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Volume 92.3
Special-Purpose Governments
Conor Clarke
Associate Professor of Law, Washington University in St. Louis School of Law.

We thank Bruce Ackerman, Lucian Bebchuk, Robert Ellickson, Daniel Epps, Edward Fox, Jens Frankenreiter, Clayton Gillette, Brian Highsmith, Noah Kazis, Reinier Kraakman, Zachary Liscow, Jon Michaels, Mariana Pargendler, and David Schleicher, as well as those who provided feedback from presentations at Yale Law School and the annual meeting of the American Law and Economics Association. We also thank Josh Kaufman, Daniella Apodaca, Jonah Klausner, and the other editors of the University of Chicago Law Review for their excellent feedback on both substance and style.

Henry Hansmann
Oscar M. Ruebhausen Professor Emeritus, Yale Law School.

We thank Bruce Ackerman, Lucian Bebchuk, Robert Ellickson, Daniel Epps, Edward Fox, Jens Frankenreiter, Clayton Gillette, Brian Highsmith, Noah Kazis, Reinier Kraakman, Zachary Liscow, Jon Michaels, Mariana Pargendler, and David Schleicher, as well as those who provided feedback from presentations at Yale Law School and the annual meeting of the American Law and Economics Association. We also thank Josh Kaufman, Daniella Apodaca, Jonah Klausner, and the other editors of the University of Chicago Law Review for their excellent feedback on both substance and style.

When one thinks of government, what comes to mind are familiar general-purpose entities like states, counties, cities, and townships. But more than half of the 90,000 governments in the United States are strikingly different: They are “special-purpose” governments that do one thing, such as supply water, fight fire, or pick up the trash. These entities remain understudied, and they present at least two puzzles. First, special-purpose governments are difficult to distinguish from entities that are typically regarded as business organizations—such as consumer cooperatives—and thus underscore the nebulous border between “public” and “private” enterprise. Where does that border lie? Second, special-purpose governments typically provide only one service, in sharp contrast to general-purpose governments. There is little in between the two poles—such as two-, three-, or four-purpose governments. Why? This Article answers those questions—and, in so doing, offers a new framework for thinking about special-purpose government.

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Volume 92.3
Decentering Property in Fourth Amendment Law
Michael C. Pollack
Professor of Law & Associate Dean for Faculty Development, Benjamin N. Cardozo School of Law.

The authors share credit and responsibility for this Article equally. The authors are grateful to Maureen Brady, Morgan Cloud, Mailyn Fidler, Barry Friedman, Ben Grunwald, Alma Magaña, and Stewart Sterk, along with participants in the Cardozo Junior Faculty Workshop for helpful conversations, suggestions, comments, and critiques. Michael Pollack thanks the Stephen B. Siegel Program in Real Estate Law for research support.

Matthew Tokson
Professor of Law, University of Utah, S.J. Quinney College of Law.

The authors share credit and responsibility for this Article equally. The authors are grateful to Maureen Brady, Morgan Cloud, Mailyn Fidler, Barry Friedman, Ben Grunwald, Alma Magaña, and Stewart Sterk, along with participants in the Cardozo Junior Faculty Workshop for helpful conversations, suggestions, comments, and critiques. Michael Pollack thanks the Stephen B. Siegel Program in Real Estate Law for research support.

The canonical test for Fourth Amendment searches looks to whether the government has violated a person’s reasonable expectation of privacy. Yet the Supreme Court has recently added a property-based test to address cases involving physical intrusions. Further, influential judges and scholars have proposed relying primarily on property in determining the Fourth Amendment’s scope. This Article exposes the overlooked flaws of a property-centered Fourth Amendment. It examines the complications of property law, explores the malleability of property rights, and reveals how governments can manipulate them. Normatively, Fourth Amendment regimes based on property are likely to be underinclusive and grounded in trivial physical contact while ignoring greater intrusions. Finally, because property is unequally distributed, its use as a determinant of Fourth Amendment protections risks leaving disadvantaged members of society with the least protection. While property concepts will sometimes be relevant, they should be used very carefully, and very little, in Fourth Amendment law.

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Volume 92.3
Noisy Factors in Law
Adriana Z. Robertson
Donald N. Pritzker Professor of Business Law, The University of Chicago Law School.

