Professor Bainbridge...on law, politics, religion, culture & food

The Obama-Biden Ticket: Implications for Delaware

David Skeel:

Obama has suggested that he will support more federal regulation of corporations. And he has signaled his support for bankruptcy reform that would allow borrowers to write down the value of their mortgages in bankruptcy. He also has sharply criticized the major bankruptcy reforms passed in 2005, which made bankruptcy more difficult for consumer debtors.

Biden has been on the other side of most of these issues.

As a senator from Delaware, he fiercely protected Delaware’s interest in state rather than federal regulation of corporate law. In bankruptcy, he was a leading Democratic advocate of the 2005 bankruptcy reforms, which were viewed by many as a valentine to the credit card industry, much of which is centered in Delaware. (He did vote in favor of the mortgage write down proposal this spring, but it was a fairly meaningless vote because it was clear the proposal wasn’t going anywhere).

Whose views would be reflected in an Obama presidency? Although Biden can certainly be expected to adjust his perspective to more closely fit Obama’s current positions in business reforms, his voice also could dampen Obama’s enthusiasm for reform during an Obama presidency.

But it’s also possibility that Biden’s presence on the ticket could actually make reform more rather than less likely. As a longtime member of the Judiciary Committee, Biden has almost single-handedly thwarted a number of reform proposals that would have interfered with Delaware’s prominence as a popular destination for corporate bankruptcy filings. He has been similarly effective in protecting Delaware’s other corporate interests. With Biden out of the Senate and no longer principally focused on Delaware voters, that obstacle might be gone. Which could mean more federal intervention in these areas in an Obama presidency.

Marcel Kahan and Ed Rock likewise have argued that:

Delaware is itself interested in limiting federal intrusions into corporate law and Delaware’s interests are influentially represented, among others, by Delaware’s Senator Joseph Biden, one of the most senior Democrats on the Judiciary Committee, through which any major proposal would have to pass. ...

Senator Biden has been able to block the enactment of a 1997 proposal by the National Bankruptcy Review Commission to eliminate state of incorporation as a venue for bankruptcy cases.

Francis Pileggi comments:

U.S. Senator Joe Biden has had a profound and lasting impact on Delaware business litigation at least via his role in the selection of members of the local U.S. District Court (and “Delaware members” of the Third Circuit Court of Appeals), as well as (at least indirectly, one might argue) the selection of judges for the Bankruptcy Court--not to mention his role in federal legislation that increased the number of bankruptcy judges in Delaware, which exceeds the number of active judges on the U.S. District Court bench.

OTOH, I’ve heard from several Delaware lawyers and judges that they don’t trust Biden to protect Delaware’s interests. Thoughts?