However, the credit squeeze of 2008 and the accompanying collapse of major banks and other financial instructions led to what has been called “the bank bailout plan.” Congress enacted an
Trang 1gave something in exchange for the forged check If the depositor’sNEGLIGENCEwas a factor
in the forgery, the bank can be excused from the liability
A bank is also responsible for determining the genuineness of the endorsement when a deposi-tor presents a check for payment A bank is liable
if it pays a check that has been materially altered, unless the alteration was due to the drawer’s fault
or negligence If a bank pays a check that has a forged endorsement, it is liable for the loss if it is promptly notified by the customer In both cases, the bank is entitled to recover the amount of its loss from the thief or forger
A drawee bank that is ordered to pay a check drawn on it is usually not entitled to recover payment it has made on a forged check
If, however, the drawee bank can demonstrate that the collecting bank was negligent in its collection duties, the drawee bank may be able
to establish a right of recovery
A bank can also be liable for the wrongful dishonor or refusal to pay of a check that it has certified, because by definition of certification it has agreed to become absolutely liable to the payee or holder of the check If a bank has paid
a check that has been properly revoked by its drawer, it must reimburse the drawer for the loss
Drawer Liabilities A drawer who writes a check for an amount greater than the funds on deposit in his or her checking account is liable
to the bank Such a check, called an overdraft, sometimes results in a loan from the bank to the drawer’s account for the amount by which the account is deficient, depending on the terms
of the account In this case, the drawer must repay the bank the amount lent plus interest
The bank can also decide not to provide the deficient funds and can refuse to pay the check, in which case the check is considered
“bounced.” The drawer then becomes liable to the bank for a handling fee for the check, as well
as remaining liable to the payee or subsequent holder of the check for the amount due Many times, the holder of a returned, or bounced, check will impose another fee on the drawer
Loans and Discounts A major function of a bank is the issuance of loans to applicants who meet certain qualifications In a loan transaction, the bank and the debtor execute a PROMISSORY NOTE and a separate agreement in which the terms and conditions of the loan are
detailed The interest charged on the amount lent can differ based on many variables One variable is a benchmark interest rate established
by the Federal Reserve Bank Board of Gover-nors, also known as the prime rate, at the time the loan is made Another variable is the length
of repayment The collateral provided to secure the loan, in case the borrower defaults, can also affect the interest rate In any case, the interest rate must not exceed that permitted by law The loan must be repaid according to the terms specified in the loan agreement In case of default, the agreement determines the proce-dures to be followed
Banks also purchase commercial papers, which are commercial loans, at a discount from creditors who have entered into long-term contracts with debtors A creditor sells a COMMER-CIAL PAPERto a bank for less than its face value because it seeks immediate payment The bank profits from the difference between the discount price it paid and the face value of the bond, which
it will receive when the debtor has finished repaying the loan Types of commercial paper are educational loans and home mortgages
Electronic Banking
Many banks are replacing traditional checks and deposit slips with electronic fund transfer (EFT) systems, which use sophisticated computer tech-nology to facilitate banking and payment needs Routine banking by means of EFT is considered safer, easier, and more convenient for customers Many types of EFT systems are available, including automated teller machines; pay-by-phone systems; automatic deposits of regularly received checks such as paychecks; automated payment of recurring bills; point-of-sale transfers
or debit cards, where a customer gives a merchant
a card and the amount is automatically trans-ferred from the customer’s account; and transfer and payment by customers’ home computers When an EFT service is arranged, the cus-tomer receives an EFT card that activates the system and the bank is legally required to disclose the terms and conditions of the ac-count These terms and conditions include the customer’s liability and the notification process
to follow if an EFT card is lost or stolen; the type of transactions in which a customer can take part; the procedure for correction of errors; and the extent of information that can be disclosed to a third party without improper
Trang 2infringement on the customer’s privacy If a
bank is planning to change the terms of an
account—for example, by imposing a fee for
trans-actions previously conducted free of charge—the
customer must receive written notice before the
change goes into effect
Banks must send account statements for EFT
transactions on a monthly basis The statements
must have the amount, date, and type of
trans-action; the customer’s account number; the
account’s opening and closing balances; charges
for the transfers or for continuation of the service;
and an address and telephone number for referral
of account questions or mistakes
EFT transactions have become a highly
competitive area of banking, with banks offering
various bonuses such as no fee for the use of a card
when the account holder meets certain provisions
such as maintaining a minimum balance Also,
the rapid growth of personal and home office
computing has increased pressure on banks to
provide services online Several computer
soft-ware companies produce technology that can
complete many routine banking services, such as
automatic bill paying, at a customer’s home
Banks have a wide range of options available
for notifying a customer that a check has been
directly deposited into her or his account If a
customer has arranged for automatic payment
of regularly recurring bills such as mortgage or
utility bills, the customer has a limited period of
time, usually up to three days before the
payment is made, in which to order the bank
to stop payment When the amounts of such
bills vary, as with utility bills, the bank must
notify the customer of the payment date in
sufficient time so that there is enough funds in
the account to cover the debt
If the customer discovers a mistake in an
account, the bank must be notified orally or in
