To maximize profits, major pharmaceutical companies (“pharma”) primarily rely on two disparate business practices innovation and marketing. Obviously, discovering additional uses for pre-existing drugs can result in an expanded market and increased profits for these products. However, it is illegal for pharma to actively market these “offlabel” uses without securing FDA approval for these additional indications. Pharma, however, can conduct research outside of the FDA regulatory process to discover additional uses for a specific drug. In turn, these studies on alternative uses might persuade doctors to prescribe the drug in an off-label manner, but only if doctors become aware that such off-label uses are medically indicated. How this off-label usage information reaches doctors is a contentious legal point.

This article will discuss the current state of off-label medicine, relevant legislation in the area, and a proposal designed to capture the benefits of off-label medicine while limiting its dangers when practiced perniciously. Part II will discuss the regulations in place governing offlabel promotion and will detail the practice of ghostwriting and its associated concerns. Part III will analyze the costs and benefits of offlabel marketing and practice of medicine, and will utilize a case study to demonstrate the predicament of drug manufacturers. Part IV will set forth a proposal to use the newly created Patient-Centered Outcomes Research Institute to generate unbiased research on off-label uses, which, in turn, would create a safe harbor for drug companies to widely disseminate studies generated through this process to the medical community. Finally, Part V will present concluding thoughts on the overarching policy considerations driving the need for legislative reform.

Consumers with approved claims will be paid up to $80 per pair of Shape-Ups, up to $84 per pair of Resistance Runner shoes, up to $54 per pair of Podded Sole Shoes; and up to $40 per pair of Tone-Ups. The settlement covers more than 520,000 claims.

Any money left over after the consumer claims are paid out will be paid to the Federal Trade Commission.

The settlement website has the notice, settlement agreement, claim form, and other material. The deadline for submitting a claim has passed. The AP reported on the settlement in this article yesterday.

When mobile phones have GPS devices, as many smart phones do, mobile phone providers can track their customers wherever they take their phones (providers can also track phones lacking a GPS, but less precisely).  For an example, go here to see how Deutsche Telefon recorded the location of one of its customers for a six-month period.  Now Verizon has begun selling that data, as reported in the Wall Street Journal (behind a paywall).  According to the article, Verizon won't sell data about individuals, but only aggregated data.  I wonder how much security that really offers, especially since deidentified data can sometimes be re-identified.  The article also notes that one customer for the data, the Phoenix Suns, is using the data to learn where the people attending its games live.  Of course, the Suns could just ask their fans, but then the fans would know that the Suns have that information or might refuse to provide it.  Other carriers are going even further.  According to the article, a European company plans to let stores know what web sites consumers are browsing while in the stores, as well as demographic information. 

After the Supreme Court upheld the Affordable Care Act last June, Senator Jim DeMint and Representative Michele Bachmann wrote Republican governors, urging them to refuse to establish ACA-prescribed “exchanges”—statewide health insurance markets—for small businesses and individuals not covered by employer-sponsored health plans. At the time, it seemed unlikely that many governors would follow this cut-off-your-nose-to-spite-your-face advice, since the ACA directs the Federal government to step in and run an exchange for states if they opt out. Hence, no real harm to the ACA, just to Republican governors and legislators, who would lose credit for a valuable constituent service. But Tea Partiers have kept up their resist-resist-resist drumbeat, and over half the states have stuck with the refusenik option. ... On May 2, the [resisters] ... filed in the District Court for the District of Columbia a complaint backed by the Competitive Enterprise Institute. [The plaintiff's lawyer Michael] Carvin’s legal argument, which originated with CATO Institute economist Michael Cannon and Western Reserve law professor Jonathan Adler, is that, due to a drafting glitch in the ACA, only state-run exchanges, not federal ones, can provide tax credits and subsidies to enable lower-income individuals to afford ACA-mandated health insurance. Threading the Carvin-Cannon-Adler argument through the intricacies of the ACA and the Internal Revenue Code could make even a seasoned tax lawyer’s head hurt. But the bottom-line is not hard to grasp: If the case makes its way to the Supreme Court, and all five members of the Supreme Court’s conservative bloc buy Carvin’s rationale, the result would, in rejectionist states, subvert the ACA’s central purpose and stiff the very population the law was enacted to benefit. The Obama administration has estimated  that 80 percent of the millions of individuals expected to purchase insurance through exchanges will require some tax subsidies. Without those subsidies, in states with Federally facilitated exchanges, the individual mandate, constitutional though the Court has declared it, simply won’t work.

