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Banking and Finance Law

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Faculty Scholarship

Western New England University School of Law

Bank holding companies

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Full-Text Articles in Law

Of Hungry Wolves And Horizontal Conflicts: Rethinking The Justifications For Bank Holding Company Liability, Eric J. Gouvin Jan 1999

Of Hungry Wolves And Horizontal Conflicts: Rethinking The Justifications For Bank Holding Company Liability, Eric J. Gouvin

Faculty Scholarship

To what extent should bank holding companies bear the costs of bank failure? Current banking law provides a number of ways to impose liability on bank holding companies for bank failure. Those devices, however, have developed haphazardly and sometimes rest on inconsistent theoretical foundations. This Article critiques the regulatory justifications that have been offered for holding company liability and offers an alternative justification for imposing liability on holding companies based on the idea that directors of bank subsidiaries suffer from an especially difficult form of horizontal conflict--the situation where the board of directors owes several different duties and chooses to …


Shareholder Enforced Market Discipline: How Much Is Too Much?, Eric J. Gouvin Jan 1997

Shareholder Enforced Market Discipline: How Much Is Too Much?, Eric J. Gouvin

Faculty Scholarship

This Article considers the federal banking regulation regime implemented in response to the widespread bank failures of the 1980s and early 1990s. The first section of the Article examines the moral hazard problem created by the presence of the deposit insurance scheme and the market discipline debate that has attempted to correct the moral hazard problem. The Author argues that the law has evolved to make bank holding companies the primary enforcers of market discipline. The Article’s second section examines the specific regulatory changes that have been designed to create an incentive for bank holding companies to impose discipline on …