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Spring 2019

ISSN 0890-913X

Volume 34, Number 1

Categories: Spring 2019 | Government

The Durability of Legislative Benefits and the Role of the Executive Branch’s Settlement Authority

Bryan P. Cutsinger, George Mason University

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TheJournalofPrivateEnterprise34(1),2019,1–14TheDurabilityofLegislativeBenefitsandtheRoleoftheExecutiveBranch’sSettlementAuthorityBryanP.Cutsinger�GeorgeMasonUniversity______________________________________________________AbstractFollowingthe2008financialcrisis,theUSDepartmentofJusticerequiredseverallargefinancialinstitutionstopaylargecashsettlementsfortheirroleinthecollapseoftheresidentialmortgage-backedsecuritiesmarket.Afractionofthesecashsettlementswasfunneledtogovernment-approvednonprofitbeneficiaries,manyofwhomhadseentheirgovernmentgrantsreducedbyCongress.Iarguethatthistransferisaninsurancecontractthatthegovernmentusestoimprovethedurabilityofcontractsbetweenspecialinterestgroupsandthelegislature.______________________________________________________JELCodes:D72,H27,P16Keywords:separationofpowers,contractualdurability,rentextraction,administrativestate,banksettlementsThispoweroverthepursemay,infact,beregardedasthemostcompleteandeffectualweapon,withwhichanyconstitutioncanarmtheimmediaterepresentativesofthepeople,forobtainingaredressofeverygrievance,andforcarryingintoeffecteveryjustandsalutarymeasure.—JamesMadison([1788]2001,p.303)Intheforminwhichweknowthisdivisionofpowerbetweenthelegislature,thejudiciary,andtheadministration,ithasnotachievedwhatitwasmeanttoachieve.Governmentseverywherehaveobtainedbyconstitutionalmeanspowerswhichthosemenhadmeanttodenythem.Thefirstattempttosecureindividuallibertybyconstitutionshasevidentlyfailed.—F.A.Hayek(1973,p.1)I.IntroductionInthewakeofthe2008financialcrisis,theUSDepartmentofJusticerequiredCitigroupandBankofAmericatopaylargesettlementsfortheirroleinthecollapseoftheresidentialmortgage-backedsecuritiesmarket.Afractionofthesemultibilliondollarsettlements,whichareintendedtoindemnifythoseharmedbytheviolatorsoffederal

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Metadata [hide]

Title	The Durability of Legislative Benefits and the Role of the Executive Branch’s Settlement Authority
Authors/Creators:	Bryan P. Cutsinger, George Mason University
Year:	2019
Volume:	34
Number:	1
Pages:	1 - 14
Publisher:	The Association of Private Enterprise Education
ISSN:	0890-913X
Document Type:	Articles
Keywords:	separation of powers, contractual durability, rent extraction, administrative state, bank settlements

Citation:
Cutsinger, Bryan P. / 2019. "The Durability of Legislative Benefits and the Role of the Executive Branch’s Settlement Authority." The Journal of Private Enterprise, 34(1): 1-14.