February 19, 2026
Mamdani’s First 50 Days: Housing Edition
NYC Mayor Zohran Mamdani
I was interviewed for AMNewYork’s story, Mamdani’s First 50 Days. It reads, in part,
For Professor David Reiss, a Cornell University housing expert and former chair of the Rent Guidelines Board, the mayor’s housing orientation so far is unmistakably pro-tenant, but it also underscores deeper challenges.
“He’s clearly pro-tenant,” Reiss said, noting Mamdani’s rhetoric, appointments, and actions such as launching his rental rip-off hearings and the revival of the Mayor’s office to protect tenants. But he cautioned that short-term policies aimed at controlling tenants’ costs must also account for the long-term viability of the housing stock.
“Are you pro-tenants five years, 10 years, 15 years down the line?” Reiss asked, pointing to the risk that buildings with constrained revenue might struggle to cover unavoidable expenses like property tax, insurance, and mortgage payments without meaningful engagement.
Reiss traced much of this pressure to state rent restrictions, which eliminated several mechanisms that previously allowed landlords to raise rents between tenancies. Under current conditions, he said, the annual RGB adjustments are often the only permissible rent increases, which, in recent years, have been modest in the view of landlord groups.
If rents are capped or frozen, his view is that the city will have very few tools to ensure financial stability without subsidies or cost reductions — whether direct (financial support) or indirect (tax relief or reduced operating costs).
“You have very few tools,” he said. “They usually involve somehow reducing costs directly or indirectly, or increasing income by subsidizing,” Reiss said that any meaningful approach will have to consider how the city allocates limited funds, especially in the face of a budget gap that has already pushed the administration to consider rainy day funds and reserve drawdowns elsewhere.
That tension between immediate affordability and long-range health of the housing stock frames much of the current policy conversation. Reiss said the rent freeze itself — assuming it survives legal and procedural hurdles — would represent a significant political success if delivered, given that it was a core campaign pledge. But he stressed that a broader housing strategy must also ensure that rent-regulated buildings can cover ongoing costs without descending into default or neglect.
“Success for the Mamdani administration,” Reiss said, “is to thread the needle between his expressed statement of reducing rent increases or rent freeze on the one hand, but ensuring that the housing stock has enough income to support itself — not just for this year, but for three years, five years, seven years down the line.”
February 19, 2026 | Permalink | No Comments
February 17, 2026
When Tokenized Real-World Assets Collide With The Real World
Biying Cheng and I have a column in Law 360, When Tokenized Real-World Assets Collide With Real World. It reads,
The city of Detroit filed a public nuisance lawsuit in July of last year in the Michigan Circuit Court for the Third Judicial Circuit against Real Token, its co-founders and 165 affiliated entities, alleging building code and safety violations across over 400 Detroit residential properties.[1] RealT is a blockchain real estate platform that sells fractional interests in individual U.S. rental properties through the issuance of crypto security tokens.
On July 22, the judge issued a temporary restraining order — later converted into a preliminary injunction on Nov. 4 — barring RealT from collecting rent, pursuing evictions without a certificate of compliance and directing future rent into escrow until properties are brought up to code.
Detroit v. Jacobson is ongoing, with a trial scheduled to begin in May. The case highlights the brave new world we face when real estate assets are tokenized via blockchain technology.
The facts surrounding the case raise three pressing questions. First, are these real estate tokens securities? Second, assuming they are, do investors know what they are getting into when they purchase them? Third, and most importantly, are the very human tenants in these properties being provided with habitable housing by their decentralized finance landlords?
Are real estate tokens securities?
