Law Commons^™

Got Bounded Rationality And Political Gridlock? There's A Loan Disclosure Hack For That, Debra Pogrund Stark, Jessica M. Choplin, Andrew Pizor

Cleveland State Law Review

For decades, Congress has primarily relied upon the use of mandatory disclosure forms to protect consumers from entering into ill-advised loans by disclosing the terms of an offered loan before the borrower enters into it. This policy is not likely to change any time soon due to congressional gridlock. Frustratingly, despite improvements, consumers still have difficulties using these forms to obtain the key information and data they need to make wise decisions. These disclosures contain a great deal of information, and assume that consumers are capable of reading, understanding, and using all of it. Contrary to this assumption, research on …

Conceptualizing The Regulation Of Virtual Currencies And Providers: Friction Points In State And Federal Approaches To Regulating Providers Of Payments Execution And Custody Services And Products In The United States, Sarah J. Hughes

Cleveland State Law Review

This essay evaluates the state of regulation by the United States government and State legislatures of participants in emerging virtual-currency businesses. It points to friction points as both the federal government and the States experiment with their own regulatory authority over virtual-currency businesses and provides a taxonomy of differing approaches to regulating such businesses. The essay takes the position that the States need to act in the near term if they wish to maintain their longstanding role as regulators of non-depository providers of financial products and services—or they risk being preempted by Congress or federal regulatory actions. This essay also …

Blockchain Symposium Introduction: Overview And Historical Introduction, Brian Ray

Cleveland State Law Review

Imagine a world where human drivers can access on-demand micro-insurance contracts tailored to cover only the actual time spent driving. How about a secure, decentralized identity system that allows individuals to purchase a vehicle and obtain insurance without sharing unnecessary private information exposing it to cyber criminals? Take that a step further and consider a system of driverless cars that transact with autonomous gas stations and take payments directly from passengers. These are some of the fascinating applications that blockchain technology could enable. But these applications give rise to significant technical, social, and legal questions, all of which we explored …

When Good Policies Go Bad: Controlling Risks Posed By Flawed Incentive-Based Compensation, Nicole Vincent

Cleveland State Law Review

The recent Wells Fargo scandal revealed the harm that can result from flawed incentive-based compensation arrangements. Large financial institutions have both a legal and an ethical obligation to ensure that any incentive-based compensation arrangements that are in place will not encourage risky or fraudulent employee behavior. The continued existence of inappropriate and poorly structured arrangements demonstrates that existing regulations are inadequate to ensure compliance and protect consumers. Regulations should include increased penalties and should more evenly distribute the burden of oversight and compliance between the public and private sectors. In addition to regulatory reform, the government should prosecute culpable high-level …

Testing Fannie Mae's And Freddie Mac's Post-Crisis Self-Preservation Policies Under The Fair Housing Act, Shelby D. Green

Cleveland State Law Review

Beginning in the 1930s, the federal government adopted programs and policies toward safe and decent housing for all. The initiatives included the creation of the Federal Housing Administration that, among other things, spurred mortgage lending by guaranteeing mortgage loans to low- and moderate-income borrowers. The creation of the secondary mortgage market by Fannie Mae and Freddie Mac (GSEs) helped provide more liquidity for loan originators. However, somewhere along the way, these GSEs lost their way, as they pursued profitability without regard to risk and heedlessly bought mortgages without considering quality.

The overabundance of poor quality mortgages led to the housing …

One Fund Solution And The Pension Crisis, Gordon Butler

Cleveland State Law Review

The next forty years of economic life will be dominated by one underlying theme: dealing with the retirement income security of a growing, aging and longer-lived global population. This is a "can’t run, can’t hide" problem that will affect the lives of almost every human being on the planet . . . Whether you are light in your pension account, whether you have more money than Croesus, whether you live in the well-funded Netherlands, or whether you are a put-upon unambitious young male in Japan who sees no future for himself, you cannot escape this problem.