We thank Lucian Bebchuk, Alon Brav, Ryan Bubb, Ed Cheng, Quinn Curtis, Elisabeth de Fontenay, Jared Ellias, Jill Fisch, Joe Grundfest, Cam Harvey, Scott Hirst, Colleen Honigsberg, Marcel Kahan, Louis Kaplow, Jonathan Klick, Brian Leiter, Saul Levmore, Dorothy Lund, John Morley, Mariana Pargendler, Elizabeth Pollman, Roberta Romano, Paolo Saguato, Holger Spamann, George Vojta, and Michael Weber for valuable suggestions and discussions. This Article has benefited from comments by workshop participants at Columbia Law School, George Mason University Antonin Scalia Law School, Georgetown University Law Center, Harvard Law School, Stanford Law School, UC Berkeley School of Law, the University of Chicago Law School, the University of Oxford Faculty of Law, the University of Pennsylvania Carey Law School, the University of Toronto Faculty of Law, the University of Virginia School of Law, and the Washington University School of Law, as well as at the American Law and Economics Association Annual Meeting, the Corporate & Securities Litigation Workshop, the Labex ReFi-NYU-SAFE/LawFin Law & Banking/Finance Conference, and the Utah Winter Deals Conference. Robertson gratefully acknowledges the support of the Douglas Clark and Ruth Ann McNeese Faculty Research Fund. Katy Beeson and Levi Haas provided exceptional research assistance. All errors are our own.

Pat Akey
Associate Professor of Finance, University of Toronto; Visiting Professor, INSEAD.

We thank Lucian Bebchuk, Alon Brav, Ryan Bubb, Ed Cheng, Quinn Curtis, Elisabeth de Fontenay, Jared Ellias, Jill Fisch, Joe Grundfest, Cam Harvey, Scott Hirst, Colleen Honigsberg, Marcel Kahan, Louis Kaplow, Jonathan Klick, Brian Leiter, Saul Levmore, Dorothy Lund, John Morley, Mariana Pargendler, Elizabeth Pollman, Roberta Romano, Paolo Saguato, Holger Spamann, George Vojta, and Michael Weber for valuable suggestions and discussions. This Article has benefited from comments by workshop participants at Columbia Law School, George Mason University Antonin Scalia Law School, Georgetown University Law Center, Harvard Law School, Stanford Law School, UC Berkeley School of Law, the University of Chicago Law School, the University of Oxford Faculty of Law, the University of Pennsylvania Carey Law School, the University of Toronto Faculty of Law, the University of Virginia School of Law, and the Washington University School of Law, as well as at the American Law and Economics Association Annual Meeting, the Corporate & Securities Litigation Workshop, the Labex ReFi-NYU-SAFE/LawFin Law & Banking/Finance Conference, and the Utah Winter Deals Conference. Robertson gratefully acknowledges the support of the Douglas Clark and Ruth Ann McNeese Faculty Research Fund. Katy Beeson and Levi Haas provided exceptional research assistance. All errors are our own.

Mikhail Simutin
Professor of Finance, University of Toronto.

We thank Lucian Bebchuk, Alon Brav, Ryan Bubb, Ed Cheng, Quinn Curtis, Elisabeth de Fontenay, Jared Ellias, Jill Fisch, Joe Grundfest, Cam Harvey, Scott Hirst, Colleen Honigsberg, Marcel Kahan, Louis Kaplow, Jonathan Klick, Brian Leiter, Saul Levmore, Dorothy Lund, John Morley, Mariana Pargendler, Elizabeth Pollman, Roberta Romano, Paolo Saguato, Holger Spamann, George Vojta, and Michael Weber for valuable suggestions and discussions. This Article has benefited from comments by workshop participants at Columbia Law School, George Mason University Antonin Scalia Law School, Georgetown University Law Center, Harvard Law School, Stanford Law School, UC Berkeley School of Law, the University of Chicago Law School, the University of Oxford Faculty of Law, the University of Pennsylvania Carey Law School, the University of Toronto Faculty of Law, the University of Virginia School of Law, and the Washington University School of Law, as well as at the American Law and Economics Association Annual Meeting, the Corporate & Securities Litigation Workshop, the Labex ReFi-NYU-SAFE/LawFin Law & Banking/Finance Conference, and the Utah Winter Deals Conference. Robertson gratefully acknowledges the support of the Douglas Clark and Ruth Ann McNeese Faculty Research Fund. Katy Beeson and Levi Haas provided exceptional research assistance. All errors are our own.