Until the Trump administration indicated that it might be taking a new approach to crypto more generally, it seemed clear that tokens like those issued by RealT were securities. Gary Gensler, chair of the U.S. Securities and Exchange Commission under the Biden administration, had stated that security tokens were generally securities under the long-standing Howey test, derived from the U.S. Supreme Court’s 1946 decision in SEC v. W.J. Howey Co.[2]
Trump administration officials have not, however, spoken in one voice on the issue. While SEC Commissioner Hester M. Peirce, the head of the SEC cryptocurrency task force, stated in July last year that “tokenized securities are still securities,” SEC Chairman Paul Atkins stated that “most crypto assets are not securities” a few weeks afterwards.[3]
Further muddying the waters, President Donald Trump’s Working Group on Digital Asset Markets released a report around the same time that distinguished between tokenized securities and tokenized nonsecurities, such as “commercial real estate.”[4]
On July 31, Atkins also announced the Project Crypto initiative to aid “President Trump in his historic efforts to make America the ‘crypto capital of the world.'” Under the aegis of Project Crypto, the SEC intends to develop “clear guidelines that market participants can use to determine whether a crypto asset is a security or subject to an investment contract” to slot crypto-assets into various categories.
The initiative also contemplates “an innovation exemption that would allow registrants and non-registrants to quickly go to market with new business models and services,” with no need to comply with burdensome regulatory requirements.[5]
It remains to be seen which types of real estate tokens will be deemed by the Trump administration to be securities and which will be deemed interests in real estate. It is important to acknowledge, however, that it would be a radical change to deem real estate tokens like RealT’s not to be securities, and it would upend decades of settled law relating to the Howey test.[6]
Indeed, the U.S. Court of Appeals for the Ninth Circuit on Aug. 11 reaffirmed a broad interpretation of the Howey test in SEC v. Barry.[7] To determine whether a security token is a security, the starting point is to decide whether it is an “investment contract” for the purposes of the Securities Act. Courts have found that the Howey test requires four elements to be met to determine whether something is an investment contract: (1) there must be an investment by the investor (2) in a common enterprise (3) with an expectation of profit (4) derived primarily from the efforts of others.
The Ninth Circuit in Barry found that sales of fractional interests in life settlements were investment contracts under the Howey test, and thus are securities. A life settlement is a transaction in which someone sells a policy insuring their own life to investors for an agreed-upon price, and the investors then take over the payment of the premiums and collect the death benefit after the insured dies. The defendants were sales agents for Pacific West Capital Group, a firm that buys life insurance policies from seniors and then sells fractional interests in those policies to investors.
Applying Howey, the court held that investors’ expected profits depended on PWCG’s managerial and ongoing efforts, including its policy selection, operation of the premium-reserve mechanism and the fractionalized structure that left investors reliant on PWCG’s management. The life settlements were thus found to be investment contracts.
Although this case does not address the tokenization issue, it demonstrates that the Howey test is generally applicable to transactions that fall under the broad category of “investment contracts.” So, while recent regulatory announcements impose some uncertainty regarding the applicability of the test, the Ninth Circuit’s decision in Barry shows that the Howey test is still alive and well, at least for now.
Are investors protected?
Promoters of real-world asset tokenization claim that they can lower barriers to real estate investing by allowing retail investors into the types of deals that once required high investment minimums and limited access to accredited investors. While the low cost and ease of entry into the real estate tokenization market are real, major challenges remain for retail investors to understand the risks posed by the tokens, as well as those posed by the underlying properties themselves.
Under the current regulatory framework, if a real estate token offering meets the Howey test, it is an investment contract and thus a security. The transaction then must be registered with the SEC or exempted.
Real estate token issuers typically rely on exemptions such as Regulation A, Regulation Crowdfunding, Regulation D and Regulation S. Each of those exemptions has various limitations on solicitation, investor accreditation and amounts raised, as well as other aspects of the offering.
States such as New York and California also have their own regulations that tokens must comply with. State securities regulators have identified schemes tied to digital assets as a top threat for retail investors.[8] It is far from clear whether real estate tokens generally comply with all of the federal and state investor protection regimes that apply to them.
In addition to being exposed to fraud and misrepresentation by token issuers, retail investors are also exposed to real-world problems relating to their investments that can rapidly interrupt cash flows and investor distributions.
Are tenants protected?
The Detroit RealT lawsuit clearly demonstrates how digital assets and their underlying real-world assets interact in a way that an investor pitch deck cannot. As alleged in the lawsuit, tenants in their properties have suffered for months from lack of heat, leaky roofs and other unsafe conditions. Investors are suffering — albeit only financially — for owning such poorly maintained properties.