In sum, the effort to kill the ACA continues. The new court challenge is Halbig v. Sebelius, No. 13-63 (D.D.C.). Here's the Halbig complaint.

Professor Redish has both anchored the modern class action in American political and constitutional theory, raising serious questions about the legitimacy of this procedural device for resolving aggregate claims. Professor Redish’s major insight is his argument that the courts and litigants have transformed the modern class action from a mere procedural device into a means for controlling and altering substantive law, in ways that he considers to be highly undemocratic.

Others, however, have suggested that the class action is dead. The article surveys accounts of the death of class actions and explains the continued endurance of class litigation ― which, it turns out ― is hard to kill off. The article then documents the changing landscape of aggregate dispute resolution, documenting a significant paradigm shift in the twenty-first century towards increased use of private claims resolution mechanisms. The article focuses on settlement classes, multidistrict litigation procedure, contractual non-class settlements, the quasi class action, and fund approaches to mass claim resolution.

Finally, the article critically evaluates this paradigm shift and concludes that Redish’s critique of class action litigation has even greater relevance in the new world of non-class, aggregate claims resolution: that Professor Redish’s critique applies with even greater force in the non-class universe. With the paradigm shift towards non-class aggregate claims resolution, the arc of history may be bending towards greater injustice ― a shift that is more significant because it is largely unbounded by rules and unmoored from judicial oversight.

Class actions are in decline, while arbitration is ascendant. This raises the question: will plaintiffs’ lawyers skilled in bringing small-value, large-scale litigation – the typical consumer, employment, and antitrust claims that have made up the bulk of class action litigation over the past forty years – hit upon a viable business model which would allow them to arbitrate one-on-one claims efficiently and profitably. The obstacles are tremendous: without some means of recreating the economies of scale and reaping the fees provided by the aggregative device of Rule 23, no rational lawyer would expend the resources to develop and arbitrate individual, small-value claims against well-heeled defendants. But despite these complications, we think there are at least two possible models that might allow for informal aggregation of like claims in at least some subset of cases.

One hybrid model would seek a judicial liability judgment upon which serial, individual arbitrations could later rely. This judgment could take a number of different forms – whether a declaratory class action judgment or a decision rendered in a public enforcement action – so long as it has preclusive force that can be leveraged in subsequent arbitration hearings. A second, complementary model envisions “arbitration entrepreneurs” (either lawyers or non-lawyers) purchasing legally-identical, individual claims which our legal capitalists believe to have value in the arbitral forum. Upon procuring as many discrete claims as the market will bear, the arbitration entrepreneur would seek to resolve the hundreds or even thousands of claims she has amassed in a single arbitral session. With one arbitration entrepreneur as the lawful owner of a multitude of claims, this form of aggregation implicates neither the prohibition against class arbitration nor the contractual definition of “a claim” subject to arbitration.

The hybrid model and the claims-buying model may work independently or synergistically, depending on the case, the form that the public declaration of liability takes, and the incentives of the lawyers and entrepreneurs involved. For example, in the appropriate case, claims-buying entrepreneurs may determine that a (b)(2) declaratory judgment class action creates more and better opportunities to bundle and capture claims than market forces alone. Similarly, lawyers who obtain a judgment under the hybrid approach may determine that the best way to monetize this victory is to buy up many claims for collective arbitration. Indeed, these models present a host of possibilities, and an equal number of potential challenges; this paper is but a first step in describing and analyzing the benefits and costs of these approaches.

The Supreme Court yesterday granted cert in Northwest, Inc. v. Ginsberg, a case about whether the Airline Deregulation Act's preemption provision, 49 U.S.C. 41713(b), preempts a consumer's state-law damages claim -- a claim alleging a breach of the implied covenant of good faith and fair dealing -- regarding his removal from an airline's frequent-flyer program. The Supreme Court has addressed the ADA's preemption provision in two cases. (It has also twice addressed a related preemption provision in a trucking deregulation statute, including this Term in the Dan's City case. The petition in Northwest v. Ginsberg had been held pending the decision in Dan's City, which came down on May 13, 2013.)

The Supreme Court generally grants a case on the petitioner's question presented, as it did in Northwest v. Ginsberg. But the parties' different views about the legal question often come through in their questions presented. Below, I have set out the airline's question presented first, followed by the consumer's question presented.

