, the small banking entities should be encouraged to work promptly upon the effective date of the amendment with the business school centers of the institutions of higher education in their areas to provide a national view of compliance in the ordinary course of business, Thus, if a routine audit generates an Agency request for documentation of compliance over many years, the small entity may comply.

The Agencies might ask the effect of replacing a detailed and stringent regulatory burden with a “presumption of compliance” in a small banking entity. Perhaps the Agencies should encourage: (1) the development of prudent market sophistication among competitors and customers as well as (2) collaboration among the administrators and staff of small banking entities with members of institutions of higher education on topics of financial institution regulation and management. Promoting sound self-governance would permit the amendment with all requisite safety and soundness in even the most remote and smallest of regions in the United States. For, a small banking entity might well be inadvertently less than conservative and less risk averse than it should be in its investments if it believes its only risk of noncompliance is in the course of its ordinary periodic audit. Evolving standards governing the presumption of compliance during after-the-fact reviews permit agency discretion, yet without some transition small entities may not as readily self-regulate to produce a revision of the compliance standards being removed with changes in the marketplace and the effectiveness of the presumption.

Under the proposed Volcker Rule, small banking entities in small cities and towns may no longer rely upon the overarching policies of federal agencies to temper the autocratic micromanagement of CEOs and Officers. The Agencies give rise to an affirmative vision of the banking industry within an international context through regulation and compliance review. The presumption of compliance requires a new approach by the Agencies in guiding the business decisions of the small banking entities with similar agency efficiency. This should be neither difficult nor costly for small banking entities possessing worldwide assets of less than $1 billion constitute only 2% of America’s banking entities according to the Notice. 83 Fed. Reg. 33432, 33440-33441 (July 17, 2018).

In Conclusion

I suggest that the small banking entity not be abandoned by the regulators and that the Agencies provide some guidance in behest of the public interest concerns of fair, just and equal commercial development throughout American cities, states and regions. A different systemic risk exists if an absence of regulation for those least able to self-regulate promotes fear among small banking entities and their customers and then, not for reasons of evasion or misplaced or imprudent motives, transactions are made merely for want of deference to the metaphysical guidance once perceptible above.

The Agencies together govern a complex and diverse financial industry, composed of many types of financial institutions and entities created by right and privilege under the laws the Agencies administer. The Agencies may only continually seek to achieve an equilibrium in the burden of regulatory compliance to be borne themselves as each a governing agency, and as to that burden to be borne by the public. In doing so, the Agencies guide all market stakeholders and thereby produce national prosperity and capital growth. The proposed amendment is a result of what the Agencies have gleaned from the marketplace and the amendment may readily promote public participation, research, discussion of policy making, examination and enforcement.

I thank you greatly for considering my comments on this rule. And, I may certainly be contacted as indicated above.

Sincerely,
Lori G. Nuckolls
Lori Gayle Nuckolls

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When is Personal Status a Crime?

Is it moral, ethical and or proper to criminalize personal decision making that does not challenge the individual identity and or personhood of another? Does a right of citizenship or even of the individual exist if one is unable to disclose the structure of one’s social existence because the structure is proscribed by law and criminalized by the government under which one collectively lives?  This question applies to all attributes of the individual, whether it be gender, marital structure, race, source of income, and many other common and current practices of modern existence.

 

If harm is not imposed upon another, in the thinking of John Stuart Mill (1806-1873), these personal attributes are expressions of liberty and freedom, derived from existence and nature, and may not be ethically restrained by the government. Persons exist within the fellowship of existence. Law and government which encroach upon one’s personal individuality, liberty and freedom are ensured only by prejudice according to Mill.

 

Even the most liberal and inclusive of elected statesmen has not yet remedied all such personally experienced difficulties in which one is unable to disclose the structure of one’s existence by virtue of one’s life structure being, in some aspect,  prohibited by law. We can know the spoken and written words of our governing officials and candidates. Yet, how can we fairly evaluate their demeanor if the material source of their identity, their life structure, is prohibited from being disclosed to the public. Their temperament, regardless of intensity, may not unilaterally be determined by matters in discussion before them.

 

In his Thoughts on the Present Discontents, Sir Edmund Burke (1729-1797) expressed the view that:

Government is deeply interested in everything which, even through the medium of some temporary uneasiness, may tend finally to compose the minds of the subjects, and to conciliate their affections. I have nothing to do here with the abstract value of the voice of the people. But as long as reputation, the most precious possession of every individual, and as long as opinion, the great support of the State, depend entirely upon that voice, it can never be considered as a thing of little consequence either to individuals or to Government.