writing after the erroneous statement is
re-ceived The bank must investigate the claim
Often, after several days, the customer’s account
will be temporarily recredited with the disputed
amount After the investigation is complete, the
bank is required to notify the customer in
writing if it concludes that no error occurred It
must provide copies of its decision and explain
how it reached its findings Then the customer
must return the amount of the error if it was
recredited to his or her account
A customer is liable if an unauthorized
transfer is made because an EFT card or other
device is stolen, lost, or used without permission
This liability can be limited if the customer notifies the bank within two business days of the discovery of the misdeed; it is extended to $500 if the customer fails to comply with the notice requirement A customer can assume unlimited liability if she or he fails to report any unautho-rized charges to an account within a specified period after receiving the monthly statement
A customer is entitled to sue a bank for COMPENSATORY DAMAGES caused by the bank’s wrongful failure to perform the terms and conditions of an EFT account, such as refusing
to pay a charge if the customer’s account has more than adequate funds to do so The customer can also recover a maximum penalty
of $1,000, attorneys’ fees, and costs in an action based upon violation of this law
The expansion of the INTERNETin the mid-1990s allowed banks to offer many more electronic services to their customers Although this form of business with banks is certainly convenient, it has caused a considerable concern regarding the security of transactions conducted
in this manner Although laws designed to prevent FRAUD in traditional banking also apply
to electronic banking, identifying individuals engaged in fraud can be more difficult where electronic transactions are concerned On the federal level, the Electronic Funds Transfers Act,
15 U.S.C.A §§ 1693a et seq., provides protection
to consumers who are the subject of an unautho-rized electronic funds transfer
The Gramm-Leach-Bliley Financial Modern-ization Act, PL 106-102 (S 900) November 12,
1999, also modified federal statutory provisions related to electronic banking Under this act, banks must disclose the fees they charge for use of their automated teller machines If the consumer
is not provided with proper fee disclosure, an ATM operator cannot impose a service fee concerning any electronic fund transfer initiated
by the consumer Furthermore, the act requires that possible fees be disclosed to a consumer when
an ATM card is issued
Interstate Banking and Branching
In late 1994 the 103d Congress authorized significant reforms to interstate banking and branching law The Interstate Banking Law (Pub L No 103-328), also referred to as the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, provided the banking
BANKS AND BANKING 509
Trang 3industry with major legislative changes The Interstate Banking Act was expected to acceler-ate the trend of bank mergers These mergers are a benefit to the nation’s largest banks, which were expected to see savings of millions of dollars resulting from streamlining
FURTHER READINGS Adler, Joseph 1995 “Banking without Glass-Steagall? Look Overseas ” American Banking Association Journal (May).
Bunditz, Mark 2006 Consumer Banking and Payments Law Boston: National Computer Law Center.
The Bank Bailout Plan of 2008
Since the creation of the Federal
Reserve System in 1913, the U.S
government has played a significant role
in regulating banks and promoting the
stability of the financial sector Besides
overseeing the activities of banks, the
government created theFEDERAL DEPOSIT
INSURANCE CORPORATION, which insures the
money of depositors However, the credit
squeeze of 2008 and the accompanying
collapse of major banks and other
financial instructions led to what has
been called “the bank bailout plan.”
Congress enacted and PresidentGEORGE
W.BUSHsigned the Emergency Economic
Stabilization Act of 2008 (EESA), Pub L
110-334 EESA established a program
called the Troubled Asset Relief Program
(TARP), which gave theTREASURY
DEPART-MENTthe authority to purchase or insure
up to $700 billion of troubled assets By
the end of 2009, many of the affected
banks had regained their financial
foot-ing and were payfoot-ing back the TARPP
funds to the Treasury Despite this
ap-parent success, critics of TARP argued
that it had overpaid for the troubled
assets Moreover, the Obama
adminis-tration had failed to make meaningful
reforms of the financial industry
The source of the 2008 financial
meltdown, which government officials
claimed almost brought the U.S and
world economies to collapse, was the
decision by the FEDERAL RESERVE BOARD
following September 11, 2001, to lower
interest rates on the money it lends
major banks The U.S economy had
slipped into a mild recession following
the terrorist attacks, and the Fed hoped
to stimulate it by making money more
available The Fed’s hopes came true when the cheap money led to low home-mortgage rates Low interest rates, combined with sub-prime, adjustable mortgages, allowed individuals who could never qualify for financing to own a home Many indivi-duals bought houses with little or no down payments and bought houses that were more than they could truly afford The subprime mortgages in turn were pack-aged and “securitized” by investment banks; mortgage-backed SECURITIES be-came lucrative financial instruments, though the worth of them was tied to the ability of homeowners to make their payments
The dramatic growth in the value of homes suggested to some economists that the United States was experiencing aREAL ESTATE bubble rather than a period of solid, sustained expansion They feared that any type of economic contraction would lead to higher interest rates for subprime adjustable MORTGAGE holders and a high number of home foreclosures
As the economy started to tighten in 2006, the fears of these economists began to be realized Many new homeowners could not pay skyrocketing monthly payments and foreclosures increased Even long-time homeowners were affected because they had refinanced their homes for the low interest rates but took adjustable rate rather than fixed rate mortgages Des-pite these signs, banks continued to sell these risky mortgages and financial products
When investment bank Bear Stearns moved towardsBANKRUPTCYin early 2008 because of the shrinking value of the mortgage-backed securities, the Federal Reserve stepped in, assumed $30 billion
of its debts and forced a sale of the bank
