Welcome to the Wall Street Week newsletter, bringing you stories of capitalism about things you need to know, but even more things you need to think about. I'm David Westin, and this week we talked with Rick Deane of the American College of Trial Lawyers about the rule of law and explored the world of single-family residences as an investment.  If you're not yet a subscriber, sign up here for this newsletter.

Rule of Law

When lawyers start talking about the "rule of law," many of us tune out. It sounds abstract and far removed from the world of investment. But, after practicing law in a big Washington law firm and serving as a chair of the firm’s antitrust group, Doug Melamed took over as general counsel of Intel.

When he asked the business side of his leadership team what they needed from the legal department, the answer was simple: "It's your job to tell me what the rules are, and it's my job to optimize for that." As he puts it, "it's not just guarding against corruption," it's "a guarantee of a robust business and economic sector" because of rules that are "predictable and knowable."

So, when the government takes actions that could undermine this sense of predictability and fairness, the business community needs to be as concerned as anyone else, according to Rick Deane, the president of the American College of Trial Lawyers.

Renting the American Dream

Home ownership was both a cause and a victim of the Great Financial Crisis. In the wake of all the mortgages under water and foreclosures, big investment firms like Blackstone stepped in to buy up large numbers of single-family houses to rent them out.

Nancy Wallace of the Berkeley Haas School of Business says those purchases "were heavily subsidized by Fannie and Freddie mortgages," but she doesn't expect to see "a huge growth" in "very large players" investing in rental homes at this point. Stepping into the void are smaller investors, putting money into acquisition funds such as Strand Capital begun by Rajan Bhatt. He sees investment funds like his as able to "blend being a small investor, but bringing the institutionalization for a large company."

But legislators like Nevada State Senator Dina Neal say they’re concerned that the continued pressure on new households to rent rather than buy poses a real problem in her state.

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