Columns

Not to keep you in suspense, we’ll begin with the conclusion: The Earth is burning up and there are no hopeful signs that we can cool it down and avoid the inevitable -- an uninhabitable Earth.
First a benchmark: Since the beginning of the industrial revolution, usually defined as the mid-1800s, temperatures have increased just over 1° Celsius (1.8° Fahrenheit). That increase has brought the havoc we are experiencing today.

By Berl Falbaum

Not to keep you in suspense, we’ll begin with the conclusion: The Earth is burning up and there are no hopeful signs that we can cool it down and avoid the inevitable -- an uninhabitable Earth.

First a benchmark: Since the beginning of the industrial revolution, usually defined as the mid-1800s, temperatures have increased just over 1° Celsius (1.8° Fahrenheit). That increase has brought the havoc we are experiencing today.

Thus, the entire environmental world has dedicated itself to keeping temperatures from rising above 1.5° Celsius (2.7° Fahrenheit). Keep these two facts in mind as you read on.

Hundreds of the world’s leading climate scientists expect global temperatures to rise at least 2.5° Celsius (4.5° Fahrenheit) this century, surpassing the agreed to goal and “causing catastrophic consequences for humanity and the planet.”

(The average temperature in 2024 was 1.6° Celsius (2.88° Fahrenheit) above pre-industrial levels, according the European Union’s Copernicus Climate Change Service. This was a major increase of 0.1° Celsius from 2023.

For the first time since record keeping began, global temperatures in November 2023 exceeded a 2° Celsius (3.6° Fahrenheit) increase from pre-industrial levels.

True, the two-degree increase was for just one day and may be transitory. But it nevertheless is a very troubling sign. If the temperature does not drop, the world will hit an ongoing two-degree increase in the 2040s and 2050s.

Climate experts envision famines, conflicts and mass migrations driven by scorching heat waves, raging wildfires, floods and higher ocean temperatures leading to storms of an intensity and frequency far beyond those we have ever experienced.

Even fractions of a degree matter: Each extra tenth means 140 million more people suffering in dangerous heat.

Professor Joeri Rogelj, at the Imperial College in London, observed, “Every fraction of a degree…whether 1.4° Celsius, 1.5° Celsius or 1.6° Celsius brings more harm to people and ecosystems, underscoring the continued need for ambitious emissions cuts.”

This warming will speed the melting of glaciers and rising of seas, damage farm crops, increase contamination of the air, lessen the availability of clean water, kill off coral reefs which are vital to sea life, and impact just about every sector of the planet that is needed for a habitable Earth.

The Guardian reported in August 2024 that “today’s global climate…is unparalleled. It has not been as hot as this for at least 125,000 years, prior to the last ice age, and most likely longer, potentially going back one million years.”

In story after story, as in coverage of the Los Angeles fires, newscasts report “There is no relief in sight,” “No one knows when temperatures will ease,” “We are in for a long spell,” and so forth.

The reason “there is no relief in sight” is because this is --- to use a cliché --- the new normal. We may experience some relief from lower temperatures from time to time, but overall, temperatures will continue to rise.

In a survey of hundreds of scientists conducted by The Guardian, 77 percent of respondents believe global temperatures will reach at least 2.5° Celsius (4.5° Fahrenheit) above pre-industrial levels; almost half – 42 percent -- think it will be more than 3° Celsius (5.4° Fahrenheit) and only 6 percent believe the l.5° Celsius (2.7° Fahrenheit) limit will be achieved.

And, if you are still hopeful, you may not want to read any further. I’ll explain.

The most common goal cited to control global warming can only be described as suicidal. Environmental experts, scholars, scientists and organizations all seem to be in unison that we should work to keep temperatures below a 1.5° Celsius (2.7° Fahrenheit) increase.

Now, I am guessing that you concluded, as I have, if an increase of 1° Celsius is bad and causing so much damage then a rise to 1.5° Celsius must be worse. Exactly!