to JPMorgan Chase for a price that was less than the value of the Bear Stearns’ Manhattan skyscraper In August the federally sponsored entities Freddie Mac and Fannie Mae raced towards insol-vency Freddie and Fannie were central
to the U.S housing market, holding mort-gages that diminished in value every day
On September 7, the Treasury Department took control of both entities
The long-respected investment bank Lehman Brothers was next Unlike Bear Stearns, the government refused to step
in, forcing it into bankruptcy on Septem-ber 12 On SeptemSeptem-ber 16, the American International Group (AIG), one of the world’s largest insurance companies, re-vealed it was teetering on financial ruin AIG had insured risky securities that were tied to securitized mortgages The federal government feared that if AIG col-lapsed, it would produce a domino effect
as banks that had insured its securitized mortgages would be left with toxic assets that had little value The government essentially bought AIG for $85 billion
As these events unfolded, theSTOCK MARKET
dropped almost 500 points and individuals withdrew about $140 billion from their money-market funds, sparking fears that there would be a run on the banks
On September 18, Treasury Secretary Henry Paulson, a former Wall Street investment banker, announced a three-page, $700 billion proposal to bail out the banks He proposed that the govern-ment buy the toxic assets from the largest banks, which could stabilize their finan-cial position Members of Congress were skeptical, in part because the three-page
Trang 4Carnell, Richard Scott, Jonathan R Macey, and Geoffrey P.
Miller 2006 The Law of Banking and Financial
Institutions New York: Aspen.
Farrell, Cathlyn 2008 Law and Banking Washington, D.C.:
American Bankers Association.
Lovett, William A 2005 Banking and Financial Institutions
Law in a Nutshell St Paul: West.
Timberlake, Richard H., Jr 1993 Monetary Policy in the United States: An Intellectual and Institutional History.
Chicago: University of Chicago Press.
CROSS REFERENCES Bank of the United States; Federal Deposit Insurance Corpora-tion; Federal Reserve Board; Glass-Steagall Act; Securities.
proposal was scant on details and gave
Paulson total, unreviewable control over
how he spent the $700 billion Because
these events occurred during the 2008
presidential campaign, politics also
fac-tored into the debate on the proposal
On September 29, the House of
Repre-sentatives voted down a modified version
of Paulson’s plan The stock market lost
nearly 9 percent of its value after the vote
was taken, the worst decline since 1987
Congress took note of Wall Street’s
reaction and reached a compromise The
House passed the bill on October 3 and
sent EESA to President Bush for signing
As the United States began to confront its
problems, the banks of Europe and Asia
were forced to deal with the crisis as it
played out around the world
The TARP program was set up to
handle the disbursement of the $700
billion The law defined“troubled assets”
to include residential or commercial
mort-gages and any“securities, obligations, or
other instruments that are based on or
related to such mortgages” originated
or issued before March 14, 2008 The
secu-ritized mortgages clearly were the prime
“toxic assets” that burdened the balance
sheets of the major banks EESA released
$250 billion to the Treasury immediately,
with the president authorized to release
$100 billion more For the remaining
$350 billion, the Treasury had to notify
Congress of its intent to use the money
Congress had 15 days to pass a resolution
denying the Treasury the authority to do so
Paulson originally intended to hold
AUCTIONSfor the trouble assets but finally
decided it would be better for the
gov-ernment to loan the money TARP
man-dated that the Treasury receive non-voting
stock from the banks in return for the
TARP funds Congress also was outraged at
the enormous bonuses paid to bank
execu-tives for acquiring these toxic assets The
TARP contained language that banned
banks that accepted TARP money from offering incentives that encouraged “un-necessary and excessive risks” to its top executives For senior executives hired in the future, the banks were banned from offering lucrativeSEVERANCEpackages
TARP also was intended to help homeowners avoid FORECLOSURE The Treasury was required to set up a program to achieve this objective but details were sketchy Secretary Paulson had no interest in implementing this provision, telling Congress that TARP
“was not intended to be an economic stimulus or an economic recovery pack-age.” Congress was concerned with how the Treasury would run TARP, so it established the Financial Stability sight Board and a Congressional Over-sight Panel A February 2009 report from the panel claimed that the government had greatly overpaid for the toxic assets
It had paid $254 billion for assets valued
at $176 billon
As TARP got off the ground, the U.S economy had taken a drubbing It is estimated that $8 trillion of wealth was wiped out in the stock when measured from its highest point in the decade
Though TARP did stabilize the problem banks (nine banks took TARP money in return for stock), it was rumored that the incoming Obama administration might nationalize some of the troubled banks
That was not the case Instead, Treasury secretary Timothy Geithner, who as head
of the Federal Reserve Bank of New York played a key role in the fall 2008 with the bailout program, announced that it would perform“stress tests” on the 19 largest U.S banks The government wanted to know whether the banks were sufficiently capitalized to weather more declines in the economy The results of the tests were promising Ten of the 19 banks needed additional capital totaling
$75 billion
Starting in March 2009, some of the banks returned to profitability Then in June, 10 banks were allowed to return their portion of the $700 billon TARP funds They paid back to the government
a total of $68 billion The zeal with which the banks returned the money was primarily based on extricating them from government oversight and restrictions on executive pay By September, Geithner reported to Congress that the TARP program was winding down and that more banks would likely repay their bailout funds Though the bank bailout appeared to be successful in stabilizing the largest banks, financial reform regu-lation legisregu-lation was having a slow and difficult journey through Congress Moreover, though the public came to the rescue of these private banks, credit remained tight in late 2009 for businesses and individuals alike
FURTHER READINGS Gasparino, Charles 2009 The Sellout: How Three Decades of Wall Street Greed and Government Mismanagement Destroyed the Global Financial System New York: HarperBusiness.