Northwest's question presented

The Airline Deregulation Act of 1978 (“ADA”) includes a preemption provision providing that States “may not enact or enforce a law, regulation or other provision having the force and effect of law related to a price, route, or service of an air carrier.” 49 U.S.C. § 41713(b). Respondent was a participant in Northwest Airlines’ frequent flyer program, which by its terms permitted Northwest to remove participants from the program in Northwest’s “sole judgment.” After respondent was removed from the frequent flyer program, he filed suit against Northwest alleging, inter alia, that Northwest breached both its contractual obligations and an implied covenant of good faith and fair dealing under Minnesota law when it exercised its discretion to terminate respondent’s membership in the program. Although the district court dismissed the contract claim for failure to state a claim and the implied covenant of good faith claim as preempted by the ADA, the Ninth Circuit reversed as to the implied covenant claim, finding such claims categorically unrelated to a price, route or service under a line of Ninth Circuit cases that have been recognized by other Circuits as inconsistent with this Court’s precedents, especially American Airlines, Inc. v. Wolens, 513 U.S. 219 (1995).

The question presented is:

Did the court of appeals err by holding, in conflict with the decisions of other Circuits, that respondent’s implied covenant of good faith and fair dealing claim was not preempted under the ADA because such claims are categorically unrelated to a price, route, or service, notwithstanding that respondent’s claim arises out of a frequent flyer program (the precise context of Wolens) and manifestly enlarged the terms of the parties’ voluntary undertakings, which allowed termination in Northwest’s sole discretion.

Ginsburg's question presented

Rabbi S. Binyomin Ginsberg is a long-standing and frequent Northwest passenger who, in 2005, earned the highest level of membership benefits in Northwest’s “WorldPerks” customer loyalty program. In 2008, Northwest abruptly revoked his status in the program. Rabbi Ginsberg filed suit alleging, as relevant here, that Northwest breached the implied covenant of good faith and fair dealing in terminating his WorldPerks membership status. The question presented is:

Did the court of appeals correctly hold that Rabbi Ginsberg’s contract claim based on the implied covenant of good faith and fair dealing is not preempted by the Airline Deregulation Act’s preemption provision, 49 U.S.C. § 41713(b), which provides that States “may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier”?

In 2005, Rabbi S. Binyomin Ginsberg, a long-time customer of Northwest Airlines, earned the highest level of membership benefits in Northwest’s customer loyalty program. In 2008, Northwest abruptly terminated his membership in the program. Rabbi Ginsberg filed suit, alleging, among other things, that termination of his membership status was a breach of the implied covenant of good faith and fair dealing.

The district court held that his claim was preempted by a provision of the Airline Deregulation Act (ADA) that preempts state laws relating to air carrier prices, routes, or services. The Ninth Circuit reversed and Northwest petitioned for certiorari.

When it hears argument in the case next fall, the Court will consider whether claims for breach of the implied covenant of good faith and fair dealing are preempted by the ADA, or whether they fall outside the scope of the statute’s preemption because a frequent flier program is not a “service” within the meaning of the ADA and/or because the ADA does not preempt common law claims.

In addition, the case gives the Court a chance to elaborate on its 1995 opinion in in American Airlines, Inc. v. Wolens, which held that although the ADA’s preemption provision bars state-imposed regulation of air carriers, it “allows room for court enforcement of contract terms set by the parties themselves.” The outcome of the case, then, may turn on whether the Court views the covenant of good faith and fair dealing claim as a contract claim, as the court of appeals did, or as based on state law external to the contract, as the district court did.

Disclosure: Public Citizen Litigation Group lawyer represents respondent Ginsberg before the Supreme Court, with my colleague Adina Rosenbaum serving as lead counsel.

For a long time, the case law under the Federal Arbitration Act (FAA) has been bad for plaintiffs who want to be in court rather than in arbitration. And it's been getting worse in recent years. Class-action bans laundered through adhesive arbitration clauses are strictly enforced, even when they are unconscionable under generally applicable state-law contract principles. And even when an arbitration clause says nothing about class actions, the FAA generally bans class actions in arbitration.

These judge-made rules have emboldened class-action defendants. They just love forcing class-action plaintiffs into individual arbitrations, which, given the the costs of individual arbitrations, generally will mean that they won't have to face off against the plaintiff class at all. So, defendants want to take advantage of arbitration clauses even when they are not parties to them.