When I first noticed this apparent contradiction of the 1.5° Celsius goal while working on a book on the environment, I contacted some scholars because, being a layman, I thought I might have “missed” something. I did not. Here is a summary of the replies I received:

“We should be aiming to limit warming to 1° Celsius or even reduce it to 0 degree Celsius…[but] no one in the scientific community has stated that it’s technically possible to limit warming below 1.5° Celsius in the foreseeable future because each additional tenth of a degree in warming is already ‘baked in’ so there is little we can do about it. Thus, 1.5° Celsius has come to represent the best-case scenario -- albeit one which will be catastrophic… (emphasis mine).”

The world’s powers and decision makers have recognized that the temperatures cannot be reduced and have touted the limit to the 1.5° Celsius goal as a desirable objective without any explanation to the public of the drastic consequences.

Even the Paris Agreement, the legally binding international agreement adopted in 2015 under the auspices of the United Nations Climate Change Conference known as COP21, 196 parties agreed to work to keep temperatures below the 1.5° Celsius increase.

Why no one, not the scientists, the media, the environmental organizations working to save the Earth -- no one -- has warned about the consequences of reaching 1.5° Celsius, I don’t know. Perhaps they want to maintain hope or not create panic.

Whatever the reason, we are on a very destructive, deadly path and one created and nurtured by mankind and one from which, regrettably, we cannot escape.

Before we moved on, in January the average temperature increase was 1.75° Celsius (3.4° Fahrenheit) above pre-industrial levels, the hottest month ever recorded.

Now, why is the Earth heating up?

The principal and short answer: Greenhouse gases are trapping heat and keeping it from escaping back into space.

The four major gases involved are carbon dioxide (CO2), methane, nitrous oxide and fluorinated gases.

In this column we will focus on CO2 which accounts for 80 percent of all U.S. greenhouse gas emissions resulting from human activity. The other three are also problematic, particularly methane that is much more powerful than CO2, but it has a shorter atmospheric lifespan.

Where does CO2 come from? The burning of fossil fuels, i.e. coal, petroleum, natural gas and oil.

Our World in Data reports that in 1950, we emitted 6 billion tonnes (a tonne equals 2204.6 pounds and is used by the British) of greenhouse gasses; in 2023, we emitted more than 37 billion tonnes or, very roughly, five tonnes per person in the world.

I am confident that as you are reading this, you are becoming angry at the obvious emitters, i.e. cars, trucks, factories and the like. The three major commercial culprits: the burning of fossil fuels for transportation, generation to create electricity and industry.

But the next time you get on an airplane, you might reflect that you (and I) are exacerbating the problem by flying. With an estimated 100,000 passenger, cargo and military flights in the world each day, the airline industry accounted for 2.5 percent of global emissions in 2023. It emits 1 billion tons of CO2 each year, more than most countries.

An irony and contradiction: former Vice President Al Gore traveled the world to promote his awarding-winning book and movie, “An Inconvenient Truth, “which warns about the environmental crisis we face. He did more than 1,000 presentations flying around the globe and emitting tons of CO2.

Taking a cruise? I’m pretty sure you never thought about emissions of CO2 from cruise ships while you are sunning on a deck. The largest cruise line, Carnival, produced more CO2 in 2023 -- 2.6 million metric tons --- than the entire city of Glasgow, Scotland --population 620,000 -- which recorded 2.43 million metric tons.

What can we do about this mess?

Unfortunately, very little, if anything, given the economic and political hurdles which need to be overcome.

Some 200 countries -- the entire world -- have attended 29 annual international summit meetings (COPs) -- with the goal of reducing CO2 emissions. Every time they met, things were worse than the previous year. They could not overcome political and economic considerations and, worse, there is no way to hold countries accountable even after they make commitments.

All of this should make us hot under the collar, but regrettably it doesn’t.

(This is the third in a five-part series on the environment by contributing columnist Berl Falbaum, a veteran journalist and author of 12 books. Berl has studied the issue for the last two decades, including writing a book, “Code Red! Code! Red! How Destruction of the Environment Poses Lethal Threat to Life on Earth.”)