Goodman, Peter 2008 “Taking Hard New Look at a Greenspan Legacy.” New York Times October 8.
Morris, Charles 2009 The Two Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash New York: Public Affairs.
Phillips, Kevin 2008 Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism New York: Viking.
Sorkin, Andrew Ross 2009 Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System and Themselves New York: Viking Varchaver, Nicholas, and Katie Benner 2008.
“The $55 Trillion Question.” Fortune September 30.
BANKS AND BANKING 511
Trang 5vBANKS, DENNIS J.
Native American activist, organizer, and protest leader Dennis Banks (Nowacumig) helped found the influentialAMERICAN INDIAN MOVEMENT(AIM)
Under his passionate leadership in the late 1960s and early 1970s, AIM championed Native Ameri-can self-sufficiency, traditions, and values How-ever, its demand for federal recognition of century-old treaty rights led to violent clashes with authorities, and the FEDERAL BUREAU OF INVESTIGATION (FBI) branded AIM an extremist group In turn, illegal actions by the FBI led to Banks’s acquittal on charges stemming from his role in AIM’s occupation of Wounded Knee,
South Dakota, in 1973 While heightening
nation-al awareness of Native American issues, Banks faced prosecution several times He spent nearly
a decade as a criminal fugitive, receiving a form
of political ASYLUM in California from then governor Jerry Brown before surrendering in
1984 and serving a shortened prison term Since
1978, Banks has led a Native American spiritual organization in Kentucky called Sacred Run Banks was born April 12, 1937, in Leech Lake, Minnesota His difficult early life began during one of many periods of upheaval in federal policy regarding Native Americans Like many Anishinabe Ojibwa, or Chippewa, chil-dren, he was sent at the age of five to schools operated by the federal Bureau of Indian Affairs (BIA), and he spent part of his childhood being shuttled between boarding schools in North and South Dakota The BIA managed such schools
in accordance with a landmark change in federal policy known as the Indian Reorganiza-tion Act of 1934 (25 U.S.C.A § 461 et seq.) Under the terms of this so-called NEW DEAL for Indians—a plan for tribal government that many traditional Native Americans had resisted—schools were to have been improved over those in previous decades that sought to Christianize or “civilize” their pupils But the schools still deemphasized Native American culture by forbidding the speaking of the Ojibwa language, Lakota Thus, like many of his generation, Banks lost his native tongue
At the age of 16, Banks joined the U.S Air Force and served in Japan Discharged in the late 1950s, he returned to Minnesota, where
he faced the same problems as young Native American men continued to face in the 1990s and the 2000s: alienation from his culture,
Dennis Banks.
AP PHOTOS.
Dennis Banks 1937–
◆
◆
◆
◆
◆
◆
❖
Indian
Reorganization
Act of 1934
1937 Born, Leech Lake, Minn.
1939–45 World War II
1950–53 Korean War
1953–59 Served
in U.S Air Force
1961–73 Vietnam War
1968 Founded American Indian Movement (AIM) with Clyde Bellecourt
1969–71 Occupation of Alcatraz Island by AIM members
1966 Convicted for buglary, sent
to Stillwater State Prison
1973 Riot at Custer County courthouse; AIM takeover
of Wounded Knee
1978 Formed Sacred Run, a Native American spiritual organization
1975–83 Lived as criminal fugitive;
given political asylum in California 1984–85 Served sentence for 1973 riot
1992 Appeared as Mohawk
warrior in the film The Last
of the Mohicans
◆
2004 Ojibwa
Warrior
published
Trang 6unemployment, poverty, alcoholism, and crime.
