Oct 29, 2008

Defamation on Trial

By Sean Hayes

Appeared in the Korea Times on October 30, 2008

A renowned actress recently committed suicide after being traumatized by malicious comments posted on Internet message boards. The actress leaves behind her young children and adoring fans.

Politicians have reacted by proposing legislation that would impose a more rigorous real name registration requirement on the Internet and more heightened punishment for defamatory statements. Expansion of real name registration would assist prosecutors in obtaining the identity of those posting malicious comments and thus prosecute them under Article 309 and 311 of the Korean Criminal Act. Many have commented that these laws are needed, while others have noted that these laws should be discarded as archaic vestiges of the past.

In much of the developed West, these laws, as applied to this situation, would run afoul of their nations' constitutions. However, in Korea because of a profound difference in attitude toward speech and the right to privacy the founders of the Korean Constitution chose to protect speech to a lesser degree. For example, Article 21(1) of the Korean Constitution notes that ``All citizens shall enjoy the freedom of speech and the press and the freedom of assembly and association."On the face of it this article is similar to the First Amendment to the U.S. Constitution which states that ``Congress shall make no law … abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble …"However, the Korean Constitution modifies this seemingly absolute protection, by noting, in Article 21(4) that ``Neither speech nor the press shall violate the honor or rights of other persons nor undermine public morals or social ethics."

The Korean Constitution, thus, in short, balances the right to free speech with the right to privacy, public mores and social ethics. This balance creates less protection for the freedom of speech than in the United States. It is interesting to note that the privacy protected, in application of the right, is not only against violations by the government, but violations by private individuals. Most constitutions only protect against actions by government.

In contraposition, in America, the First Amendment has been interpreted as creating near absolute protection for the freedom of speech. Justice Benjamin Nathan Cardozo stated the reason for the near absolute protection of free speech by noting that ``our history, political and legal," recognized ``freedom of thought and speech" as ``the indispensable condition of nearly every other form of freedom."

Thus, in America, criminal punishment for speech not coupled with action is nearly impossible to successfully prosecute and civil liability is available for a defamed public figure only if the plaintiff can prove that the defamatory comment is false and that the statement was made with ``malice." Malice is defined, in law, as either knowledge by the defendant that the statement was false or a reckless disregard by the defendant for the truth of the statement. Because of this high standard and that the burden of satisfying the standard is placed on the defendant, it is nearly impossible, except with the most flagrant mendacious statement, for a plaintiff to win a lawsuit.

This situation in Korea is very alarming and upsetting. However, most Americans would rather hear of these difficulties, which America also has a good deal of and which I have written about in these pages, than have an often biased government choose if speech violates ``the honor or rights of other persons" or ``undermine public morals or social ethics."

However, Korea has a vastly different history and relies more on the government for solutions to difficulties.

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SeanHayes@ipglegal.com

Oct 26, 2008

Don't Only Blame Bush

Don't Only Blame Bush

By Sean Hayes
(Appeared in Korea Times on October 23, 2008)

Most ``mainstream'' pundits and the vast majority of editorial writers have blamed the current financial mayhem on the Bush administration's ``deregulation bias.''

Democratic presidential hopeful Sen. Barack Obama has noted, in a campaign speech, that John McCain and the Bush administration ``fought against the very rules of the road that could have stopped this mess.''

Let's put blame where blame is due; Republicans and Democrats played a significant role in this mess. Without this realization we will never learn from our mistakes.

Those espousing Sen. Obama's viewpoint have not cited one Bush-term regulatory change that is the culprit for our present difficulties nor have they explained away the fact that the U.S. financial market is one of the most regulated markets in the world.

The reason we hear no explanation is the obvious disingenuousness of these statements. The reality is that a Bush regulation that would have assisted in alleviating these problems was strongly opposed by the same regulation bellwethers and regulation is a major culprit behind our current situation.

First, we can't put all the blame on a deregulation-biased Bush administration. The administration proposed a regulatory framework that would have helped prevent the coming crisis, however, Democrats strongly opposed the plan and Republicans, because of more pressing Iraq issues were unwilling to strongly push for the regulations.

In 2003, the Bush administration attempted to create an agency ``to regulate and supervise the financial activities" of Fannie Mae and Freddie Mac. It perceived that a problem with one of these agencies could ``cause strong repercussions in financial markets, affecting federally insured entities and economic activity."

However, our usually regulation-friendly Democrat Barney Frank, chairman of the House Financial Services Committee, strongly opposed the plan, noting that the agencies ``are not facing any kind of financial crisis … The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''

He added, in a House hearing, that ``there has been more alarm raised about potential unsafety and unsoundness than, in fact exists … I want to roll the dice a little bit more in this situation toward subsidized housing.''

The Bush administration renewed its efforts in 2004 and 2005, but again Barney Frank and his liberal cohorts vigorously opposed the plan. Frank's ``dice roll'' failed, but he is unwilling to take an iota of blame for this crisis and still has a major role in the inevitable regulatory backlash.

Secondly, over-regulation was a major catalyst. The Clinton administration, motivated by a debunked Boston Federal Reserve Bank study, extended the scope and impact of the Carter-era Community Reinvestment Act and the Home Mortgage Disclosure Act.

The acts, and particularly the Clinton amendments, made it more difficult for lenders to receive acceptable bank ratings. Acceptable ratings, after the amendments, were heavily influenced by how well a lender ``served'' low, moderate income and minority borrowers.

The bank examiners looked at federal home loan data and broke the data down by income group, neighborhoods, race, and tax brackets and determined how well the banks were servicing these groups.

Without an acceptable rating banks would not be given permission to merge or to establish new branches and may even be subjected to costly class action lawsuits.

The impetus for the bills was a study that incorrectly claimed that banks were not giving loans to minorities because of their race. Holes and possible fabrication of data were found by a noted economist who, adjusting for the irregularities, found no mortgage discrimination based on race.

Lastly, the Clinton administration encouraged Fannie Mae to underwrite loans to subprime borrowers.

Franklin Raines, the former chairman and CEO of Fannie Mae, noted that ``Fannie Mae has expanded home ownership for millions of families in the 1990s by reducing down payment requirements … Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''

Clinton fixed this with a program in 1999 to underwrite loans to subprime borrowers.

Republicans, Democrats, and of course some unscrupulous lenders are to blame for these difficulties. However, if we can't force them to take a good look in the mirror we will never learn from the present melee.

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SeanHayes@ipglegal.com