Tenants are not without remedies. Many local governments, including Detroit, have significant statutory protections in place for residential tenants. Residential rentals in Detroit must obtain and maintain a certificate of compliance, and courts can effectively halt rent payments or consider noncompliance against landlords in cases. When units are out of compliance, tenants may be directed to escrow rent until code issues are fixed, as the judge in the RealT case has ordered.
What’s next?
We are just beginning to live in a world of tokenized real estate. The RealT case in Detroit should provide some guidance as to how we should navigate this new world.
But the regulatory environment is not yet clear. Investors do not yet understand what they are investing in. And tenants may be suffering real-world consequences until a whole host of regulatory and business issues are worked out.
The sooner we figure it out, the better for all.
[1] City of Detroit, City of Detroit Announces Major Lawsuit Against Real Token And 165 Related Corporate Entities for Widespread Nuisance Abatement Violations (July 24, 2025), https://detroitmi.gov/news/city-detroit-announces-major-lawsuit-against-real-token-and-165-related-corporate-entities.
[2] Gary Gensler, Chair, U.S. Sec. & Exch. Comm’n, Remarks on the Importance of Oversight and Investor Protection in Our Crypto Markets (Apr. 4, 2022), Securities and Exchange Commission, https://www.sec.gov/news/speech/gensler-remarks-crypto-markets-040422. , 328 U.S. 293 (1946).
[3] Hester Peirce, Comm’r, U.S. Sec. & Exch. Comm’n, Statement on Tokenized Securities, (July 9, 2025), https://www.sec.gov/newsroom/speeches-statements/peirce-statement-tokenized-securities-070925; Paul Atkins, American Leadership in the Digital Finance Revolution (July 31, 2025), https://www.sec.gov/newsroom/speeches-statements/atkins-digital-finance-revolution-073125.
[4] President’s Working Group on Digital Asset Markets, Strengthening American Leadership In Digital Financial Technology 37 (July 2025), https://www.whitehouse.gov/fact-sheets/2025/07/fact-sheet-the-presidents-working-group-on-digital-asset-markets-releases-recommendations-to-strengthen-american-leadership-in-digital-financial-technology/.
[5] Paul Atkins, Chair, U.S. Sec. & Exch. Comm’n, American Leadership in the Digital Finance Revolution (July 31, 2025), https://www.sec.gov/newsroom/speeches-statements/atkins-digital-finance-revolution-073125.
[6] SEC v. W.J. Howey Co., 328 U.S. 293 (1946).
[7] SEC v. Barry, 146 F.4th 1242 (9th Cir. 2025).
[8] NASAA Highlights Top Investor Threats, North American Securities Administrators Association (Mar. 6, 2025), https://www.nasaa.org/75001/nasaa-highlights-top-investor-threats-for-2025/.
February 17, 2026 | Permalink | No Comments
February 11, 2026
Consumer Law Awardee, alongside Senator Warren
David J. Reiss (right), clinical professor of law and research director of the Blassberg-Rice Center on Entrepreneurship Law at Cornell Tech and Kara Bruce (left), head of the AALS Section on Commercial and Consumer Law and the Graham Kenan Distinguished Professor of Law at the University of North Carolina School of Law.
Via Cornell Law School:
David J. Reiss, clinical professor of law and research director of the Blassberg-Rice Center on Entrepreneurship Law at Cornell Tech, was among the distinguished law professors honored at an awards ceremony held January 9 during the Association of American Law Schools’ (AALS) Annual Meeting in New Orleans.
Reiss was recognized with the Section on Commercial and Consumer Law Juliet Moringiello Mentorship Award, which was also given to Senator Elizabeth Warren, Harvard Law School (Emeritus). “I am extremely honored to share this award with Senator Elizabeth Warren, who is a hero to many of us who work on consumer protection issues in the financial sector,” said Reiss.
Kara Bruce, head of the AALS Section on Commercial and Consumer Law and the Graham Kenan Distinguished Professor of Law at the University of North Carolina School of Law, presented Reiss with the award.
“In his twenty-three-year career in law teaching, David has founded and directed a variety of law clinics, merging discrete areas of law such as real estate, consumer, and small business law into programs that offer broad support to the communities they serve. Along the way, he has guided and supported many clinicians, adjuncts, and fellows as they found their footing in legal academia,” said Bruce.