The Ninth Circuit faced that situation in Rajagopalan v. Noteworld, LLC, a class-action involving debt settlement services and payment processing on those services. The plaintiffs sued the payment processing company, but not the debt settlement company, whose contract with the plaintiffs included an arbitration clause. The payment processing company tried to take advantage of the arbitration clause in the debt settlement company's contract with the plaintiffs under state-law third-party beneficiary and equitable estoppel theories, both of which the 9th circuit rejected yesterday.

Last Friday's Third Circuit ruling in Abraham v. St. Croix Rennaisance Group considered whether the Class Action Fairness Act (CAFA) provides federal "mass action" jurisdiction over a suit against a plant that continuously exposed nearby residents to toxic chemicals over an extended period.

First, some background. CAFA provides jurisdiction in federal district court (originally and by removal) for most minimally diverse class actions and for so-called "mass actions." Under CAFA, a mass action is

any civil action (except a civil action within the scope of section 1711(2)) in which monetary relief claims of 100 or more persons are proposed to be tried jointly on the ground that the plaintiffs’ claims involve common questions of law or fact, except that jurisdiction shall exist only over those plaintiffs whose claims in a mass action satisfy the jurisdictional amount requirements under subsection (a).

But there are exceptions to the definition of "mass action," one of which is for local controversies. That exception involves cases in which

all of the claims in the action arise from an event or occurrence in the State in which the action was filed, and that allegedly resulted in injuries in that State or in States contiguous to that State.

With that background in mind, take a look at this key passage from the Third Circuit's opinion, which describes the facts and the holding:

The complaint alleges circumstances that persisted over a fixed period of time–specifically, from 2002, when SCRG acquired the former alumina refinery, to the present. These circumstances included: (1) the presence throughout the former refinery site of the red mud and the various hazardous substances that were buried therein; (2) the plaintiffs’ continual exposure to the red mud and its particulates as a result of erosion by wind and water; and (3) the persistent failure of SCRG to contain or abate the hazardous substances and to remediate the premises. In short, the condition of the site during the period of SCRG’s ownership provided a source for the ongoing emission of the red mud and the hazardous substances and the subsequent dispersion onto the plaintiffs’ persons and their property. We believe that these circumstances, which the District Court characterized as the “continuous release of toxic substances from a single facility located in the Virgin Islands,” constituted “an event or occurrence” for purposes of the mass-action exclusion. [citation omitted]

Kudos to CL&P contributor Leah Nicholls, who briefed and argued the appeal for the plaintiffs.

As a recess appointee, Cordray can stay in the job only through the end of this  year. But even that timetable will likely not be of much significance. After  Cordray departs, the agency will be run by the next in line and there is little  reason to think the bureau’s agenda would change at that point.

* * *

“We are still going to have a CFPB,” said John Socknat, a partner with the law  firm Ballard Spahr. “It’s going to continue to have very broad powers, and there  are going to be regulations that [financial institutions] are going to have to  deal with. The validity of Cordray’s appointment is not going to undo all of the  regulations that have been issued.”

Now, Danielle Douglas, reports that it's taking a long time for the money to be paid out. Here's an excerpt:

Banks have paid less than half the $5.7 billion in cash owed to troubled homeowners under nearly 30 settlements brokered by the government since 2008, delaying help to the millions of victims of discrimination and shoddy lending that epitomized the housing crisis, according to a Washington Post analysis of government data. When the settlements were announced, with great fanfare, government officials hailed them as the long-promised reckoning with the financial industry. Regulators found that some banks had saddled borrowers with unaffordable mortgages or assigned higher rates to minorities even when they qualified for a better deal. Some banks were accused of having employees “robo-sign” foreclosure documents without reading them or having proper documentation. ... In 2011, Wells Fargo agreed to compensate up to 10,000 borrowers after the Federal Reserve found the bank was steering them into subprime loans even though they qualified for better mortgages. But no borrowers have received money yet. Last year, Bank of America agreed to pay some borrowers between $1,000 and $5,000 for what the Justice Department called lending discrimination. The agency said the bank illegally asked some would-be home buyers who relied on disability income to provide a doctor’s letter verifying the severity of their ailment. But it’s still unclear how many people will ultimately be paid. There isn’t a full list of the victims.