(emphasis added). Under American law, as derived from the words of Edmund Burke, as well as countless additional voices of all hues and genders, all should have full, complete, and unfettered participation with one voice. The voice of the individual, not that of the abstract “tyrannous majority” is the founding principle of our government.

 

Some indicia of personal status, which upon actus reus, or effectuating conduct, constitute a crime in virtually all of the 50 American states are a noncriminal personal status of mental intent, such as a personal yet unconsummated devotion to a career of prostitution or the intent to engage in multiple marriages upon reaching the age of puberty without equal treatment under formal legal acknowledgment of the marital union. If, upon the effectuating act, traditions of liberty in America exist untranscended, is there an ethical rationale for this criminalization?

 

Sir Burke agrees that a nation is merely the composite of the individuals comprising it in cellular diversity. The principles of respect and ethics by which our nation of individuals is governed are derived via prescription from the very principles by which individual humans share and comport with one another. In the words of Burke:

 

Nations are governed by the same methods, and on the same principles, by which an individual without authority is often able to govern those who are his equals or his superiors, by a knowledge of their temper, and by a judicious management of it; I mean, when public affairs are steadily and quietly conducted: not when Government is nothing but a continued scuffle between the magistrate and the multitude, in which sometimes the one and sometimes the other is uppermost — in which they alternately yield and prevail, in a series of contemptible victories and scandalous submissions.(emphasis added). Anglo-Saxon, conservative thought upon which America was founded provides due precedent for legalization of many American civil privileges long acknowledged and many that might be.

 

Such support in the writing of Burke long preceded the day and era of American poet Emma Lazarus (1849-1847) and her poem The New Colossus, in which she wrote:

Not like the brazen giant of Greek fame,

With conquering limbs astride from land to land;

Here at our sea-washed, sunset gates shall stand

A mighty woman with a torch, whose flame

Is the imprisoned lightning, and her name

Mother of Exiles. From her beacon-hand

Glows world-wide welcome; her mild eyes command

The air-bridged harbor that twin cities frame.

“Keep, ancient lands, your storied pomp!” cries she

With silent lips. “Give me your tired, your poor,

Your huddled masses yearning to breathe free,

The wretched refuse of your teeming shore.

Send these, the homeless, tempest-tost to me,

I lift my lamp beside the golden door!”

 

 America lives by a written social contact of enlightened popular democracy. All participate equally. Participation requires an equal voice. A voice hindered and encumbered when such encumbrance is not materially required is unjust. Conservative theorists suggest that persons come together in society when encouraged and implored by a subconscious sense of order, even in present times.

 

In the thoughts of our President Franklin Roosevelt, democratic patriotism is the right of all on American soil, to seek freedom from prejudice and unkindness, which he deemed an affront not only against the one but also as against the many within the American public. Declaring life structures that are harmless to another to be harmful to the general public when the argument declaring such is  not based upon an understanding of the manner in which the rights of individuals and of the government are compromised is invalid.  Such assertions of criminal conduct deprive all of liberty and freedom. It is not patriotism under any theory of a respect for our constitutional rights or the national security of our nation, domestic or abroad. For, most importantly, government that is open is government that is most wise, most fair and most just. The people professing life structures we currently criminalize such as:  prostitution, multiple marriages, and controlled of substance use, are currently the people we regulate from the criminal and noncivil side of the line as currently drawn. If no injury to others, why not the civil side of the line?

 

 Legal right to the privilege of government acknowledgment of our personal identity and personhood are prerequisites to a constitutionally acknowledged right to speak freely and participate in government.  Men and women who offer sexual services for monetary compensation, and sister wives and brother husbands are currently deemed status criminals as to the social contacts to which they are a party. If the multiple wives and brothers seek formal written and governmentally filed licenses of marriage, they are illegal by virtue of intent to misrepresent their family structure and chosen social contract. If men and women who trade currency for sexual favors do so they consummate written and or oral contracts that contravene governing law. If the only proper and ethical concerns of American government are the respect for the rights of our citizens and America’s founding principles of justice and fairness, and not the various tenets and principles long ago giving rise to various proscriptions against certain social contracts, upon what proper bases are these proscriptions founded? For, they continue to exist in numerous and myriad informal and unregulated forms that have been deemed to readily devolve into abuse in previously no longer criminally contexts.

 

Sex commerce and multiple marriage partners deserve the ordinary rights of citizenship under state and federal law. These rights include the centuries old rights to: real property ownership and management; state and local tax treatment; business commerce and  investments; banking privileges; family and juvenile law; no less participation in voting and elections; expressions of faith; and public education, with its long acknowledged absence of truancy compliance, and the aggregations of proceeds brought to America, etc. Only with open access to government and society, that legalization brings, may many honest people not live in fear.

 

Lori Gayle Nuckolls, Esq.