The Earth reached an historic milestone at year-end 2023 which should have been met with a woeful outcry but instead was greeted with a deafening silence.
The world population of 7.9 billion slipped over the 8 billion mark. Worse, projections are that we will hit 9.1 billion by 2050, just 25 years away. This addition of another 1.1 billion people will require huge supplies of clean water, land, shelter, food, and energy, and it will further invade wildlife habitats.

By Berl Falbaum

The Earth reached an historic milestone at year-end 2023 which should have been met with a woeful outcry but instead was greeted with a deafening silence.

The world population of 7.9 billion slipped over the 8 billion mark. Worse, projections are that we will hit 9.1 billion by 2050, just 25 years away. This addition of another 1.1 billion people will require huge supplies of clean water, land, shelter, food, and energy, and it will further invade wildlife habitats.

Not only was this growth greeted with a yawn, but those who reported on the growth discussed it in entirely economic terms. Hardly a word was said about what it meant in terms of our environmental future.

Just one “minor” example: The New York Times in April 2023, reported that India will soon pass China in population, writing: “With size -- a population that now exceeds 1.4 billion -- comes geopolitical, economic and cultural power…And with growth comes the prospect of a ‘demographic dividend’.’’

The Times devoted three pages analyzing this development. There was not one word on what this meant to the environment.

Now, you don’t have to be a climate change expert, scientist or scholar to know that growth requires resources. We will now need more land for shelter, food, water, and energy -- resources which are already at a minimum. We are already using resources faster than the Earth can replenish them.

The dire warnings regarding population growth are not new; many experts in the past have tried to get the attention of the world on the threat that population growth poses to our existence.

For instance, the United Nations has estimated the planet will need twice as much food by 2050 than we are producing now. Its Food and Agriculture Organization (FAO) has reported we will need to increase world food production by 60 to 70 percent to feed 9 billion people.

In 2006, when former Vice President Al Gore released his award-winning book and movie, “An Inconvenient Truth,” which warned about the environmental challenges we face, the world population stood at 6.6 billion. We have witnessed an increase of 1.4 billion people or a 21.2 percent jump in just 19 years.

In 1968, Paul R. Ehrlich, and his wife, Anne Howland Ehrlich, two Stanford University researchers, warned in their book, “The Population Bomb,” that the Earth cannot sustain the growth it was experiencing. The population at the time: a mere 3.5 billion.

In 2016, Edward Osborne Wilson, a biologist known as the Darwin of the 21st century who won two Pulitzer Prizes, warned in his book, “Half-Earth: Our Planet’s Fight for Life,” that to survive, mankind needs to reserve half the Earth for wildlife. He also warned in his studies that the Earth has only the capacity to support 9 to 10 billion people.

In the early 1970s, a small group of scientists created a computer model called World3 which analyzed population growth.  Its findings were published in a book, “The Limits to Growth.” The conclusion?

“... humanity was despoiling nature so fast that civilizational collapse would occur sometime within the next one hundred years.”

To give these abstract forecasts some meaning let’s look at Kenya. In 1971, it had a population of 11 million which grew to 53.7 million by 2021. In 1971, the country had 160,000 elephants and 20,000 black rhinos. By 2021, those numbers dropped to 35,000 elephants and 1,000 black rhinos and only two white rhinos (both female.) The same scenario is playing out throughout the world.  (I chose Kenya as an example because I visited the country on a photo safari in 1996. It was an experience of a lifetime.)

Let’s focus on a place closer to home: Oakland County. Every time friends would point to a beautiful new subdivision, I would reply, “that’s pollution” because it took habitat from insects, bees, deer, coyotes, skunks, racoons, etc., all essential to the “circle of life.” Of course, the growth also created problems of water supply and pollution in the county’s many lakes.