For years, academic experts have championed the widespread adoption of the “Fama-French” factors in legal settings. Factor models are commonly used to perform valuations, performance evaluation and event studies across a wide variety of contexts, many of which rely on data provided by Professor Kenneth French. Yet these data are beset by a problem that the experts themselves did not understand: In a companion article, we document widespread retroactive changes to French’s factor data. These changes are the result of discretionary changes to the construction of the factors and materially affect a broad range of estimates. In this Article, we show how these retroactive changes can have enormous impacts in precisely the settings in which experts have pressed for their use. We provide examples of valuations, performance analysis, and event studies in which the retroactive changes have a large—and even dispositive—effect on an expert’s conclusions.

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Book review
Volume 92.3
The Geopolitics of Digital Regulation
Aziz Z. Huq
Frank and Bernice J. Greenberg Professor of Law, The University of Chicago Law School, supported by the Frank J. Cicero fund.

Thanks to Uven Chong for research assistance. Anu Bradford offered gracious, insightful, and generous comments on a draft that strikes to be fair, if critical, of her work. For her careful engagement, I am respectfully and deeply grateful. Editors of the University of Chicago Law Review, including Helen Zhao, Daniella Apodaca, and Nathan Hensley, did excellent work on the text.

Contemporary regulation of new digital technologies by nation-states unfolds under a darkening shadow of geopolitical competition. Three recent monographs offer illuminating and complementary maps of these geopolitical conflicts. Folding together insights from all three books opens up a new, more perspicacious understanding of geopolitical dynamics. This perspective, informed by all three books under consideration here, suggests grounds for skepticism about the emergence of a deep regulatory equilibrium centered on the emerging slate of European laws. The area of overlap will be strictly limited to less important questions by growing bipolar geostrategic conflict between the United States and China. Ambitions for global regulatory convergence when it comes to new digital technology, therefore, should be modest.

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Volume 92.2
The Constitutional Money Problem
Brian Galle
Professor of Law and Agnes Williams Sesquicentennial Chair in Tax Policy, Georgetown University Law Center.
Aziz Z. Huq
Frank and Bernice J. Greenberg Professor of Law, The University of Chicago Law School, supported by the Frank J. Cicero Fund.

Under the Supreme Court’s contemporary approach to constitutional meaning, there is a surprising degree of doubt about whether key aspects of the Federal Reserve (“Fed”)—its independence from Congress and the President, and even its power to create money—are constitutional. In particular, we propose that the structure and monetary authority of the Fed can be justified by Article I, Section 8 borrowing power, and by the Public Debt Clause of the Fourteenth Amendment. In 1935, eight members of the Court agreed that these provisions require credible commitments: to meaningfully exercise the borrowing power, Congress must be able to promise creditors it will not undermine the value of its debts. We argue that judicial enforcement of sovereign promises is unlikely to fulfill this goal. Instead, the exercise of monetary authority by independent central banks is the most promising current solution to the credible sovereign borrower problem.

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Legislating for the Future
Jonathan S. Gould
Class of 1965 Professor of Law, University of California, Berkeley.

For helpful comments and conversations, we are grateful to Dan Awrey, Daniel Farber, Brian Feinstein, Brian Galle, Aziz Huq, Howell Jackson, Kathryn Judge, Patricia McCoy, Arthur Wilmarth, and workshop participants at the University of Chicago Law School.

Rory Van Loo
Visiting Professor of Law, Harvard Law School.

For helpful comments and conversations, we are grateful to Dan Awrey, Daniel Farber, Brian Feinstein, Brian Galle, Aziz Huq, Howell Jackson, Kathryn Judge, Patricia McCoy, Arthur Wilmarth, and workshop participants at the University of Chicago Law School.

Public policy must address threats that will manifest in the future. Legislation enacted today affects the severity of tomorrow’s harms arising from biotechnology, climate change, and artificial intelligence. This Essay focuses on Congress’s capacity to confront future threats. It uses a detailed case study of financial crises to show the limits and possibilities of legislation to prevent future catastrophes. By paying insufficient attention to Congress, the existing literature does not recognize the full nature and extent of the institutional challenges in regulating systemic risk. Fully recognizing those challenges reveals important design insights for future risk legislation.

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Volume 92.2
Regionalism and the Federal Reserve Banks
Kathryn Judge
Harvey J. Goldschmid Professor of Law at Columbia Law School.

The authors are grateful to Scott Baker, Michael Held, Patricia Mosser, Nathan Tankus, and the participants at the Washington University Law and Economics Workshop and the Women in Law and Finance Workshop at Wharton for helpful comments on earlier drafts. Brian Japari and Alex MacDonald provided exceptionally helpful research assistance. Research for this publication is made possible in part by The Leichtman-Levine Faculty Research Fund at Columbia Law School.