“I was heading down a road that was filled with
wine, whiskey and booze,” Banks later recalled
“Then I landed in prison.” In 1966 he was
convicted for burglarizing a grocery store and
began serving 31 months of a
three-and-a-half-year sentence in Stillwater State Penitentiary, in
Minnesota In prison, Banks met fellow convict
Clyde Bellecourt, also an Ojibwa The two men
and others founded AIM in July 1968 with
several goals in mind They wanted to address
the problems that beset their people and find
solutions to basic needs such as housing and
employment To help Native Americans live
successfully off reservations, they would start
so-called survival schools But fundamentally,
they wanted to preserve their vanishing culture
AIM’s emblem was an upside-down U.S flag,
what Banks called the international distress
signal for people in trouble
When the first AIM chapter started in
Minneapolis in 1968, Banks would often use a
police radio to guide him to the scene when
officers were arresting Native Americans
Intending to prevent police abuses, he was
frequently arrested on charges of interference
This kind of tough, streetwise advocacy helped
spread the movement, making Banks,
Belle-court, and another AIM leader, Russell Means,
heroes to many of their generation
Over the next four years, the movement
spread to all 50 states and to Canada The
organization’s political message had widespread
appeal for Native Americans who felt betrayed
by the federal government’s Indian
Reorganiza-tion Act Not only was this new deal perceived
as no deal, but many believed that it opened the
way for massive federal land grabs of Indian
territory on which valuable minerals were
located Banks and his fellow leaders decided
to reclaim former Indian territory, announcing
that they would symbolically “retake the
country from west to east” like the “wagon
train in reverse.”
The militancy of their claims was soon
demonstrated In its first act of protest, on
November 4, 1969, AIM seized the abandoned
federal prison on Alcatraz Island, in San
Francisco Bay, California Two hundred
acti-vists claimed the island as free Indian land and
demanded that an educational and cultural
center be established there In ironic press
statements, they announced the establishment
of a Bureau of Caucasian Affairs and offered to pay the U.S government $24, in mockery of the
1626 purchase of Manhattan Island from Indians by Dutch settlers The occupation, which lasted 19 months, stirred up considerable publicity The U.S House of Representatives passed a JOINT RESOLUTION directing President RICHARD M.NIXONto negotiate with the activists, but his administration’s offer to build a park on the island was laughed off U.S marshals ultimately arrested the activists still on the island in June 1971
In April 1971 Banks led several AIM members
in a week-long takeover of the Fort Snelling Military Base, in St Paul Seizing an abandoned building, the group announced that it intended
to start an Indian survival school there Senator Walter F Mondale agreed to negotiate with Banks, but before he could, a federal Special WEAPONS and Tactics (SWAT) unit arrested the protesters
Around the United States, other occupations of government property took place as AIM chapters demonstrated against broken treaties As a white backlash against the protests began, several Indians were beaten or shot Charges of MAN-SLAUGHTERbrought against white attackers usually ended in acquittal, inflaming the Indian move-ment It maintained that little or no help was forthcoming from the BIA or the FBI
In response, car caravans converged on Washington, D.C., on November 2, 1972, in a protest rally dubbed the Trail of Broken Treaties
AIM presented a 20-point proposal demanding that the government revamp the BIA, recognize Indian sovereignty, restore the power of Indians
to negotiate treaties, and create a review board to study treaty violations A group of 400 protesters seized the BIA building; clashed with riot squads;
and, renaming the facility the Native American Embassy, ransacked files that Banks said con-tained evidence of federal mistreatment of Indians Banks told reporters,“We are trying to bring about some meaningful change for the Indian community If this is the only action that will bring change, then you can count on demons-trations like this 365 days a year.” On November 6, the Nixon White House agreed to negotiate After two days, Banks’s followers departed in return for the appointment of a special panel to investi-gate conditions on Indian reservations But within
a week after the takeover, federal funding was cut off for three of AIM’s survival schools
In early 1973, a turning point occurred in Banks’s life and the direction of AIM On
WHAT WE HAVE DONE,WE DID FOR THE SEVENTH GENERATION TO COME WE DID NOT DO THESE THINGS FOR OURSELVES [BUT]SO THAT THE SEVENTH GENERATION MAY
BE BORN FREE
—D ENNIS B ANKS BANKS, DENNIS J 513
Trang 7February 6, he led an AIM protest 200 strong in Custer, South Dakota, after a white man accused of killing an Indian in a barroom brawl was charged with INVOLUNTARY MANSLAUGHTER Banks met with local officials, but when the slain man’s mother, Sarah Bad Heart Bull, tried
to enter the courthouse, she and other Native Americans were beaten by the police A riot ensued, in which AIM members set fire to police cars and the chamber of commerce office For his role in the Custer incident, Banks was charged with ARSON, BURGLARY, and mali-cious damage to a public building, all of which
he denied But his radicalization was complete
“We had reached a point in history where we could not tolerate the abuse any longer,” Banks later explained, “where mothers could not tolerate the mistreatment that goes on on the reservations any longer, they could not see another Indian youngster die.”
