Trampling the Constitutional Role of Regulation
09. May, 2009 
6 Comments
Recently I have grown deeply concerned with the potential power grab by the central government over credit card interest rates. In a time of weak economic conditions in many industries and the overall economy in general, the White House and Congress assume they have the power and responsibility to lower credit card rates and greatly increase regulation over the industry, in order to protect the consumer.
Prior to 1937, Congress’s role in the regulation of commerce was quite simply defined as the “movement of goods” between states, and put most production and manufacturing outside of the regulatory power of Congress. This definition has essentially been abandoned ever since the Supreme Court, in 1937, upheld an act allowing Congress to regulate many aspects of labor through the National Labor Relations Board.
Before this case, activities within the states were left strictly to the states to regulate and it was out of the boundaries of the federal government to intervene. Today, this description of regulation would be laughed at by the bureaucrats in Washington arguing to regulate practically anything that the government doesn’t already have its hands on.
The issue of whether credit card rates and businesses should be regulated is a viable discussion. Traditionally, and constitutionally, this is an issue that should absolutely be left to the states. It is a local issue and not an interstate issue, thus taking it out of Congress’s regulation jurisdiction. At least, this is what the case would have been before 1937 when a more clear interpretation was used to define the Commerce Clause in the Constitution.
The troubling aspect of the new potential regulations of credit cards is that it is the Federal Reserve Board who is making many of the new decisions and regulations limiting credit-rate increases, set to take effect in 2010. Now, think for a moment.
If it used to be out of the constitutional boundaries of Congress to regulate local and state matters like credit card rates, where on earth does the Federal Reserve get the constitutional authority to set and carry out these regulations? It is troubling that the Constitution can be trampled on this much without so much as a peep asking where the constitutional authority for these powers is derived from.
The issue of whether these regulations are needed or worthwhile is one thing. But rough problems today will easily turn into a disaster tomorrow if there is no check on government. Today we are seeing a federal government with few boundaries or concern for following the Constitution. Our government was created under the Constitution, and the federal government and Congress specifically were given very specific and limited powers. This was generally respected for the first 150 years of our nation’s history.
Credit card regulation may certainly be beneficial on a state level. If the regulation is needed, constitutionally it is clearly and definitively a decision to be debated and made by the states, not the federal government or Federal Reserve. Currently not only is state power being trampled on, but Congress has turned and continues to turn the responsibility of the states over to a closed-off, powerful, independent agency whose very constitutionality itself is questionable.
In today’s time of calls for more federal regulation, intervention, and control over finance, it is hard to imagine a time when Congress’s role in commerce was so narrowed down to regulating the movement of goods between states. It isn’t too unlikely that the Federal Reserve will gain even more regulatory powers over the financial industry over the next several years. What’s ironic is that it is all being carried out in the name of protecting the consumer.
It is absurd to think that allowing the Federal Reserve to carry more regulatory responsibility will help consumers. They have no constitutional authority to regulate, the operators of the Fed are not elected by the people, and the primary operations of the Fed are off-limits to audits. You cannot tell me that this group can adequately protect consumers and not pander to the banking interests who run the agency.
True regulatory representation of the consumer can only be achieved through the states. If it isn’t the individuals who decide the regulations, it isn’t right to call it consumer protection, is it? It’s a head scratcher to think that the same organization who has destroyed the value of our currency (which hits the lower and middle class hardest) can stand up for consumers with a straight face.
It is largely a lack of understanding and respect for the Constitution that got us into this mess in the first place. Many in government either do not understand, or simply ignore, the restraints placed on Congress’s regulatory power and the 10th Amendment’s clear language bringing issues not given to the federal government back to the states and the people.
If it is consumers who you want to protect, all you have to do is follow, respect, and protect the Constitution. Through their local, state, and own regulatory power, the free individuals of this country can do the rest.
“If the provisions of the constitution be not upheld when they pinch as well as when they comfort, they may as well be abandoned.” — Former Associate Justice of the Supreme Court George Sutherland
David Kretzmann is a remarkably precocious and insightful teenage investor who has been investing in individual stocks since July 2005. His latest commentary on finance, the economy, government and more can be found on his website, http://davidkretzmann.com
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Huh? The *vast* majority of credit card transactions and lender/borrower relationships are interstate, not intrastate.