Now, just three weeks after Public Citizen launched a campaign to shame Schwab into dropping its class-action ban, it has done just that -- at least for now.  Here's Public Citizen's statement and here's Schwab's statement describing its decision:

Related articles

UPDATE 1-Schwab reverses ban on client class-action lawsuits

Charles Schwab Drops Forced-Arbitration Clause From Contracts

Courts have faced a wave of compelled disclosure cases recently. By government mandate, tobacco manufacturers must include graphic warnings on their cigarette packages, doctors must show and describe ultrasound images of fetuses to women seeking to abort them, and crisis pregnancy centers must disclose that they do not provide contraception or abortion services. Although applying the same compelled speech doctrine to similar issues, appeals courts have reached very different results in challenges to these laws. Drawing from First Amendment theory, this Article first identifies why compelled disclosures undermine free speech values. It then applies those insights to the specific examples above. In doing so, it examines not only compelled text but the new phenomenon of compelled images, particularly compelled images designed to provoke an emotional response. The Article concludes that recent appeals court decisions have it backwards: It is mandatory abortion counseling laws that offend free speech principles, not laws requiring cigarette warnings or crisis pregnancy center disclosures.

The panel held that the attorneys’ fee award to class counsel violated the Class Action Fairness Act (“CAFA”), and specifically 28 U.S.C. § 1712(a)-(c), which governs the calculation of attorneys’ fees in class action cases containing a coupon component. The panel held that when a settlement provides for coupon relief, either in whole or in part, any attorneys’ fee that is “attributable to the award of coupons” must be calculated using the redemption value of the coupons. The panel reversed and remanded, because the district court awarded fees that were “attributable to” the coupon relief, but failed to first calculate the redemption value of those coupons.

Judge Berzon dissented, and would hold that there was no violation of § 1712 of CAFA, where the district court did not award a contingency fee calculated as a percentage of the purported value of the total class recovery, but instead chose to award a lodestar fee, calculated on the basis of hours worked and rates charged, carefully limited by a fair estimate of the amount of the benefit received by the class. Judge Berzon would affirm the district court because the fee award was consistent with CAFA.

A divided panel of the Third Circuit today joined the D.C. Circuit in holding that President Obama's recess appointments to the NLRB are unconstitutional.  The case is NLRB v. New Visa Nursing and Rehabilitation.  From the majority opinion by Judge Smith, who is joined by Judge Van Antwerpen:

The central question in this case is the meaning of "the Recess of the Senate," which is the only time in which the president may use his power to recess appoint officers. Three definitions have been offered: (1) breaks between sessions of the Senate (i.e., "intersession breaks"); (2) these intersession breaks as well as breaks within a session (i.e., "intrasession breaks") that last for a non-negligible time, or (3) any break in Senate business that makes the body unavailable to provide advice and consent on the president‘s nominations. This is a difficult question that has never been addressed by our Court or the Supreme Court. We hold that "the Recess of the Senate" in the Recess Appointments Clause refers to only intersession breaks. As a consequence, we conclude that the National Labor Relations Board panel below lacked the requisite number of members to exercise the Board‘s authority because one panel member was invalidly appointed during an intrasession break. We will therefore vacate the Board‘s orders.

From Judge Greenaway's dissent:

The Majority's rationale undoes an appointments process that has successfully operated within our separation of powers regime for over 220 years.

In defining the scope of the Recess Appointments Clause, the critical issue is more straightforward than the Majority suggests: The issue is whether “the Recess” includes only intersession recesses (those between two regular sessions of Congress) or intersession recesses and intrasession recesses (those within a regular session of Congress). The Majority's three possible definitions of “Recess” can be distilled into one question: Are intrasession recesses included within the ambit of “the Recess”? I would hold that “the Recess” refers to both intrasession and intersession recesses because the Senate can be unavailable to provide advice and consent during both. The availability of the Senate to provide advice and consent is the crux of the Recess Appointments Clause because its operation depends on its complementary interplay with the Appointments Clause, which requires that the Senate be available to provide advice and consent.

In practice, processing account debits received by the bank each day in high-to-low order [as opposed to chronological order] multiplied the overdraft fees collected by the bank by depleting the account as fast as possible and turning what might otherwise be a single overdraft into as many as ten.

The judge's previous order that Wells Fargo pay restitution was vacated on appeal when the Ninth Circuit held that certain California state-law theories were preempted; the court today reinstated the restitution award on the basis of a different state-law theory that the Ninth Circuit had left open.

