HUD and CFPB "Spanked" By Supreme Court

[Washington, D.C.; June 4th, 2012]

The U.S. Supreme Court, in a recent unanimous (9-0) decision of Freeman v. Quicken Loans, has struck a major blow to overreaching federal regulatory discretion by agencies.

Writing for High Court, Justice Antonin Scalia expressed the Court's view that the Department of Housing and Urban Development's as well as the new Consumer Financial Protection Bureau's aggressive assertion of their regulatory authority was "manifestly inconsistent with ["the 1974 federal law known as Respa, for the Real Estate Settlement Procedures Act"]".

Respa forbids providers of real-estate services—title insurance, appraisals and the like—from taking kickbacks or splitting the fees they receive. In 2001 HUD quietly expanded the law's reach by declaring it wasn't limited to "situations where at least two persons split or share an unearned fee."

The Supreme Court disagreed, explaining in Justice Antonin Scalia's opinion that the little-known 1974 Respa law's text "clearly describes two distinct exchanges", not an exchange of fees of a company with itself.

In the main case, Freeman v. Quicken Loans, three aggrieved married couples (plaintiffs) sued, alleging that Quicken Loans had illegally split fees with itself.

The Solicitor General sided with them, arguing that HUD indeed had the right to interpret the statute, had done so properly, and the Court should give deference to its decision. Also chiming in was the senior litigator from the new consumer protection bureau, who was a signatory to the government's amicus brief on the side of the plaintiffs. (The consumer bureau now enforces Respa, thanks to the federal Dodd-Frank Law).

The nine justices of the U.S. Supreme Court, however, disagreed strongly with this argument, stressing the point that the U.S. Congress makes the laws and the federal bureaucracy implements the laws. Nothing more.

[WSJ, Monday, 6-4-2012]

FACEBOOK and ZUCKERBERG: Cash in a Flash

Years ago, when Bill Gates was still CEO of Microsoft (NAS: MSFT) , he described a simple principle he used to manage the company's balance sheet.

"I came up with this incredibly conservative approach that I wanted to have enough money in the bank to pay a year's worth of payroll even if we didn't get any payments coming in," he said. "I've been almost true to that the whole time."

Facebook (NAS: FB) is taking this philosophy to a whole new level. The company raised $6.4 billion of cash after going public on Friday. Regulatory filings detailing its pro forma balance sheet shows Facebook now has $10.3 billion of total cash and cash equivalents.

How does that stack up against Gates' principle?

Accounting varies between companies, so it's hard to get an apples-to-apples comparison. But here goes: Facebook had total selling, general, and administrative expenses (SG&A) of $835 million in the 12 months ended March 31. With $10.3 billion of cash, that would pay its overhead expenses at headquarters for more than 12 years without a dime of revenue.

Even compared with Apple -- known for its ludicrously large cash hoard -- Facebook is still the new king of cash. And its cash in relative terms trounces other tech giants like Google, Cisco, and Microsoft:

Now, if we're really talking about overhead costs here, it might be appropriate to add in part of cost of goods sold. For Facebook that includes the salaries of workers at operating segments like server farms. Including these expenses would drop the company's how-many-years-can-you-last-without-revenue metric to something like eight years (it would also drop the figures for the other companies shown in the chart).

Either way, the numbers are huge. Facebook has more cash than it knows what to do with.
In fact, it virtually admits as much in its IPO prospectus. Here's what the company says about its new cash hoard (emphasis added):

We intend to use the net proceeds to us from our initial public offering for working capital and other general corporate purposes; however, we do not currently have any specific uses of the net proceeds planned. We may use a portion of the net proceeds to us to satisfy a portion of the anticipated tax withholding and remittance obligations related to the initial settlement of our outstanding RSUs. Additionally, we may use a portion of the proceeds to us for acquisitions of complementary businesses, technologies, or other assets. However, we have no commitments to use the proceeds from this offering for any such acquisitions or investments at this time.