While I agree that the federal government should stay out of intrastate matters, that won’t help this problem by more than a tiny, tiny amount.
You need to think much, much ‘bigger’ when considering how government and big companies can work together to ‘trample’ your constitutional rights.
See: ITSSD: Americans’ Constitutional Rights Will Be Trampled Unless Congress Convenes Public Hearings on the UN Law of the Sea Convention
PRINCETON, N.J., May 5 /PRNewswire-USNewswire/ — In a new article appearing within the forthcoming issue of the Santa Clara Journal of International Law entitled, What Goes Around, Comes Around: How UNCLOS Ratification Will Herald Europe’s Precautionary Principle as US Law, international attorney Lawrence Kogan calls upon all Americans to immediately exercise their constitutionally guaranteed ‘right to know’. This article identifies the multiple pathways through which global environmental extremists, US trans-nationalists, and the 111th Congressional supermajority seek to use the highly complex United Nations Convention on the Law of the Sea (UNCLOS) as a loading platform from which to import into the American heartland very harmful UN and European-anchored environmental treaty and customary international law rules. “Unless the public demands due process of law from their congressional representatives,” emphasized Kogan, “such rules, resembling rogue waves, will collectively override US sovereignty and the supremacy of the US Constitution and its accompanying Bill of Rights”.
According to Kogan, “The US Navy continues to publicly deny the likely adverse consequences of the more than 45 plus environmental UNCLOS articles, regulations, protocols and annexes that implicitly and explicitly incorporate Europe’s Precautionary Principle. This principle is known not only to raise indirect taxes and to threaten American free enterprise by chilling investments in technological innovations, reducing economic activity and increasing product manufacturing, processing and distribution costs and service fees, but to also severely impact military planning. Indeed, since, at least the late 1990’s, foreign governments and environmental activist groups have invoked this controversial European legal nostrum to block US commercial activity, to curtail the Navy’s ability to train offshore with sonar equipment, and to impair the timely US naval exercise of customary international law rights to freedom of navigation and innocent passage, both on the high seas and in territorial waters and at the north and south poles.”
“Meanwhile,” notes Kogan, “there are ‘environmentally-enlightened’ congressional committee chairs and ranking members who appear to be enamored with the legislative and associated regulatory powers derived from Europe’s political civil law Precautionary Principle, especially those who hail from the coastal States of Alaska, California, Maine, Massachusetts, New Jersey and New York. They are busily preparing amendments to a host of US federal environmental, chemical and energy statutes that would expressly incorporate said principle as US law from within our own borders and thereby obviate the need for special US legislation to implement the UNCLOS’ land and air-based pollution provisions. For example, these amended statutes, the new carbon cap-and-trade regime currently under development and the proposal for a new federal oceans policy are designed to achieve regulatory harmonization with socialist Europe. Their effect is to attenuate and subjugate US constitutionally guaranteed individual rights, including private property, to global communal interests. In addition to raising the cost of living for all Americans, they would also create disguised environmental trade barriers that are likely to injure and trigger retaliation from US trading partners, all at a time when the US is suffering from a deep financial crisis.”
It has been observed that the Obama administration is paying lip service to ensuring Americans greater public transparency and a higher standard of governmental ethics than had its predecessors, even as it devises how to exploit the opaque federal administrative regulatory process to enshrine Europe’s Precautionary Principle as US law. Perhaps, this explains why it has yet to ‘walk the talk’ to move those congressional committees possessing oversight jurisdiction concerning the UNCLOS’ environmental, economic and tribunal components to hold open public hearings, prior to ratification, that substantively discuss their impact on the US economy, US national security, US constitutional rights and US sovereignty. If, however, ‘change’ is in the air as this administration insists, then nothing less than full disclosure will make it authentic.
The Institute for Trade, Standards and Sustainable Development (ITSSD) is a non-partisan non-profit international legal research and educational organization that examines international law relating to trade, industry and positive sustainable development around the world. An annotated version of this press release is accessible at: http://itssd.org/news.html. The full law review article is accessible at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1356837.
Phone: 609-658-7417
Fax: 609-897-9598
Email: info@itssd.org
Website: http://www.itssd.org
SOURCE Institute for Trade, Standards, and Sustainable Development
Yes, credit card transactions may fall into the interstate category, but not credit card interest rates. There is a fine line, and so far as I can see and interpret, it must be states who regulate interest rate restrictions and increases.