Lev Menand
Associate Professor of Law at Columbia Law School.

The authors are grateful to Scott Baker, Michael Held, Patricia Mosser, Nathan Tankus, and the participants at the Washington University Law and Economics Workshop and the Women in Law and Finance Workshop at Wharton for helpful comments on earlier drafts. Brian Japari and Alex MacDonald provided exceptionally helpful research assistance. Research for this publication is made possible in part by The Leichtman-Levine Faculty Research Fund at Columbia Law School.

Regionalism is central to our country’s central banking system. Rather than rely on a single organization, Congress created twelve Federal Reserve Banks (FRBs), each in a different part of the country. These FRBs are an undertheorized example of how the federal government uses regional bodies to formulate and administer federal policy. This Essay examines the regional aspect of the FRBs, distinguishing between three types of regionalism: regional policy variation, regional policy formulation, and regional policy implementation. Regional policy variation makes less and less sense in today’s national and interconnected financial system. The trend of shifting decisions from the FRBs to national bodies should be continued. But regional voice and implementation should be retained. The Open Market Committee is critical for incorporating regional perspectives into uniform, national policy, and the FRBs carry out these policies at a regional level in ways that enhance legitimacy, improve efficacy, and promote resiliency.

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Volume 92.2
Public Investment as Constitutional Power and Accountability Challenge
Saule T. Omarova
Earle Hepburn Professor of Law at the University of Pennsylvania.

We thank Aziz Huq, Adriana Robertson, and all participants in conferences and workshops at the University of Chicago and Cornell Law Schools.

Brian Richardson
Associate Professor of Law at Cornell University.

We thank Aziz Huq, Adriana Robertson, and all participants in conferences and workshops at the University of Chicago and Cornell Law Schools.

We offer a way of thinking about public-investment institutions as creatures of both public law and private markets. Placing public investment—a distinct public function—in the context of constitutional debates on the legitimate reach of the administrative state, we focus the search for legitimate institutional structure on the interaction between the entity’s efficacy as a market actor and the concept of public accountability. This tension, as well as synergy, is where the fundamental hybridity of public-investment institutions is most visible. We argue that only by considering the unique objectives and tools of public investment as a legitimate sovereign activity can we design workable mechanisms of democratic accountability for public-investment institutions. We hope that our observations shed light on the broader debate about the optimal implementation mechanisms for the nation’s reemerging industrial policy.

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Volume 92.2
Financial Stability and Bank Agency Discretion
Christina Parajon Skinner
Associate Professor, The Wharton School of the University of Pennsylvania; Co-Director, Wharton Initiative on Financial Policy and Regulation; Research Member, European Corporate Governance Institute.

The pursuit of financial stability goals over the past fifteen years has fueled the perception that a regulatory “expertocracy” governs the field of banking, rather than market forces. This Essay discusses four areas where financial stability or systemic risk mandates—either express or assumed—empowered bank regulators and supervisors to substitute their judgment for that of Congress: (1) the Financial Stability Oversight Council’s power to designate nonbank systemically important financial institutions; (2) the Federal Deposit Insurance Corporation’s power to bail out uninsured bank depositors; (3) the adoption of inter-national standards of bank regulation through Basel; and (4) the Federal Reserve and Office of the Comptroller of the Currency’s power to deny bank merger applications on financial stability grounds.

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Volume 92.2
Central Clearing the U.S. Treasury Market
Yesha Yadav
Milton R. Underwood Chair, Associate Dean and Professor of Law, Vanderbilt Law School.

We benefited greatly from thoughtful comments and conversations in the preparation of this Essay. The authors are enormously grateful to Dan Awrey, David Bowman, Jonathan Brogaard, Adam Copeland, Darrell Duffie, Ellen Correia Golay, Frank Keane, Kate Judge, Megha Kalbag, Mike Koslow, Dina Marchioni, Rebecca McCaughrin, Saule Omarova, Julie Remache, Morgan Ricks, Will Riordan, Pradeep Yadav and participants at the University of Chicago Law Review’s Symposium on Financial Regulation in the Crucible: Private and Public Law Perspectives on a Sector in Crisis. We are also most appreciative of the extraordinarily talented editors and staff at the University of Chicago Law Review for their careful edits, commentary and patience. The views expressed by the authors are their own and may not reflect the views of the Federal Reserve Bank of New York or the Federal Reserve System.