When I was in my teens in the 1950s (yes, I’m old), much of where I now live. West Bloomfield, was farmland. I paid a farmer a couple of bucks to go horseback riding. It was a win-win for the farmer. He earned a few dollars and I exercised his horses. Now, when I sit in a traffic jam at Orchard Lake Road and Maple, I wish I was back in the saddle again.  

I doubt there is much land left on which to expand in my suburb. Space is, after all, finite.

The problem: by the time the world understands the meaning of the emergency flashes on the radar and tries to respond appropriately, it will probably be too late.  

The NATO Review, reported under the headline, “Population Growth, the Defining Challenge of the 21st Century:”

“Without taking action now, billions of people across the world will face thirst, hunger, slum conditions and conflict in response to droughts, food shortages, urban squalor, migration and ever depleting natural resources, while capacity tries to catch up with demand.”

The Population Center wrote:

“Slowing down, stopping and eventually reversing human population growth ---these are ethical imperatives that will help improve the chances for future generations establishing living scenarios with the planet. The most ethical gift we can give people and creatures of the last 21st century and early 22nd century is a chance.”

Regrettably, we are not living up to our moral and ethical obligation.

(This is the second in a five-part series on the environment by contributing political columnist Berl Falbaum, a veteran journalist and author of 12 books.  Berl has studied the issue for the last two decades, including writing a book, “Code Red! Code! Red!  How Destruction of the Environment Poses Lethal Threat to Life on Earth.”)

I thought long and hard on how to start this series to get the attention of readers. And I don’t mean just to “tickle” their interest in the subject so they read it but with the hope they understand the ominous message about the future we face.
David Wallace-Wells, who has written extensively on the environment, did it by starting his book with the following eight words: “It is worse, much worse, than you think.”

By Berl Falbaum

(EDITOR’S NOTE: With this column, we begin to publish a five-part series on the environment written by our contributing political columnist Berl Falbaum, a veteran journalist and author of 12 books. The columns will appear over the next few weeks. Berl has studied the issue for the last two decades, including writing a book, “Code Red! Code! Red! How Destruction of the Environment Poses Lethal Threat to Life on Earth.”)

I thought long and hard on how to start this series to get the attention of readers. And I don’t mean just to “tickle” their interest in the subject so they read it but with the hope they understand the ominous message about the future we face.

David Wallace-Wells, who has written extensively on the environment, did it by starting his book with the following eight words: “It is worse, much worse, than you think.”

I will try it with the following: The Earth is becoming uninhabitable for humans much faster than many experts predicted. And it may well be too late to stop the environmental deterioration on numerous fronts, not just global warming that receives most of the attention.

Scientists are warning we are on the cusp of the Earth experiencing its sixth extinction, the first one caused by humans -- you and me.

The last extinction, the fifth, happened 65 million years ago when an asteroid crashed into the Earth, wiping out the dinosaurs.

There is not an inch of land, or a body of water on the planet, no matter how small or isolated, which is not being impacted by environmental issues. Yes, including your beautiful gated subdivision.

The following comes from a story, published by The Guardian, on a report written by renowned environmental experts:

“Many of Earth’s ‘vital signs’ have hit record extremes, indicating that the future of humanity hangs in the balance ...

“More and more scientists are now looking into the possibility of societal collapse… [The report] assessed 35 vital signs in 2023 and found that 25 were worse than ever recorded, including carbon dioxide levels and human population. This indicates a ‘critical and unpredictable new phase of the climate crisis.’”

Consider the following: Patagonia, which sits on the western side of South America, is one of the least populated regions on the planet. With an area of 1 million square kilometers, Patagonia is larger than 80 percent of countries on Earth. It has less than 5 percent of the population of both Chile and Argentina, making it a sparsely populated region.

Yet, it is being severely impacted by polluted air and water carried by currents of both and it is inundated with microplastics.

Or consider this: A scientist testing a submarine took it to the deepest depths of the oceans. some 36,000 feet. What did he find? Plastic garbage bags and candy wrappers.