[http://www.fool.com/investing/general/2012/05/26/1-of-the-craziest-facebook-numbers-i-know.aspx, Morgan Housel, 5/26/2012; S&PCapitalIQ]

CANNIBALISM IN AMERICA: HANNIBAL "The Cannibal" Dines in Maryland?

Question: Is "Cannibalism" illegal in the U.S.?

A 21-year old college student, Alexander Kinyua has admitted this week to killing his 37-year old male housemate and dining on his heart as well as portions of his brain. He has been charged with first-degree murder and is being held in the Harford County, Maryland detention center without bail.

The act of "anthropophagy", or cannibalism, is reported to be on the rise throughout the world, including here in North America. It is widely considered by many to be the ultimate "cultural taboo".

Although still rare, cannibalism or "anthropophagy" is not considered illegal in most countries, per se, including the U.S.

"Hannibal Lector" Arrested in Maryland?

A 21-year old college student, a man, has been arrested for murder and cannibalism in Maryland.

The arrest of the man, Alexander Kinyua, came about a week after his "friend" and roommate, Kiyoe Bonsafo Agyei-Kodie, age 37, went missing.

Alexander "the Cannibal" Kinyua told investigators that he ate the heart and portions of the brain of a man whose dismembered remains were found in his Joppa home, according to a grisly account from the Harford County Sheriff’s Office.

Kinyua, an electrical engineering student, was ordered held without bail at a court appearance Thursday afternoon.

Monica Worrell, a spokeswoman for the Harford County Sheriff’s Office, said today that Agyei-Kodie had been reported missing, but information collected by detectives “didn’t pass the smell test.” On Monday, police released a public appeal for help in locating him.

Late Tuesday night, Antony Kinyua, notified police that his son, Kinyua’s brother, had found what they believed were human remains in the basement of the house, according to charging documents. Upon their arrival, Jarrod Kinyua told police he found a human head and two human hands inside metal tins, under a blanket in the laundry room.

When he asked Alexander Kinyua about the remains, Jarrod Kinyua said his brother denied that they were human and said they were animal remains, according to charging documents. After calling his father, Antony Kinyua, downstairs, the pair discovered the remains had been moved and Alexander Kinyua was washing out the metal tins.

With a search and seizure warrant for the location, deputies were able to locate the head and hands on the main floor of the house, according to charging documents. They also interviewed Alexander Kinyua, who allegedly admitted that he had killed Agyei-Kodie by cutting him up with a knife and afterward, ingested his heart and portions of his brain.

Kinyua also directed police to Towne Baptist Church to find the rest of the remains, which were found in a Dumpster on the property, according to charging documents.

The case comes on the heels of shocking incidents in cities like Miami, where a naked man believed to be high on bath salts ate another man’s face, and New Jersey, where a man disemboweled himself and reportedly threw his intestines at police officers. Police there say they aren’t sure whether the man, Wayne Carter, was on drugs or suffering from mental illness.

At his first court appearance, defense attorney for Kinyua requested that reasonable bail to be set in the case, adding that Kinyua has been in Harford County for six years and in Maryland for nine years. He is self-employed and performs consulting work, she added.

Upon questioning by Judge John L. Dunnigan, Kinyua said that all of his family members resided in Maryland and he was originally from Nairobi, Kenya.

The Assistant State’s Attorney cited those out-of-country ties, as well as the “grisly” nature of the crime, when she asked for Kinyua to be held without bail.

The charges are not Kinyua’s first in recent weeks, and a previous arrest and Kinyua’s online postings point to a troubled man. In January, he was disenrolled from the ROTC program after two-and-a-half-years of participation, said a professor of military service who oversees the program. Officials said it followed a disciplinary incident.

Then on May 20, Kinyua, who otherwise does not have a criminal record in Maryland, was charged with first-degree assault and reckless endangerment in Baltimore in connection with an incident that allegedly occurred May 19 at the apartments, according to court records.