Praised for his mentorship-focused activities at Cornell, Reiss spent the past semester co-teaching with Robert MacKenzie, the Davis Polk & Wardwell LLP Clinical Teaching Fellow at New York University School of Law, as he entered the academy. “Watching his excitement as he figures out how he wants to approach teaching, scholarship, and service over the decades to come is a joy in its own right. And to the extent I can offer any advice that he might find useful, I am very happy to do so,” said Reiss.
Reiss remains connected with the practicing bar as a fellow of both the American College of Real Estate Lawyers and the American College of Mortgage Attorneys. He also has a forthcoming book, Paying for the American Dream: How to Reform the Market for Mortgages, that will be published by Oxford University Press.
At the award ceremony, Reiss said, “Receiving this award drove home to me how we are a community of scholars who work with each other and rely on each other to make sense of the immense complexity of commercial law and to understand the implications of its structure for consumers and businesses.”
February 11, 2026 | Permalink | No Comments
February 9, 2026
Why Was Housing So Much Cheaper in the 1950s?
inequaltiMarketplace quoted me in Why Do Cars, Housing and Clothing Cost Much More Than They Did in the 1950s? It reads, in part,
Question: Why did a pair of jeans, a box of rice, cars, houses and other items that still exist today cost one price in the 1950s but now are so much more? They’re still the same products with very little change. In fact, due to automation, many of these things are actually cheaper to produce.
* * *
Aren’t products today higher quality?
There has been an increase in the quality of some products over time, which means looking at costs from the 1950s vs. today can seem like an apples-to-oranges comparison.
One can make the argument that cars are equipped with better features than ones from the ‘50s. “We have all kinds of things like seat belts and anti-lock brakes and computerized systems in your dashboard,” Stapleford said.
But if you’re trying to determine affordability, you have to look at the options that are available to you at the time.
“If someone wanted a 1950 car, they couldn’t get it. You couldn’t go out and buy a car that’s exactly the same as it was in the 1950s. You don’t have that kind of discretion as a consumer. You’re sort of stuck with what’s available on the market. So you’re then forced, in a way, to buy this higher-quality thing, which you may or may not want,” Stapleford said.
If you’re comparing housing prices, you also have to look at changes in the types of homes people are buying.
A typical home in the 1950s could cost around $7,000 a year vs. about $400,000 now, said David Reiss, a law professor at Cornell University who studies housing policy.
But while today’s price is 57 times more the cost of a house in the 1950s, you have to adjust for inflation and look at the size of these homes. The average house is now much bigger, Reiss pointed out. So based on square footage, a home today is actually probably four or five times more expensive than one in the 1950s, Reiss said. They also have more amenities, he pointed out.
“The quality of the housing has gone up dramatically, and that’s probably reflected in the price to some extent,” Reiss said.
But there are still other factors explaining the increase in price, which include construction productivity and supply and demand. There are people who will pay $1 million for an apartment with a leaky roof because of the area it’s in, Reiss said.
In a lot of areas with job opportunities, the regulations that govern new construction are very strict, which contributes to these high prices, Reiss said.
Many Americans feel like homeownership has become increasingly out of reach.
There was less income inequality in the mid-20th century compared to now, Reiss said. In 1950, the household median income was $2,990, with the median home value about 2.5 times that. In 2024, the median sales price was almost five times the median household income.
There is one big caveat: Reiss noted that the housing market was “incredibly discriminatory” against different groups like Black Americans. But for those who didn’t face unjust policies, homeownership was more affordable.
“Now you have extreme wealth at the one end, and some very low incomes at the bottom end,” Reiss said.
February 9, 2026 | Permalink | No Comments
Is It a Homebuyer’s Market?
CC BY 2.0 Mark Moz
Marketplace quoted me in Is It Really a Homebuyer’s Market Now? It reads, in part,
Housing prices are dropping and buyers are scoring steep discounts on their purchases, indicating that the real estate market is becoming more favorable for buyers. But while some homebuyers are getting better deals, housing is still out of reach for many Americans and the 30-year mortgage rate remains above 6% — double what it was in 2021.