Even the shape of the Earth is being affected. You read that correctly. Scientists at ETH Zurich in Switzerland, published a report in the National Academy of Sciences of the U.S. that the moon’s gravitational pull has steadily lengthened days, but polar melting is redistributing water closer to the equator. This makes the Earth more oblate -- or fatter -- slowing the rotation of the planet and lengthening the day faster than the lunar effect alone.

While we should be addressing environmental dangers, the deadly threats have been met with apathy and/or denial. We should be discussing the environment as we did COVID at its peak.

Instead, raging fires, floods, melting glaciers, soaring temperatures, plastic contamination, air and water pollution, nuclear waste disposal, deforestation --- and so much more -- are met with a sentence or two in news reports. Like in, “By the way ...”

Jonathan Watts, The Guardian’s global environment editor, wrote: “…weather catastrophes have become so commonplace that they risk being normalized. Instead of outrage and determination to reduce the dangers, there is a sense of complacency: these things happen. Someone else is responsible. Somebody else will fix it.”

The Guardian, incidentally, publishes four stories on the environment every day and they contain mostly negative news.

In one opinion piece The Nation wrote during the Los Angeles fire calamity: “These mega-fires have called forth a mega-failure by much of the news media. A review of coverage to date shows that most journalism is still not accurately representing how the climate crisis is upending our civilization by driving increasingly frequent and severe extreme weather.

“Too much of the [Los Angeles fire] coverage has simply ignored the climate crisis altogether, an inexcusable failure when the scientific link between such mega-fires and a hotter, dryer planet is unequivocal.”

Full disclosure: I am a journalist, not a scientist. I did not conduct any independent research. My reporting comes from researching the research done by world experts.

In these articles, I did not attribute every statistic, conclusion, prediction or finding because I thought that would be awkward and annoying to readers.

But it all comes from authoritative sources. In my book, I list more than 100 references.

This series is not recreational reading.

There is no good news to report.

With that warning, here goes.

The rise of artificial intelligence (AI) has the potential to completely upend antitrust law as we know it, according to Professor Daniel Crane.
In a recent article in the New York University Law Review, Crane notes that AI is at the core of a number of emerging technologies with the potential to reinvent the entire economy—and that idea carries profound implications for the practice of law.

By Bob Needham
Michigan Law

The rise of artificial intelligence (AI) has the potential to completely upend antitrust law as we know it, according to Professor Daniel Crane.

In a recent article in the New York University Law Review, Crane notes that AI is at the core of a number of emerging technologies with the potential to reinvent the entire economy—and that idea carries profound implications for the practice of law.

Crane—the Richard W. Pogue Professor of Law—recently answered five questions about the issue:

1. Do you see the impact of AI on antitrust being greater than on other areas of the law?

Probably not.

The cumulative effect of all of this is going to fundamentally reshape the whole way the economy works. It’s relevant to everything that touches our economy, from the way we write contracts, to the way securities are offered, to the way insurance policies are written, to the way labor markets work.

In his book The Coming Wave, Mustafa Suleyman describes how AI has synergies with things like synthetic biology, robotics, quantum computing, nanotechnology, energy expansion, and so forth.
I wanted to take what is being said by these technologists who are looking forward 10 or 20 years out and ask what it means for antitrust law.

Of course, the predictions could be wrong. But if these trends do continue, they have dramatic implications. It’s not limited to antitrust. It really applies to all human existence, honestly.

2. Your article details the four pillars of antitrust law that you expect to buckle if trends continue on their present course. Of the four, which one would be affected first?

I think we’re seeing one already: this idea that one function of competitive markets is to obtain information about people and what people want. Friedrich Hayek famously made the point that no central planner ever has enough information to really understand human desires, and I think he was clearly right.

Yet now the technology we already have is so far ahead in getting into our brains, and almost reprogramming our brains. Amazon has already patented a business method for prospective delivery of things you don’t know you want yet. We’re on that track pretty fast.