In that case, according to police, Kinyua “randomly” attacked another Morgan State student in a doorway of the apartment complex with a baseball bat, then fled into a nearby wooded area. The victim, listed as Joshua Ceasar, suffered fractures to his skull, arm, shoulder, as well as blindness to his left eye. The first responding officer saw Ceasar stumbling toward her, with blood coming from his forehead, and the officer noted a large amount of blood in the doorway.

Kinyua was ordered held on $220,000 bond in that case, and university officials said the school was in the process of expelling him.

Massachusetts "Defense of Marriage Act" (DoMA) Ruled Unconstitutional

The 1st Circuit U.S. Court of Appeals in Boston, Massachusetts ruled today (Thursday, May 31st, 2012) that the "Defense of Marriage Act" (DoMA) is unconstitutional. The Massachusetts law denies a range of federal benefits to same-sex married couples in Massachusetts. Until now.
The DoMA defined marriage as a union between a man and a woman. This 1st Circuit Court ruled that it discriminates against gay couples.

The DoMA law was passed in 1996 at a time when it appeared Hawaii would legalize gay marriage. Since then, many states have instituted their own bans on gay marriage, while eight states have approved it, led by Massachusetts in 2004, and followed by Connecticut, New York, Iowa, New Hampshire, Vermont, Maryland, Washington state and the District of Columbia. Maryland and Washington’s laws are not yet in effect and may be subject to referendums.

The appeals court agreed with a lower court judge who ruled in 2010 that the law is unconstitutional because it interferes with the right of a state to define marriage and denies married gay couples federal benefits given to heterosexual married couples, including the ability to file joint tax returns.
The 1st Circuit said its ruling wouldn’t be enforced until the U.S. Supreme Court decides the case, meaning that same-sex married couples will not be eligible to receive the economic benefits denied by DOMA until the high court rules.

During arguments before the court last month, a lawyer for gay married couples said the law amounts to "across-the-board disrespect." The couples argued that the power to define and regulate marriage had been left to the states for more than 200 years before Congress passed DoMA.

An attorney defending the law argued that Congress had a rational basis for passing it in 1996, when opponents worried that states would be forced to recognize gay marriages performed elsewhere. The group said Congress wanted to preserve a traditional and uniform definition of marriage and has the power to define terms used to federal statutes to distribute federal benefits.
[msnbc.com, May 31, 2012; The Associated Press (AP), May 31, 2012]

LEGAL UPDATES:

The Consumer Financial Protection Bureau (CFPBB) released a "draft" rule on May 24, 2012 outlining how it plans to supervise debt collectors, consumer credit reporting agencies, money services companies and other small nonbanks that engage in "activities that pose risks to consumers."
International judges (ICC) have sentenced former Liberian President Charles Taylor to an unprecedented 50 years imprisonment (on Wednesday, May 30, 2012), ruling that he was responsible for "some of the most heinous and brutal crimes recorded in human history" by arming and supporting Sierre Leone rebels in return for "blood diamonds".
[The Legal Times, Wednesday, 5/30/2012]

Maryland: Murder Conviction Overturned.
The Maryland Court of Appeals, the state's highest court, has ordered a new trial for a man convicted of felony murder 36 years ago in the killing of a Hagerstown, Maryland police officer.
In the process the high court has reopened the courthouse door, so to speak, to the state's inmates (for new trials) convicted of violent crimes prior to 1980, when Maryland judges' jury instructions were merely "advisory".
[The Daily Record, Tuesday, May 29, 2012]

GRAND ROUNDS: JOHNS HOPKINS UNIVERSITY MEDICINE
Symposium: "The Marriage of Current Law with Current Medicine"; Speaker: Attorney Charles Jerome Ware; 10:00 AM, Wednesday, November 7, 2012; Johns Hopkins University Hospital Baltimore, Maryland

GRANDROUNDS: JOHNS HOPKINS UNIVERSITY MEDICINE

"The Marriage of Current Law with Current Medicine", Speaker: Attorney Charles Jerome Ware, Wednesday, November 7th, 2012
Zayed 2119A Auditorium