The typical homebuyer got a discount of 3.8% or $15,196 in 2025, with 62% of all homebuyers paying less than the list price, according to a new Redfin study.
“Some sellers haven’t adjusted to the fact that demand is much slower than it was during the pandemic homebuying frenzy. They watched their neighbor’s home sell for tens of thousands of dollars over the asking price back then, and are now pricing their homes based on that,” stated the authors of the study.
And for the first time in two years, national home prices have gone negative, declining 1.4% in the last quarter of 2025, according to Parcl Labs, a housing data and analytics firm.
“I think big picture, any decline or slowing of growth is better for buyers than the type of growth that we have been seeing for a few years,” said Nicholas Kacher, an associate professor of economics at Scripps College in California.
But although there are positive signals out there for homebuyers, there are also some “countervailing points” that indicate the market isn’t entirely in their favor, said David Reiss, a law professor at Cornell University who studies housing policy.
Signs that buyers may still struggle on the market
Home sales are at a 30-year-low, which means sellers are either keeping houses off the market or buyers are not willing to purchase them, Reiss said.
“The market is not super liquid right now,” Reiss said.
Plus, nearly a quarter of homes still sold above list price last year, Reiss pointed out.
* * *
The solution: Increase supply
The major issue with the housing market is that the U.S. is simply not building enough housing, Reiss said.
“It’s tough to build housing, and a lot of markets, lots of localities, discourage it. They don’t want new housing. They don’t want the construction. They don’t want to pay for the social services that are attached to it, like new schools and new medical facilities,” Reiss said.
February 9, 2026 | Permalink | No Comments
January 16, 2026
Integrating AI Tools Into Law School Teaching
Robert MacKenzie and I have an article in Bloomberg Law, Law Schools Should Teach How to Integrate AI Tools Into Practice. It reads,
Now that artificial intelligence tools for lawyers are widely available, we decided to integrate them for a semester in our Entrepreneurship Clinic. We have some important takeaways for legal education in general and the transactional practice of law in particular.
First, employers and educators need to account for law students who already are using AI tools in their legal work and guide new lawyers about how to use such tools appropriately.
Second, different AI products lead to wildly different results. Just demonstrating this to law students is very valuable, as it dispels the notion that AI responses can replace their independent judgment.
Third, AI’s greatest value may be in refining legal judgment for lawyers in ways that can help new and experienced lawyers alike.
Legal AI Prep
As we were planning our syllabus over the summer, we provided formal training in AI tools designed for lawyers. A librarian provided us an overview of products from Bloomberg Law, Lexis, and Westlaw early in the semester.
Before the training, we asked students how they were using AI in the legal work. Their responses ranged from “not at all” to “I start all of my case law research on ChatGPT.”
We were confident that our students would be better off operating somewhere between those extremes. Over the semester, we demonstrated how AI could enhance the speed and quality of legal work, as well as the dangers of outsourcing research and judgment to an AI tool.
AI Tool Differences
Perhaps the training’s most valuable takeaway was that each tool had access to different databases of materials and had different constraints. We designed simulations that required groups of students to complete the same transactional tasks (drafting, researching, benchmarking market terms, and crafting effective client emails) using various AI tools.
In one exercise, students acted as counsel to a small business owner. The “client” emailed them asking about standard-form contracts relevant to their industry and what pricing mechanics such contracts use.
For the research stage of the task, all teams located a standard-form construction contract, but only half of them found the industry-accepted standard form that we contemplated. The others located this form later by modifying their search approach. This helped to demonstrate some limitations of AI tools.
For the client communication stage, some teams failed to answer the “client’s” questions. This isn’t something the AI tool could address on its own, and it reminded students to constantly refocus on the big picture in addition to individual tasks.
We found that AI tools built on widely available AI platforms such as ChatGPT produced the most responsive outputs and were most forgiving of haphazard prompting. But certain specialized legal AI tools often failed to answer the prompt.
This is a double-edged sword. Although the generally available tools were more likely to generate an answer, they also were more prone to providing unreliable outputs. By contrast, the specialized tools hallucinated much less frequently but regularly stopped short of fulfilling a request if it required work beyond their guardrails.