From scans of your eyeballs or your fingertip movements to looking at facial patterns in a movie theater, AI-enabled systems are able to figure out how people are reacting to products and services. Businesses are already widely using this to know us as consumers and even to program us as consumers.

So the traditional consumer discovery function that we attribute to markets is becoming obsolete.

3. You see new, comprehensive regulation as a likely response to these issues. What might that look like?

AI will certainly be regulated.

I’m focusing on what kind of regulation can replace the functioning of competitive markets. Because if the predictions are true, competitive markets will go the way of the dodo bird. We’ll have a few large companies controlling even much bigger swaths of the economy than they do today.

So what could regulation look like?

Some technologists are saying that instead of trying to program the outputs of an AI-driven system, we might instead program the inputs. An AI system has to have marching orders, called its objective function. The problem with regulating AI systems is that what happens between the objective function, the command, and the outputs is a big black box.

So one regulatory response would be to address what the business is allowed to tell their AI to do. For example, instead of “Maximize the profits of the firm,” the AI might be required to allow innovation without dramatic price increases.

4. You speculate that the coming wave might actually overwhelm antitrust law altogether. How likely do you think that is to happen?

In the short run? Not very likely.

If we’re looking 20 or 30 years out, I think it’s increasingly going to overwhelm antitrust law. If the current path of these technologies continues, it’s going to be very difficult for antitrust law to continue doing the things that it tries to do.

Think about all the cases against big tech right now. They’re largely based on internal documents and emails.

Once you turn over more business discretion to an AI, you’re not going to have that anymore. You’re not going to have evidence of a predatory intent or a predatory practice. Firms will get bigger and bigger because the best AI will have a slim advantage, which will multiply itself across all the business outputs of the firm and lead to dominance.

I think there’s very little that regulators can do to stop that from happening, at least using the current antitrust law. There’s almost an inevitability to the continuing roll-up of the economy in a few big firms. The paper is really ultimately a call to be prepared for this.

5. How should we prepare for these changes?

A lot has to do with making sure that we have expertise and understanding of these emerging technologies in the right places in government. The wave is going to wash over us whether we want it to or not.

The question from a citizen’s perspective is, how do you get ready to participate in democracy where this consolidation of power is likely to continue? How do we advocate for regulatory solutions that give agency to you and me as citizens, as voters, as participants in markets and in workforces?

Regulation of objective functions—the inputs of AI systems—seems to me like a promising way to focus some energy, because it says we’re not giving up a democratic voice in how the economy operates.

The economy may fundamentally change, but what shouldn’t ever change is the fact that the economy works for people and that the citizens need to have a voice in how their economy works.

A troubling gap in Michigan’s 2019 no-fault reform act has become increasingly apparent as auto insurance companies exploit provisions allowing family members to be excluded from coverage without their knowledge or consent.

By A. Vince Colella
Moss & Colella P.C.

A troubling gap in Michigan’s 2019 no-fault reform act has become increasingly apparent as auto insurance companies exploit provisions allowing family members to be excluded from coverage without their knowledge or consent.

In a recent Jackson County Circuit Court case, this oversight led to devastating consequences for a motorcyclist who suffered serious injuries in a freeway accident, including severe damage to his pelvis and wrist. The victim required extensive medical care, including surgery, inpatient hospitalization, and a comprehensive physical therapy and rehabilitation program, ultimately incurring medical expenses exceeding $100,000.

Unknown to the injured motorcyclist, his spouse had previously elected to exclude him from their Personal Injury Protection (PIP) medical coverage, exercising a provision within the no-fault statute that permits opting out when covered under a qualified health plan. The motorcyclist’s situation became dire when it was discovered that his qualified health plan contained an exclusion for medical expenses related to motor vehicle accidents—a critical detail his spouse likely overlooked when making the election.

Michigan’s transition to a cafeteria-style approach for auto insurance coverage has left drivers facing complex premium decisions and potentially devastating consequences when insurance carriers fail to explain nuances that could substantially impact post-accident coverage adequately.

