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I’m not sure that’s it’s clear. If the Congress passes a budget, does it create debt? Or is the debt created only when the Treasury issues a bond to pay for i

I’m not sure that’s it’s clear. If the Congress passes a budget, does it create debt? Or is the debt created only when the Treasury issues a bond to pay for it? Let’s say that Biden directs the Treasury to ignore the debt ceiling law, citing the 14th amendment. Who has standing to file a lawsuit to challenge him? Who is directly harmed? You and I aren’t allowed to sue the EPA to force them to do anything about climate change, because our harms are generalized. We need to prove we’re directly harmed. Ok, but let’s say that someone is allowed to sue. It works its way through the court system and Biden loses. Does that mean we have to claw back all the payments the federal government made?

doktorhladnjak 3y ago
Someone trading derivatives that would be affected by the US govt defaulting would likely have standing
- Kon-Peki 3y ago
  Interesting thought. It raises a bunch of other questions though. In what other circumstance would a derivatives trader say “I would have profited but for your (possibly illegal) actions”? And are we seeing such lawsuits?
  - vivegi 3y ago
    Not sure if the following cases offer precedents. Obviously, the Federal Govt enjoys additional legal powers, but these cases offer the circumstances where a party sued their derivatives trader (the opposite of the questions you raise). Procter & Gamble v. Bankers Trust [1] P&G sued BT for losses incurred in derivatives contracts that should not have been sold by BT. This article [2] provides some more detail: > In another high-profile case, Procter & Gamble Co. is suing Bankers Trust, its derivatives dealer, blaming it for a loss of dollars 195 million on two interest-rate contracts the company claims it should not have been sold. > Procter & Gamble recently upped the stakes dramatically, claiming triple damages under U.S. civil racketeering legislation. In a related development, a shareholder has sued Procter & Gamble for financial irresponsibility. The outcome of the case is that Bankers Trust settled with P&G as per this article [3]. The same article [2] also mentions the Orange County bankruptcy where OC sued its derivatives broker. At the time, this was one of the largest financial failures. > Orange County is suing both its main derivatives broker, Merrill Lynch, and the accounting firm Peat Marwick Merrill Lynch paid OC $437 M to settle as per this article [4]. [1]: https://casetext.com/case/procter-gamble-v-bankers-trust/case-details https://casetext.com/case/procter-gamble-v-bankers-trust/cas... [2]: https://www.nytimes.com/1996/01/13/your-money/IHT-moneylosers-demand-a-day-in-court.html https://www.nytimes.com/1996/01/13/your-money/IHT-moneyloser... [3]: https://www.nytimes.com/1996/05/10/business/bankers-trust-settles-suit-with-p-g.html https://www.nytimes.com/1996/05/10/business/bankers-trust-se... [4]: https://www.nytimes.com/1998/06/03/business/ending-suit-merrill-lynch-to-pay-california-county-400-million.html https://www.nytimes.com/1998/06/03/business/ending-suit-merr...

doktorhladnjak 3y ago

Someone trading derivatives that would be affected by the US govt defaulting would likely have standing

Kon-Peki 3y ago
Interesting thought. It raises a bunch of other questions though. In what other circumstance would a derivatives trader say “I would have profited but for your (possibly illegal) actions”? And are we seeing such lawsuits?
- vivegi 3y ago
  Not sure if the following cases offer precedents. Obviously, the Federal Govt enjoys additional legal powers, but these cases offer the circumstances where a party sued their derivatives trader (the opposite of the questions you raise). Procter & Gamble v. Bankers Trust [1] P&G sued BT for losses incurred in derivatives contracts that should not have been sold by BT. This article [2] provides some more detail: > In another high-profile case, Procter & Gamble Co. is suing Bankers Trust, its derivatives dealer, blaming it for a loss of dollars 195 million on two interest-rate contracts the company claims it should not have been sold. > Procter & Gamble recently upped the stakes dramatically, claiming triple damages under U.S. civil racketeering legislation. In a related development, a shareholder has sued Procter & Gamble for financial irresponsibility. The outcome of the case is that Bankers Trust settled with P&G as per this article [3]. The same article [2] also mentions the Orange County bankruptcy where OC sued its derivatives broker. At the time, this was one of the largest financial failures. > Orange County is suing both its main derivatives broker, Merrill Lynch, and the accounting firm Peat Marwick Merrill Lynch paid OC $437 M to settle as per this article [4]. [1]: https://casetext.com/case/procter-gamble-v-bankers-trust/case-details https://casetext.com/case/procter-gamble-v-bankers-trust/cas... [2]: https://www.nytimes.com/1996/01/13/your-money/IHT-moneylosers-demand-a-day-in-court.html https://www.nytimes.com/1996/01/13/your-money/IHT-moneyloser... [3]: https://www.nytimes.com/1996/05/10/business/bankers-trust-settles-suit-with-p-g.html https://www.nytimes.com/1996/05/10/business/bankers-trust-se... [4]: https://www.nytimes.com/1998/06/03/business/ending-suit-merrill-lynch-to-pay-california-county-400-million.html https://www.nytimes.com/1998/06/03/business/ending-suit-merr...