Joshua Younger
Policy Advisor at the Federal Reserve Bank of New York and Lecturer in Law at Columbia Law School.

We benefited greatly from thoughtful comments and conversations in the preparation of this Essay. The authors are enormously grateful to Dan Awrey, David Bowman, Jonathan Brogaard, Adam Copeland, Darrell Duffie, Ellen Correia Golay, Frank Keane, Kate Judge, Megha Kalbag, Mike Koslow, Dina Marchioni, Rebecca McCaughrin, Saule Omarova, Julie Remache, Morgan Ricks, Will Riordan, Pradeep Yadav and participants at the University of Chicago Law Review’s Symposium on Financial Regulation in the Crucible: Private and Public Law Perspectives on a Sector in Crisis. We are also most appreciative of the extraordinarily talented editors and staff at the University of Chicago Law Review for their careful edits, commentary and patience. The views expressed by the authors are their own and may not reflect the views of the Federal Reserve Bank of New York or the Federal Reserve System.

The market for Treasury securities, a deep and liquid market for risk-free debt, has anchored an ambitious and creative U.S. dollar economy while also ensuring the safety and soundness of its financial and monetary system. But as the market has grown, a series of disruptions to Treasury market trading have prompted policymakers to explore measures to strengthen the market’s foundations and shore up its resilience. This Essay considers this regulatory response. It focuses on the introduction of mandatory central clearing for most trades in U.S. Treasuries—a proposal seeking to significantly reshape the day-to-day functioning of the Treasury market. Central clearing is a well-established means by which to reduce the risk of loss associated when trading parties default. We analyze this mandate, detailing its likely advantages as well as its potential trade-offs from a public policy perspective.

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Volume 92.2
Securities Regulation and Administrative Law in the Roberts Court
David Zaring
Elizabeth F. Putzel Professor, The Wharton School at the University of Pennsylvania.

Thanks to Vincent Buccola, Christine Chabot, Haiyun Damon-Feng, Donna Nagy, Christina Skinner, Chris Walker, and for comments at presentations at the University of Chicago, the 2024 ABA Administrative Law Section Spring Meeting, and the 2024 National Business Law Scholars Conference. Thanks also to Rachel Shoemaker and Elizabeth Weise for research assistance.

This Essay compares a judicial revolution that is happening to one that is not. Both the change and the status quo are being managed by the current Supreme Court. That Court has, when it comes to administrative law, shown a capacity to revisit everything. But when it comes to securities regulation, it has resisted change. What is the explanation for this divergent approach between general regulation, which the Court has sought to police, and securities regulation, which the Court has left alone? Some scholars have argued that the Supreme Court is simply uninterested in securities regulation, but the Court now hears proportionately more securities cases than it once did. Others dispute the premise that the Court supports corporate America. And, of course, the Roberts Court could change its approach to securities regulation in time. But I think the divergence suggests that the Court wants to police public rights and rights against the state but is less interested in reformulating the standards for private disputes, such as disputes between shareholders and managers.

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Volume 92.1
Scrutinizing Sex
Jessica A. Clarke
Robert C. and Nanette T. Packard Professor of Law, University of Southern California Gould School of Law.

Thanks to Courtney Cahill, Mary Anne Case, David Cruz, Mike Dorf, Ben Eidelson, Katie Eyer, Aziz Huq, Courtney Joslin, Craig Konnoth, Laura Lane-Steele, Chan Tov McNamarah, Laura Portuondo, Camille Gear Rich, Naomi Schoenbaum, Ann Tweedy, Ezra Young, Adam Zimmerman, and workshop participants at the 2024 West Coast Sexuality & Gender Law Workshop, Cornell Law School, and Vanderbilt Law School for feedback, and to Molly Gray for research assistance.

Critics of the Supreme Court’s equal protection jurisprudence despair that the Court conceives of discrimination as the mere classification of individuals on forbidden grounds, such as race and sex, rather than systemic patterns of subordination. On the Court’s anticlassification theory, affirmative action, which relies on overt racial or gender classifications, is generally forbidden. Such context-insensitive anticlassification rules could, in principle, extend to individuals who are members of groups often regarded with hostility and suspicion, such as transgender people. Indeed, this is how most trial courts have approached recent laws that classify individuals based on sex to exclude transgender people. However, appellate courts have refused to take anticlassification rules seriously. This Article argues that all sex classifications, like all race-based ones, ought to trigger heightened constitutional scrutiny. It draws support from the principles undergirding anticlassification rules announced by the Roberts Court, most recently in its university affirmative action decisions.