The provision central to the Jackson County case, MCL 500.3107c, allows an applicant or named insured to select PIP coverage limits of $250,000 per individual per loss. Yet the coverage decisions extend beyond mere limit selection — under MCL 3017d, the applicant or named insured can exclude their spouse and any household relatives by simply indicating they have qualified health care plan coverage. While the Act requires insurers to provide a standardized form for excluding family members and mandates that these forms explain coverage limits and associated risks, it does not require applicants to prove their excluded family members have qualified healthcare coverage. This oversight creates a dangerous scenario where spouses and household members risk complete loss of PIP coverage for medical expenses following a severe accident.

Most concerning is the apparent absence of any statutory duty requiring auto insurance companies to notify family members when they’ve been excluded from the policy by the named insured.

The Department of Insurance and Financial Services (DIFS) anticipated these coverage gaps when it amended its model form for PIP medical opt-outs. DIFS Bulletin 2023-11-INS, which contains the agency recommendations for all Michigan automobile insurance companies, explicitly requires “specific proof for Qualified Health Coverage purposes.” The amended form contains language mandating that an applicant or named insured “provide current updated documentation every year for … qualified health coverage.” The language appears to be more than a mere recommendation; rather, it imposes an implicit obligation on insurers to verify that any spouse or family member being excluded from PIP medical coverage maintains qualified healthcare coverage. The model form thus attempts to create a safeguard that the legislature failed to include in the statutory framework. However, without explicit statutory authority requiring insurers to follow DIFS’ guidance, the model form’s protective measures may prove toothless in practice.

The no-fault Act’s silence regarding protection against unauthorized coverage opt-outs creates a significant vulnerability for Michigan motorists. When challenged on these issues, auto insurance companies will likely seek refuge in principles of statutory construction that prevent courts from reading additional requirements into unambiguous statutes, as recently demonstrated in Bronson Health Care Group v Esurance, ___ Mich App ___ (2023) (Docket No. 363486). However, courts confronting these cases should balance strict constructionist approaches against compelling public policy considerations that have historically shaped Michigan’s no-fault system. Since its inception in 1972 until the 2019 reforms, Michigan’s no-fault system prioritized protecting motorists against catastrophic medical and financial losses following auto accidents. While recent reforms may signal a shift away from guaranteed unlimited medical coverage, the legislature’s inclusion of a qualified health coverage requirement for PIP opt-outs clearly indicates it did not intend to leave motorists completely exposed to devastating medical bills. This suggests courts should interpret the Act’s provisions to prevent family members from being stripped of coverage without their knowledge, consent, or proof of alternative coverage.

The evolving landscape of Michigan’s no-fault insurance system has created unforeseen gaps in coverage that can devastate families following serious accidents. While the legislature’s intent may have been to provide flexibility and cost savings through various coverage options, the lack of statutory safeguards has allowed insurance companies to exclude family members from coverage without their knowledge or consent.

Until the legislature addresses these oversights, courts should interpret the Act’s provisions in a manner that promotes its historical purpose of protecting Michigan motorists from catastrophic losses. At a minimum, insurance carriers should be required to verify qualified health coverage for excluded individuals and provide notice to all affected household members. Without these basic protections, more Michigan residents may face overwhelming medical bills despite believing they have adequate insurance coverage.

Policymakers and academics have long been concerned about the danger posed by “shadow banks”—financial institutions that function like banks but are not subject to banking regulations, such as money market mutual funds or stablecoin issuers.

By Bob Needham
Michigan Law

Policymakers and academics have long been concerned about the danger posed by “shadow banks”—financial institutions that function like banks but are not subject to banking regulations, such as money market mutual funds or stablecoin issuers.

That lack of safeguards leaves shadow banks susceptible to instability that can quickly spread throughout the financial system. Typical approaches to addressing this risk have focused on changing banking laws.
Yet a conversation between Professors Gabriel Rauterberg and Jeffery Zhang during a stroll around the Law Quad led to a new idea: using securities law instead.

