Law Commons^™

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 …