Three weeks later, Banks, Means, and other AIM members took over the town of Wounded Knee on the Pine Ridge Reservation in South Dakota For Native Americans, the town has a bitter place in history: it is the site where, in
1890, 300 unarmed Sioux men, women, and children were massacred by the Seventh Cavalry
of the U.S Army Banks and Means hoped to invoke this symbolism by seizing the town by armed force and issuing new demands They wanted the federal government to investigate the BIA and to address treaty violations, and they denounced recent tribal elections as corrupt manipulations by white U.S citizens
As national attention focused on the growing army of some three hundred FBI agents and U.S marshals, and the armored personnel car-riers surrounding the militants’ fortifications, gunfire was frequently exchanged Over 71 days, while the government ordered surrender without AMNESTY, the town was held.“We laid down our weapons at Wounded Knee,” Banks told the press from within the stronghold, recalling the
1890 massacre “Those weapons weren’t just bows and guns, but also a sense of pride.”
The takeover ended on May 9, 1973 Penta-gon documents later revealed that the U.S Army had readied a vast military arsenal to clear out AIM members, including more than 170,000 rounds of ammunition, grenade launchers, explosives, gas, helicopters, and jets In the end, however, casualties were limited: two Native Americans were killed and several wounded;
three members of the government forces were
wounded, including one agent who was para-lyzed As a condition of surrendering, AIM was once again promised a federal investigation of its demands, but none was forthcoming
Banks and Means were prosecuted on ten felony counts each in a dramatic eight-month trial in St Paul, during which federal marshals used mace on courtroom spectators The defendants alleged that their takeover of Wounded Knee was justified by the govern-ment’s violations of the 1868 Treaty of Fort Laramie—a pact in which the Sioux Indians had been promised government protection for ending their armed resistance But the case against Means and Banks foundered on revela-tions that the FBI had used illegal wiretaps and had changed documents, among other illegal-ities, in mounting its prosecution On Septem-ber 16, 1974, all charges were dismissed Although Banks acted as a negotiator during the mid-1970s, settling disputes between Native Americans and authorities, other aspects of his life soon changed for the worse In July 1975 a South Dakota jury convicted him on charges of riot and assault with a deadly weapon for his role in the 1973 riot at the Custer County Courthouse The conviction carried a maxi-mum sentence of 15 years in prison Before sentencing, Banks heard prison guards say he would not last 20 minutes in the South Dakota State Penitentiary He fled, only to be arrested
by FBI agents on January 23, 1976, in northern California A massive petition movement sup-ported by the actors Jane Fonda and Marlon Brando appealed to Governor Brown on Banks’s behalf Brown reduced Banks’s bail, refused EXTRADITION requests from South Dakota, and informed authorities there that he was protect-ing Banks because of sworn statements that Banks’s life would be endangered if he were imprisoned Banks lived freely in California, serving as chancellor of the two-year Indian college Deganawidah-Quetzalcoatl University, until the 1983 inauguration of Republican gover-nor George Deukmejian ended his asylum Banks then took sanctuary on the Onondaga Reservation in New York Because reservations
in the state are not under federal jurisdiction, the FBI chose not to arrest him as long as he remained there
After nine years as a fugitive, Banks gave himself up to state authorities in South Dakota in fall 1984 His request for clemency was denied,
Trang 8and he was sentenced to three years in prison.
After hisPAROLEon December 9, 1985, he spent
time on the Pine Ridge Reservation, where,
through his success at persuading Honeywell
and other companies to locate factories there,
employment doubled But his legal troubles
continued Banks had been charged with illegal
POSSESSIONof dynamite stemming from the 1975
arrest of his wife, Kamook Nichols A lower court
dismissed the charges in 1983 on the ground that
Banks and three other defendants had been
denied their SIXTH AMENDMENT right to a SPEEDY
TRIAL, and a second federal court upheld the
ruling But on January 21, 1986, the members of
the U.S Supreme Court, in a 5–4 vote, held that
their rights had not been violated, because they
were free without bail and not under indictment
during the 90-month delay in their prosecution
Banks pleaded guilty on March 8, 1988, and
received five years’ probation Also in 1988,
Banks’s autobiography Sacred Soul was published
In 1994 Banks led the four-month “Walk
for Justice.” The purpose of the trek from
Alcatraz Island in San Francisco to Washington,
D.C., was to publicize current issues regarding
Native Americans
Banks continued to serve as director of
Sacred Run, an organization he founded in 1978
to address Native American spiritual concerns
Since then the Run has become an international,
multicultural event that carries the message of
the sacredness of life and of humankind’s
relationship to the earth By 1996 Banks had
led runners over 58,000 miles through the
United States, Canada, Europe, Japan, Australia,
and New Zealand
Banks has had roles in movies including
War Party, The Last of the Mohicans, and
Thunderheart A musical cassette, Still Strong,
featuring Banks’s original work as well as
traditional Native American songs, was
com-pleted in 1993 and a music video with the same
name was released in 1995
As of 2009, Banks continues working toward
the release of Leonard Peltier Peltier, an Ojibwa
whom Banks considers to be a political prisoner,
was convicted in 1977 of theMURDERof two FBI
agents during a gunfight in Oglala, North
Dakota In addition to supporting the Peltier
defense and other issues concerning Native
Americans, Banks sits on the board of directors
for the Nowa Cumig Institute and travels and
lectures in the United States and abroad
FURTHER READINGS Banks, Dennis J., with Richard Erdoes 2004 Ojibwa Warrior: Dennis Banks and the Rise of the American Indian Movement Norman, Oklahoma: University of Oklahoma Press.