Before you read very …

Replacing Havoc: Creating Rules For Sovereign Default, Edward J. Kelley

Cleveland State Law Review

Sovereign debt is an ongoing threat to a State’s economic stability and its citizens’ standard of living. A single occurrence of default begins a cycle in which it becomes increasingly more difficult for an indebted State to pay its debts and ensure the survival of its citizens. Because central banking systems and direct spending are often inadequate methods to boost an indebted State’s economy, a more expansive solution to sovereign debt is required. The initial solution to the growing problem of sovereign debt is an international treaty that will allow the world economy to establish monitoring mechanisms to prevent debt …

Capital In Chaos: The Subprime Mortgage Crisis And The Social Capital Response , Raymond H. Brescia

Cleveland State Law Review

Can law create trust? Can law make people more trustworthy? These are some of the questions posed by scholars across the political spectrum interested in the impact of law on society. There is no shortage of arguments on both sides of these questions: that law can be a tool for promoting trust, or destroying it. This Article is an attempt to address these questions through an analysis of a single market, to explore the interplay between law and trust in a situation of abject market failure: the subprime mortgage crisis in the United States. Initially, I will introduce the concept …

Should Banks Be Permitted To Engage In Real Estate Brokerage And Management Services: How The Current Debate Demonstrates The Inadequacies Of The Gramm-Leach-Bliley Act, Patrick J. Burke

Cleveland State Law Review

One of the first major efforts by regulators to expand the list of permissible activities under the Gramm-Leach-Bliley Act is to allow financial holding companies and financial subsidiaries of nationally chartered banks to engage in real estate brokerage and real estate management services. Part II of this Note will provide a brief history of the financial service regulations that preceded the Gramm-Leach-Bliley Act. Part III will discuss the legislative history of the Gramm-Leach-Bliley Act, provide a brief overview of the Act, and detail the provision which may allow financial holding companies to engage in real estate brokerage and management activities. …

Regulatory Theory And Deposit Insurance Reform, R. Mark Williamson

Cleveland State Law Review

The purpose of this article, however, is not to summarize the maze of federal and state banking regulation. Instead, recognizing that deposit insurance is a centerpiece of the overall regulatory scheme to which any financial institution in the United States is subject, this article is primarily concerned with subjecting this form of bank regulation to analysis based upon general principles of regulatory theory. This article is less concerned with the details of banking law than it is with using regulatory to shape policy guidelines for the coming process of deposit insurance reform.

Judicial Construction In The Wake Of The Nation's S & (And) L Crisis: Build A Better Status And The Fdic Will Beat A Path To Your Courtroom, Alison L. Drake

Cleveland State Law Review

This note proposes that the Fifth Circuit's opinion in handling these claims provides a better rationale than the Ninth Circuit's opinion. The first factor examined is the degree of control exercised by the corporate officer(s) who had been aware of the financial woes that the outside professionals allegedly overlooked. The second factor discussed is whether the insiders' misconduct was for or against the institution. Finally, policy considerations will be evaluated to determine whether the FDIC should be accorded the special status that immunizes it from defenses which could have been asserted against the failed thrift through imputation from the thrift's …

Judicial Construction In The Wake Of The Nation's S & (And) L Crisis: Build A Better Status And The Fdic Will Beat A Path To Your Courtroom, Alison L. Drake

Cleveland State Law Review

This note proposes that the Fifth Circuit's opinion in handling these claims provides a better rationale than the Ninth Circuit's opinion. The first factor examined is the degree of control exercised by the corporate officer(s) who had been aware of the financial woes that the outside professionals allegedly overlooked. The second factor discussed is whether the insiders' misconduct was for or against the institution. Finally, policy considerations will be evaluated to determine whether the FDIC should be accorded the special status that immunizes it from defenses which could have been asserted against the failed thrift through imputation from the thrift's …

Regulatory Theory And Deposit Insurance Reform, R. Mark Williamson

Cleveland State Law Review

The purpose of this article, however, is not to summarize the maze of federal and state banking regulation. Instead, recognizing that deposit insurance is a centerpiece of the overall regulatory scheme to which any financial institution in the United States is subject, this article is primarily concerned with subjecting this form of bank regulation to analysis based upon general principles of regulatory theory. This article is less concerned with the details of banking law than it is with using regulatory to shape policy guidelines for the coming process of deposit insurance reform.