Good point, David. And more notable, is the fact that the intention and understanding of the commerce clause at the time of ratification wasn’t an excuse for the federal government to tell business how to operate. It was meant as a way to prevent states from interfering with trade through restrictive tariffs and the like.
Some great reading on this subject from Prof. Rob Natelson:
http://www.umt.edu/law/faculty/natelson/articles/Commerce%20Clause.pdf
I don’t understand the fine line. If most all credit card borrower/lender relationships are interstate, then it logically follows that the vast majority of interest paid to lenders is interstate commerce as well.
And they are. Mostly. Don’t be fooled by the fact that you’re sending a payment in to a local address. Practically every significant bank in the country is incorporated in the state of Delaware (or owned by another bank that is). Some portion of that interest payment is almost certainly being transferred to Delaware in the form of state taxes.
Very few people live in Delaware compared to the rest of the country. Even those who do pay the vast majority of their interest payments to banks that have their headquarters in other states.
Additionally, the advertisements of those interest rates, in almost all cases, will eventually cross state lines. Finally, in very nearly every single case, the actual payment you send in for that interest will cross state lines by being routed through an interstate payment clearing system.
Are there are few examples of completely intrastate credit card transactions somewhere in the country? Of course. Should, in theory, the federal government exempt those particular transactions’ interest from federal regulation. Sure, I’ll go along with that.
Again, though, it won’t make any practical difference.
It is not only the federal government that intrudes into legal and regulatory spheres of the State. There are numerous examples of where the States intrude into the federal sphere of legislation and regulation…
ITSSD: ‘Putting Country First’ Means Defending America’s Sovereignty,
Constitution and Free Enterprise System Against Foreign Incursion
Law Review Article Reveals Mostly Blue Party Efforts to Help Foreigners
‘Change’ America’s Regulatory Landscape at State and Local Levels
PRINCETON, N.J., Sept. 8 /PRNewswire-USNewswire/ — In a new Temple Political & Civil Rights Law Review article entitled, The Extra-WTO Precautionary Principle: One European ‘Fashion’ Export the United States Can Do Without, international trade and regulatory lawyer Lawrence Kogan documents how America’s Blue Party is quietly assisting our transatlantic cousins to reform the common law foundations of America’s unique constitutional and free enterprise systems in Europe’s continental civil law image.
“The unfortunate reality is that green-socialist Europe is increasingly
governing the American way of life, that is, re-colonizing America through
’soft (law) power’, unless our political leaders ‘put country first’ and act aggressively to reverse this trend”, emphasizes Kogan. “Protectionist Europe has long sought to undermine U.S. product design, process and manufacturing methods by imposing on American global supply-chains and small businesses its costly, non-science-based and WTO-inconsistent environmental requirements which are also promoted globally by the politically unaccountable institutions of the United Nations.”
According to Kogan, “European governments and like-minded U.S. politicians
have strongly criticized America for refusing to ratify European-crafted UN
environmental treaties, and now call for fundamental domestic ‘change’ to
rehabilitate America’s image abroad.” To facilitate this transformation,
“Mostly Blue Party legislators and executives have opened up the doors of U.S. statehouses and regulatory agencies to Europe’s collectivist, communitarian model of rulemaking, thereby placing America’s individual rights-based federalist system and Americans’ constitutionally guaranteed exclusive private property rights at considerable risk.” “Furthermore”, notes Kogan, “This sovereign incursion threatens to tilt the ongoing global competition between Anglo-American (negative-rights-based) and Continental (social-redistributionist) capitalism” in Europe’s favor.
This raises many questions to which the American electorate deserves clear and unambiguous answers. For example, “Will our current and future leaders defend, at the federal, state and local levels, America’s founding principles which have enabled the U.S. throughout its history to remain a nation without peers? Or, will they simply decide, on political correctness grounds, to broad-brush these traditions away for the sake of ‘global solidarity’?”
The Institute for Trade, Standards and Sustainable Development (ITSSD) is a
non-partisan non-profit international legal research and educational
organization that examines international law relating to trade, industry and positive sustainable development around the world. This ITSSD study is
accessible online at: http://www.itssd.org/Kogan%20171.2.pdf .
CONTACT: ITSSD, +1-609-951-2222, info@itssd.org