Rauterberg and Zhang took the idea from that initial conversation and developed it into a new paper, forthcoming in the Stanford Law Review.

They argue that securities regulators—who already exercise some authority over shadow banks—can and should do more, even if it might not be the first-best solution. They recently answered five questions about the issue:

1. How does the shadow banking sector contribute to problems of insecurity in the broader economy?

Rauterberg: Businesses need both long-term and short-term funding. They get a lot of their short-term funding from the shadow banking sector. So when there are mass withdrawals of financing from the shadow banking sector, it destabilizes the shadow banks themselves. Then it also dries up funding for businesses just when we’re in a moment of financial instability or panic. The broader economy depends on financial institutions for funding, and it turns out they’re kind of fragile.

Zhang: If the shadow banking market was tiny, it probably wouldn’t matter. But shadow banking in the last few decades of US financial history has grown into a multi-trillion-dollar industry. When you have an industry that large, that is so interconnected with the rest of the US economy—and that is also subject to the dynamics of bank runs, but without the safeguards that banks have—you get problems in the real economy.

2. Efforts to address this vulnerability have largely focused on banking law, but your paper suggests approaching the issue through securities law. How did you develop this idea?

Zhang: It started in 2022, when a banking law scholar (Zhang) was walking with a securities law scholar (Rauterberg) around the Law Quad. We’d both noticed how banking scholars and securities scholars don’t really talk to each other. We talked about how these economic phenomena are well known, but everyone has their own tools and their own perspectives. When you have entrenched views, it’s hard to think about the problem from the other side. So we asked ourselves, what would be another approach, even if it’s not perfect?

Rauterberg: We began with an observation that turned out to be massively more complicated than we thought it would be—that securities law provides securities regulators with a lot of jurisdiction over aspects of shadow banking. And as a result, there was this ambiguous relationship that seemed worth exploring between the two bodies of law. That started us thinking about whether that meant that securities regulators could play a more important role.

3. You mentioned that securities regulators already have some authority over shadow banking. What’s an example of that?

Rauterberg: One entire body of law that securities law usually doesn’t think of as relating to shadow banking, but it could, is broker dealer regulation. Broker dealers play a huge role in the financial sector. They can influence financial stability, but broker dealer regulation is designed only with customer protection goals in mind, not broader systemic issues.

For another example, money market fund regulation is at the heart of shadow banking. The Securities and Exchange Commission (SEC) knows that it’s important to financial stability, but has taken only modest action. The paper wrestles with this because it’s an ambiguous proposition, but the SEC could probably do more on that front.

4. What’s an example of the bigger reforms you advocate?

Zhang: To stick with money market funds—they are like banks. We force banks to hold capital for safety and soundness purposes; why not have money market funds do the same? The SEC could do this.

Of course, the counter argument is that this is really aggressive. In fact, this idea has been floated before, and the SEC has not taken it up. The industry certainly balks at it every single time, but that doesn’t mean that, logically, it isn’t a proper solution.

5. The paper discusses how finding political will for these changes could be an issue. Does that become even harder with a new presidential administration?

Rauterberg: Like a lot of the things about the incoming administration, it’s uncertain. The SEC in the first Trump administration was widely regarded as a perfectly reasonable SEC making competent if contestable judgment calls. Overall, though, I think the change makes it less likely the SEC will adopt these proposals.

Most of the people who study shadow banking think that this is such a big problem, we need to plan for whatever moment gives an opening for regulatory reform. That opening might be in six years or in two years. Some of these reforms could be doable as a staff-initiated set of changes. But the presidential administration will shape things.

Zhang: If you focus on the standard talking points, a Republican administration might mean less regulation. But what we are really addressing here is financial crises, system-wide failures. When that happens, everybody loses. Nobody wants that.

This should be thought of as the beginning of an undertaking, of a true synthesis of securities law and banking law. This first collaboration is planting a seed; we’re just going to let it grow, and we think it’s going to grow quite well.