Category Archives: regulation

In Which a Judge Gets It (Mostly) Right

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Judge Reed O’Connor of the US District Court for the Northern District of Texas ruled at the end of the summer that the Obamacare requirement that health coverage providers must provide coverage for particular aspects of health care—and do so at no cost to the individual being covered—was unconstitutional. He’s currently considering whether to make his ruling permanent and if so, whether to make his ruling applicable only to the litigants in the particular case or to make it nationwide. (As an aside, I have trouble seeing how a ruling of unconstitutionality can have any range less than national.)

Michael Cannon, Cato Institute’s Director of Health Policy Studies, testified as an expert witness in the case that

People have a right to choose whether and what kind of health insurance they need and want. The government shouldn’t be requiring people to buy coverage of any service, whether preventive or otherwise.

O’Connor’s ruling to that extent would be partially correct. However, Government also shouldn’t be dictating to private companies what they must or must not produce. That’s textbook fascism.

There’s also no authority in our Constitution for government to determine what private companies can and cannot produce.

Whose Choice Is It?

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And whose property is it?

A new law being seriously considered by lawmakers in New York City could strip landlords of the ability to perform criminal background checks on prospective tenants.

Because landlords shouldn’t be able to control who rents their property, shouldn’t be able to protect the interests of their existing tenants—who have, by dint of their rent agreements, have some property of their own in the landlord’s buildings.

This law means it’s city government property; landlords possess the buildings only in fee from the city lords.

Republican Councilwoman Inna Vernikov has the right of it:

A bill which would prohibit landlords from conducting criminal background checks of potential tenants. Murdered someone? Beat up your girlfriend? Robbed? Stabbed your neighbor? No problem. Come live among us!

Certainly felons, even violent felons, shouldn’t be blanketly denied a second chance, shouldn’t be blanketly denied an opportunity to demonstrate that they’ve rehabilitated themselves, shouldn’t be blanketly denied an opportunity at redemption.

But that should be the choice of the property owner, the landlord; it cannot be, legitimately, a choice forced upon the property owner, in a one-size-fits-all diktat by the Lords of the city.

Any Excuse

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…to extend an “emergency” in order to continue Government’s expanded powers and reduced individual liberties, an expansion that depends on that continued emergency. Here’s the Children’s Hospital Association and the American Academy of Pediatrics in a letter to President Joe Biden (D) and HHS Secretary Xavier Becerra (D):

…unprecedented levels of RSV happening with growing flu rates, ongoing high numbers of children in mental health crisis and serious workforce shortages are combining to stretch pediatric care capacity at the hospital and community level to the breaking point[.]
…
Your ongoing response to COVID-19 has successfully supported strategies to mitigate the impact of health care capacity issues for adult patients. Please take this action to allow these same strategies to be employed in service of our nation’s children.

Understand that this is the same American Academy of Pediatrics that promotes “gender-affirming care”—gender-affirming: destigmatizing gender variance—in children who, even at their tender age, think they’re confused about their sex—including in some cases puberty blockers. The Children’s Hospital Association also actively supports gender-affirming care. These are entities wholly unqualified to have medical or psychological opinions regarding the health and well-being of our children.

Notice, also, that this same hysterical “overloaded hospital” bleat was made during the Wuhan Virus situation—and no, hospitals were not, in the main, overloaded then. On the contrary, those Wuhan Virus situation strategies did nothing useful regarding the virus, but they did hammer our economy and do long-term damage to our children while expanding government powers over us average Americans.

Withal, keep in mind the origin of any shortages of medicines or medical facilities for handling the present outbreaks of respiratory virus and influenza in our children.

This situation is a direct result of school lockdowns and other moves to isolate our children from each other and from adults outside the immediate family, lockdowns and other moves that were pushed zealously by Progressive-Democratic Party politicians, teachers union managers, these medical “experts,” and the Left generally.

This forced isolation blocked continued development of our children’s immune systems, which left our children vulnerable to viruses against which they would have developed natural resistance absent that shameful, deliberate isolation. It’s no wonder viral outbreaks in our children are spiking.

We might have expected these Medical Wonders to understand and predict the impact of isolation on children’s immune systems and prepare for just these outbreaks.