Churchill, Ward 1988 Agents of Repression: The FBI’s Secret Wars against the Black Panther Party and the American Indian Movement Boston: South End Press.
Sayer, John William 1997 Ghost Dancing the Law: The Wounded Knee Trials Cambridge: Harvard Univ Press.
Smith, Paul, and Robert Warrior 1997 Like a Hurricane:
The Indian Movement from Alcatraz to Wounded Knee.
New York: New Press.
Weyler, Rex 1982 Blood of the Land: The Government and Corporate War against the American Indian Movement.
New York: Everest House.
CROSS REFERENCE Native American Rights.
BAR ASSOCIATION
An organization of lawyers established to promote professional competence, enforce standards of ethical conduct, and encourage a spirit of public service among members of the legal profession
The mission of a bar association is fre-quently described in the words ofROSCOE POUND, legal scholar and dean of Harvard Law School from 1916 to 1936:“[To] promote and maintain thePRACTICE OF LAWas a profession, that is, as a learned art pursued in the spirit of a public service—in the spirit of a service of furthering the administration of justice through and according to law.”
Bar associations accomplish these objectives
by offering continuing education for lawyers in the form of publications and seminars This education includes instruction on recent devel-opments in the law and managing a law practice successfully as a business Bar associations en-courage members to offerPRO BONOlegal services (to provide legal services at no cost to members
of society who cannot afford them) The asso-ciations develop guidelines and rules relating to ethics andPROFESSIONAL RESPONSIBILITYand enforce sanctions for violation of rules governing lawyer conduct They also offer attorneys the opportu-nity to meet socially to discuss employment prospects and legal theories
The International Bar Association, based in London, is for lawyers and law firms involved in the practice ofINTERNATIONAL LAW In the United States, bar associations exist on the national, state, and local levels Examples are the AMERI-CAN BAR ASSOCIATION (ABA) and the FEDERAL BAR
BAR ASSOCIATION 515
Trang 9ASSOCIATIONon the national level, the New Jersey State Bar Association and the Florida Bar Association on the state level, and the New York City Bar Association on the local level
Some law schools have student bar associations for the student body as a whole, and distinct, smaller bar associations for students with a common ethnic background or an interest in a specific area of practice
In a majority of states, membership in the state bar association is mandatory for those licensed to practice law When lawyers are required to join the bar in order to practice law, the bar is said to be integrated, or unified
Integration is generally accomplished by the enactment of a statute giving the highest court
of the state the authority to integrate the bar, or
by rule of that court in the exercise of its inherent power In effect, lawyers are not free to resign from anINTEGRATED BAR, because by doing
so, they lose the privilege to practice law
The modern U.S bar association traces its beginnings to the mid-nineteenth century At that time, the practice of law was largely unregulated People in need of legal services had no assurance that the lawyers they hired had had even minimum legal training To address this situation, leaders of the legal profession began to organize self-governing bar associations
to establish standards of education and of professional conduct The first Code of Profes-sional Ethics was formulated by the Alabama State Bar Association in 1887 The ABA Canons
of Professional Ethics followed in 1908, and were subsequently adopted in whole or in part throughout the United States These canons were revised and expanded in 1969, as the Model Code of Professional Responsibility, and again
in 1983, as the Model Rules of Professional Conduct The ABA amends the Model Rules periodically as necessary, and states are free to determine whether to adopt these amendments
In addition to the rules, both the ABA and state bar associations issue ethics opinions, which are advisory statements regarding the application of an ethical rule Although these opinions are not binding as law, they are often persuasive when reviewed by a court
Major issues of concern to bar associations
in the 2000s included:
n A perceived decline in professionalism among lawyers, manifested by a decline in civility and professional courtesy
nThe preservation of due process and other constitutional rights in light of the wave of international anti-terrorism sentiment
nA conflict between lawyers’ ethical respon-sibilities and their business interests Critics within and outside the legal profession complain that some lawyers seek out clients using unethical methods, and engage in LITIGATION of questionable merit in the pursuit of personal profit rather than in the interests of justice
nThe politicization of bar associations and the preservation of judicial independence On some occasions, bar associations have taken positions on hotly contested social and political issues Critics argue that the conflict within the membership over these issues distracts bar associations from their primary duty of regulating the practice of law
nTort law reform Bar associations continue
to oppose any enactment of federal legisla-tion that would preempt state tort law
in such areas as PRODUCT LIABILITY, medical LIABILITY, and automobile liability, includ-ing federal initiatives aimed at creatinclud-ing maximum allowable damages in tort cases
FURTHER READINGS American Bar Association Available online at https://www abanet.org/home.html (accessed May 16, 2009) Hamilton, Bruce 1995 “What Makes a Great Bar Associa-tion.” Arizona Attorney (January).