Delegating Work
Our final takeaway was that AI was surprisingly good at issue-spotting and double-checking a lawyer’s work product. These uses can help both new and experienced lawyers.
We used the idea of delegation to make this point to our students. AI is fast, adaptable, and always available, so it’s a great resource. But you should only delegate work to it when you can verify its output.
In one exercise, students had to issue-spot risks and approaches after a “client” described a business opportunity. Students brainstormed in small groups. There was a lot of overlap, but some groups thought of items that others had not. We added the items to a collective list, relying on our years of practice to guide the students through gaps that remained.
Once we had a strong collective list of items, a team asked an AI product to issue-spot the same scenario. It generated most of the items in our list, some that weren’t relevant, and—most importantly—a couple that no one had raised.
This was a valuable lesson: AI had something to add to our analysis, but we had to exercise independent judgment to determine whether its contributions merited further thought.
Important Takeaways
We asked students for feedback on our use of AI throughout the semester. The most valuable feedback was that they wanted to develop their own legal judgment and learn how and why certain tasks are completed before relying on AI.
This echoes the transition from book-based legal research to electronic legal research. There was some value in searching the law reports in the library, but electronic legal research won out because it was so much more efficient. Yet even with this enhanced efficiency, a responsible lawyer must understand how to build a strong research plan and actually read the cases they cite.
In the clinic, our goal is student learning. It was for this reason that we liked to deploy the AI tools at the end of our exercises: You do the work and then interrogate it with the AI tools of your choice.
Such an approach ensures law students get the benefit of struggling through first repetitions of new tasks while allowing them to generate superior work product with fewer drafts. This process requires discipline. Legal education and legal employers need to clarify the line between AI as a tool versus AI as a crutch.
We learned a lot about how AI tools can help law students develop into good lawyers. As those tools are integrated into legal practice, lawyers of all experience levels should take a self-conscious approach to using them.
January 16, 2026 | Permalink | No Comments
December 17, 2025
Federal Home Loan Banks during Financial Stress
I was happy to participate in the discussion group process for the Government Accountability Office’s report, Federal Home Loan Banks: Role During Financial Stress and Members’ Borrowing Trends and Outcomes (GAO-26-107373). The Highlights of the report include
The Federal Home Loan Bank (FHLBank) System consists of 11 federally chartered FHLBanks that support liquidity by making loans to member financial institutions (including banks) in the U.S. As of June 2025, 93 percent of banks (approximately 4,100) were members of an FHLBank, allowing them to obtain liquidity via secured loans. GAO’s analysis found that the FHLBanks generally serve as a reliable and consistent source of funding for banks of all sizes throughout the financial cycle. They can also play a key role in the health of small banks (those with $10 billion or less in assets). This has been the case despite concerns raised in some academic and other literature that FHLBank lending could exacerbate periods of financial stress—for example, by masking problems at troubled member banks or increasing resolution costs when a member bank fails.
Banks’ FHLBank borrowing trends. From 2015 through June 2025, most U.S. banks were FHLBank members and obtained secured loans at least once. Banks’ total outstanding borrowing (as of quarter-end) ranged from $189 billion to $804 billion during this period. Although most active FHLBank members maintained relatively consistent FHLBank borrowing, a small number of large banks (with more than $10 billion in assets) drove substantial increases in aggregate borrowing at the onset of the COVID-19 pandemic in 2020 and during the March 2023 liquidity crisis. For example, large banks were responsible for 97 percent of the increased borrowing in the first quarter of 2023. However, median FHLBank borrowing as a share of median total assets generally stayed within a consistent range from 2015 through June 2025, including for large banks. This suggests that their overall reliance on FHLBank loans during stress periods was largely unchanged.
Outcomes associated with FHLBank borrowing. GAO’s econometric models, which controlled for bank health, macroeconomic factors, and economic cycles, found that higher FHLBank borrowing by a bank was generally associated with positive outcomes for the bank. From 2015 through 2024, higher FHLBank borrowing was associated with (1) increases in real estate lending and (2) lower likelihood of being flagged as a problem bank or of failing or closing voluntarily. These results were largely driven by small banks, which make up 97 percent of banks in GAO’s analysis.
December 17, 2025 | Permalink | No Comments