In a lawsuit that echoes the worst abuses of the foreclosure crisis, [California's] top law enforcement official is suing the nation's largest bank, accusing it of using aggressive and illegal tactics to collect credit card debt from thousands of California consumers. Atty. Gen. Kamala D. Harris on Thursday accused JP Morgan Chase & Co. of operating a "debt collection mill" that flooded courts with more than 100,000 lawsuits to obtain speedy judgments before consumers could fight back. Much as banks did during the housing crisis, JPMorgan used so-called robo-signing to churn out documents without reviewing them, Harris said.

Harris's suit is part of an effort to reform a debt collection industry that consumer advocates claim is just as beset by robo-signing and other improper practices as was the mortgage industry. The debt collection reform bill mentioned in the LA Times article, SB 233, is slated for a vote in the California Senate this week.

[HT Ted Mermin]

by Ted Mermin [guest post]

Thank you for the guest post on Ticketmaster's anti-competitive practices.  Anyone who has tried to get a ticket to a popular concert or sporting event recently understands what the problem is.  But whether the organization "Fan Freedom" really represents consumers is a different question.  As the organization's website (very quietly) acknowledges, "initial funding was provided by StubHub, a division of eBay." That may or may not change anyone's feelings about the group's goals, which seem laudable. But a grassroots effort it's not.

Is civil procedure political?  In May of 2009, the Supreme Court issued its decision in Ashcroft v. Iqbal, which explicitly extended the “plausibility standard,” first articulated in Bell Atlantic v. Twombly two years earlier, to all civil pleadings. That standard requires that pleadings, in order to satisfy Rule 8(a) of the Federal Rules of Civil Procedure, must state a plausible claim for relief. For many, these rulings represented a sea change in civil pleading standards. Where prior Supreme Court precedent had provided that a pleading should not be dismissed “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim,” the new standard requires that judges utilize their own “judicial experience and common sense” to determine whether claimants have set forth facts sufficient to “nudge their claims across the line from conceivable to plausible.”  In the years since their issuance, this standard has provoked many questions. One such question, which lurks behind all otherwise neutral rules of procedure is the following: could this apparently neutral principle of procedure be subject to political manipulation?  

After Twombly, and again after Iqbal, many expressed fears that the new plausibility standard offered judges too much discretion; a judge could dismiss a case where a plaintiff’s claims did not comport with that judge’s experience and common sense. There was a particular fear that this discretion would have a disparate and adverse impact on civil rights cases: i.e., if members of the federal bench were predisposed to disfavor such claims, they might use these precedents to dismiss civil rights cases too readily. Several years have now passed since the Court issued these decisions, and the district courts have compiled a body of thousands of decisions citing these precedents.  As a result, it is now possible to assess the impact of these decisions on practice in the lower courts, particularly their effect on civil rights cases. The study described here attempted to do just that by looking at outcomes and trends in motions challenging the specificity of the pleadings in over 500 employment and housing discrimination cases over a period of six years (including decisions issued both before and after Twombly and Iqbal). This research reviewed the outcomes in such cases based on a number of metrics, including, most importantly, the political affiliation of the president who appointed the judge issuing each decision reviewed.

The study revealed a statistically significant relationship between the outcomes in civil rights cases and time period (i.e. pre-Twombly, post-Twombly but pre-Iqbal, and post-Iqbal)  where the political affiliation of the president who appointed the judge reaching the decision in each case was Republican. For cases decided by judges appointed by Democrat-affiliated presidents, no such relationship was observed. This paper reports on the findings of this study and discusses their implications.

Credit agencies that rate Wall Street's big banks were blamed for playing a pivotal role in the financial meltdown, but those agencies are still being paid for their work by the very banks they rate. That was one of the root causes of the financial crisis of 2008, according to a bipartisan Senate subcommittee that investigated the crash. Senator Al Franken, D-Minnesota, wants to stop what he calls this "pay to play" rating system. He is meeting with the Security and Exchange Commission [today] to discuss credit rating reform, and the problems with "rate shopping." "Let's say an investment bank created a financial product, say, subprime mortgage-backed securities and they wanted to get a rating on that. So, it would go shop its two different credit rating agencies and make sure that they got a AAA, whoever they picked would give them a AAA," said Franken. "It was sometimes unspoken, but the credit rating agencies knew that they wouldn't get the next gig if they didn't give a AAA." * * * Franken's bill would require an independent board to assign the initial rating of any structured financial product issued by a bank, and assign it to a credit rating agency based on the agency's expertise and track record.

Go here or click on the embedded video below to see Sen. Franken discuss the issue. Definitely worth watching.