Martin, Peter A 1989 “A Reassessment of Mandatory State Bar Membership in Light of Levine v Heffernan.” Marquette Law Review 73 (fall).
Pound, Roscoe 1953 The Lawyer from Antiquity to Modern Times St Paul, MN: West.
Warren, Kenneth J 2003 “Multijurisdictional Practices Call for New Model Rules ”TheLegalIntelligencer(February20) Young, Don J., and Louise L Hill 1988 “Professionalism: The Necessity for Internal Control ” Temple Law Review
61 (spring).
CROSS REFERENCE Continuing Legal Education.
BAR EXAMINATION The bar examination is a written test that an individual must pass before becoming licensed to practice law as an attorney A license to practice law within a state or federal jurisdiction is gene-rally premised upon admission to that jurisdic-tion’s bar (a collective professional association
of attorneys and counselors) by meeting its criteria, including passing that jurisdiction’s bar examination
Trang 10Bar examinations are regulated by states,
and their specific requirements vary from state
to state Generally, they cover numerous legal
topics and consist of multiple-choice questions
and/or essay questions; many jurisdictions
addi-tionally require a test designed to assess an
examinee’s fundamental lawyering skills in a
hypothetical situation
Each state has an interest in protecting its
citizens by ensuring the quality and competency
of lawyers who receive licenses to practice in the
state In addition to requiring bar candidates to
pass a difficult and comprehensive test of
subs-tantive legal knowledge, most jurisdictions also
require proof of graduation from anACCREDITED
LAW SCHOOL and successful completion of a
character background review With few
excep-tions, only people who satisfy these strict
requirements and are licensed by a state bar
may practice law in the licensing state Critics of
this system ofATTORNEY licensure argue that its
true purpose is to reduce competition between
lawyers by regulating the number of lawyers
admitted to the bar
Historically, lawyers have played an active
role in determining who, and how many, would
join their ranks as members of the bar This
tradition predates the U.S Constitution by
more than six centuries, when English courts
governed who would be allowed to practice law
Courts have long relied on the rationale that the
integrity and competency of practicing
attor-neys directly affect the quality of justice
dispensed
The U.S legal system has adopted this
rationale Before 1828, states allowed practicing
attorneys to determine the competency of
prospective attorneys Strict rules developed by
lawyers at that time typically required an
individual to obtain a college degree and work
several years as an attorney’s apprentice before
being admitted to thePRACTICE OF LAW Because
attorneys controlled who would get
apprentice-ships, the general public perceived the system as
catering to the elite
A decline of elitist attitudes surrounding the
election of President ANDREW JACKSON in 1828
prompted a change in the attorney licensing
system State legislatures divested the authority
granted attorneys and reclaimed control of
bar admission standards, which became far less
stringent and far less exclusive Apprenticeships
remained the most common form of legal
study, but by 1860, only nine states required any form of LEGAL EDUCATION for ADMISSION TO THE BAR Written bar examinations, when required, were cursory
By the late 1800s, a surge in formal law schools spurred a decline in legal apprenticeship programs A new wave of interest in improving standards of legal education and bar admission prompted the founding of the AMERICAN BAR ASSOCIATIONin 1878 and the American Associa-tion of Law Schools in 1900 These groups encouraged tougher bar admission standards, including the requirement that all bar candi-dates complete a written examination used to assess their fitness to practice law In the early 2000s, every state offers a bar examination
Administrative bodies established in each state generally govern the standards and parti-cularities of the bar examination In keeping with the tradition of attorney self-regulation, these boards usually are made up, at least in part, of licensed attorneys The boards deter-mine what legal topics will be covered; what types of questions will be asked; what grading methods will be applied; and the locations, dates, and times of examinations Nearly every state requires, as one component of the exami-nation, the Multistate Bar Examination
The Multistate Bar Examination contains
200 multiple-choice questions covering six legal topics: contracts, CONSTITUTIONAL LAW, CRIMINAL LAW and procedure, evidence, real property, and torts Examinees have six hours to complete the exam, or 1.8 minutes for each question This computer-graded test is offered twice per year, usually in February and July The test questions change each time the examination is given, and score results from the multistate examination taken in one state may be transferred to other states’ bar admissions committees According to the National Conference of Bar Examiners (NCBE), as of 2008, only Louisiana and Washington did not include the multistate examination
as part of their respective bar examinations The average raw score, according to the NCBE, has hovered between 125 and 130 out of 200
Most states also require bar candidates to complete a test of their knowledge of state laws Examinees usually take this portion of the exam on the day before or after the Multistate Bar Examination This state-specific examina-tion often contains essay quesexamina-tions or multiple-choice questions or a combination of the two
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