No, this demand to extend a “medical” emergency is just another naked power grab by Party and Party supporters.

Financial Reporting

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A little bit in the weeds, here, but necessary for future understandings by some investors. The proximate matter is FTX’ collapse and bankruptcy (with possibly criminal activities associated).

In a footnote to the financial statements, the company said its “primary shareholder is also the primary shareholder of several related entities which do business with the company.” It didn’t say who the related parties were for any specific transaction it disclosed.
The standard accounting rules for disclosing related-party transactions are vague and have long been considered a weakness in the system. There is no clear-cut rule requiring companies to disclose the players in a related-party transaction. The rules do say, “If necessary to the understanding of the relationship, the name of the related party shall be disclosed.”

Some questions arise. Whose definitions of “necessary” and “understanding?” The way the rule is written, those definitions are left to the company—FTX, here—to determine, and what an investor or customer or client needs or wishes for his own understanding is unimportant.

FTX’s new CEO John Ray exposed part of the much larger problem in his FTX bankruptcy-court filing, in which he acknowledged that FTX’s financial information wasn’t trustworthy and that it was controlled by

 a very small group of inexperienced, unsophisticated, and potentially compromised individuals.

That potentially compromised part is key. Compromised by whom? In what way? That would seem clearly related to who those “related parties” are.

There’s more, related to arm’s length transactions, which are statutorily required in many business arrangements. Here’s a working definition of arm’s length transactions that’s good enough for our purposes:

A transaction in which the buyer and the seller have no significant, prior relationship. In an arm’s length transaction, neither party has an incentive to act against his/her own interest. That is, the seller seeks to make the price as high as he/she can, and likewise the buyer seeks to make it as low as he/she can. The negotiations for an arm’s length transaction result in the arm’s length price, which is almost always close to the market value of the asset being sold.

That drive for each party to work toward his own interest, and especially the resulting essentially market price for the things being transacted, also is key. How can an investor or a customer or a client know that a particular transaction within an FTX is legitimate or problematic under arms’ length requirements if the investor or customer or client can’t know who the related party is that’s do[ing] business with the company? And why is the investor or customer or client being actively denied this information? What’s being hidden?

This is, as RG Associates founder and member of the Financial Accounting Standards Board’s Emerging Issues Task Force, Jack Ciesielski, said,

a hole that needs to be fixed. The auditors would have to know who the related party is. Why not just put that in there? How hard can it be? By keeping it purposely opaque it’s defeating the purposes of the footnote.

And so do investors, customers, and clients need to know—hence the footnote, even if carefully vague in the present case. And hence the need to plug that loophole: require the related parties to be explicitly identified. There’s no free speech question here, no political speech would be chilled by this. Documenting business arrangements in a purely investment environment has nothing to do with our 1st Amendment.

Another Power Grab

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This one by the Securities and Exchange Commission.

A proposal under consideration by the agency would generally require brokers to route small investors’ market orders into auctions, where trading firms would compete to execute them, people familiar with the matter said. …
Brokers would have a way out. Instead of sending the orders to auctions, the brokers could attempt to have them filled at the midpoint price or better, the people said.

And

The proposed midpoint requirement and auctions would apply to market orders. Commonly used by small investors, market orders are instructions entered through a brokerage to buy or sell stocks at whatever their current market price is.

This sounds good, but in reality, it’s a solution for a nonexistent problem.

I’m one of those poor, downtrodden small investors, and my broker already uses a price improvement procedure whereby my market orders are routed to the trading house that offers the best execution price—which is the price shaded above the mid-point toward the buy price if I’m selling and below the mid-point toward the sell price if I’m buying. I’m already getting a better price than the mid-point.

My broker isn’t alone, either; most brokers offer/provide that procedure: it’s a means of competing for the small investors’ business.

But wait—don’t those trading houses pay the brokers for the orders to be routed to them? Why yes, yes they do. And those trading houses compete among themselves for the brokers’ business, which means the brokers get a range of trading houses from which to select the best price improvement for their customers.

The SEC’s…proposal…is just another exercise in power for the sake of power being carried out by SEC Chairman Gary Gensler.