Urban Housing Finance And The Redlining Controversy, Daniel F. Reidy

Cleveland State Law Review

This note will focus upon three basic issues raised by the redlining controversy: first, whether or not redlining is in fact occurring; second, the role of government through legislation and regulatory agencies; third, emerging areas of litigation.

The Federal Bank Commission Act: A Proposal To Consolidate The Federal Banking Agencies, Laurie Leader

Cleveland State Law Review

As background to an examination of the Federal Bank Commission Act, this Note will explore the two most important causes of the deficiencies in the present commercial banking system. The first cause is the existence of a "dual banking" system, under which banks may choose between state or federal charters. The resulting division of regulatory authority encourages banks to "shop" for the most favorable regulation. The second major cause of deficiencies in the banking system is the three-tiered organization of federal regulation. The Act consolidates the three federal agencies into a single regulatory Commission. Emphasis also will be placed on …

Effect Of Usury Laws On Home Ownership Needs, Richard S. Stoddart, Earl R. Hoover

Cleveland State Law Review

In this paper we examine usury laws which thwart the thrift industry, particularly savings and loan associations, from entering fully into the needed home financing picture of the 1970's. If there is virtue in owning a home, be it a normal house, mobile home, condominium or a 99-year leasehold, (and the very basis of American life suggests that there is), and if the predicted housing boom is actually to occur, substantial changes should be made in laws which frustrate home financing.

The Law Of Overdrafts, William O. Morris

Cleveland State Law Review

It is the intent in this article to examine the judicial decisions in which the courts of this country have been called upon to resolve the rights and liabilities of parties involved with the issuance, payment, and receipt of overdrafts of both depositors and non-depositors of the payor bank.

Bad Checks For The Price Of Goods, William E. Mccurdy

Cleveland State Law Review

A seller receives a check from the buyer for the price of goods. When presented to the bank on which it was drawn, payment is refused. The buyer may, or may not, have had sufficient funds on deposit at the time the check was drawn, but insufficient when refused now although becoming sufficient immediately after the check was presented. Or the buyer may have known or have had reason to know that there would be insufficient funds to meet the check. Or the buyer never had an account at the bank. Or the one obtaining the goods may give a …

Mortgage Theory Of Ohio, James Jay Brown

Cleveland State Law Review

It will be the function of this paper to explore the theory of the real estate mortgage as it is being used in the confused state of Ohio. The theories will be identified and defined. From this academic introduction, practical uses of the theories will be suggested. This will be followed by an analysis of Ohio case decisions since 1929. The conclusion of this analysis will be a determination of whether the state has been consistent in its reasoning and theory.

Mortgage Investments And The Usury Problem, Gordon M. Harrell

Cleveland State Law Review

A continuous and steady expansion of residential dwelling is desirable from both a sociological and economic standpoint. Continuing support is required from risk capital willing to invest throughout the United States. This necessarily means that, if funds are to be drawn from areas of financial plenty to areas experiencing a financial drought, the investor will often not be a party to the original loan transaction, but will be a transferee of a local mortgage lender. We will consider those situations which are most often the foundation for an allegation of usury by the borrower-where there is a substantiated charge of …

The Credit Union Act Of Ohio, Rathuel L. Mccollum

Cleveland State Law Review

The Act governing credit unions incorporated under Ohio law is vague on numerous pertinent matters. Many of the statutory provisions are unreasonable, and some of them are meaningless for all practical purposes. It is the purpose of this article to discuss in detail various portions of the Act, in the light of actual experience in credit union work.

Basic Principles Underlying Duty Of Loyalty, Earl R. Hoover

Cleveland State Law Review

When the nation's 25th and 47th largest banks, The Union Trust Co. and the Guardian Trust Co. of Cleveland, cracked up in 1933, Ohio's Supreme Court cracked down on the violation of an old but little known rule of fiduciary law: the duty of undivided loyalty. Airing of the principles underlying the rule seems warranted. The rule necessarily is harsh, almost iron-clad. Defenses are few. A defendant inevitably cries on the court's shoulder the same old discredited excuses. Unless the court understands the reasons for the rule, such tears may sway it. Because violation is so costly, a client needs …