Law Commons^™

The Duty To Creditors Reconsidered - Filling A Much Needed Gap In Corporation Law, Richard A. Booth

Working Paper Series

The most fundamental question of corporation law is to whom does the board of directors of a corporation owe its fiduciary duty. Recently, the question has tended to be whether and under what circumstances the board of directors has the duty to maximize stockholder wealth. But if a corporation is insolvent (or close to it), business decisions designed to maximize stockholder wealth may result in a reduction of creditor wealth. Although the conventional wisdom is that creditors must protect themselves by contractual means, there is a substantial body of case law that says that creditors can assert claims sounding in …

Give Me Equity Or Give Me Death - The Role Of Competition And Compensation In Building Silicon Valley, Richard A. Booth

Working Paper Series

In this essay, I argue that the preeminence of Silicon Valley as an incubator of technology companies is attributable to equity compensation. Ronald Gilson, relying on the work of AnnaLee Saxenian and others who have noted the tendency of Silicon Valley employees to job hop, has suggested that California law prohibiting the enforcement of non-compete agreements was a major factor in the rise of Silicon Valley (and the demise of Route 128). I extend this line of thought by suggesting that California employers may have relied on equity compensation as a substitute way to bind employees. I argue further that …

Biometrics, Certified Software Solutions, And The Japanese Consumption Tax: A Proposal For The Tax Commission, Richard Thompson Ainsworth

Faculty Scholarship

Significant change is anticipated in the Japanese Consumption Tax. The Japanese Tax Commission is recommending that the rate should double, multiple rates should be employed, and the "bookkeeping method" of accounting should be abandoned in favor of the European "invoice method."

The Tax Commission faces a tax policy dilemma. The aging population drives the need for a tax increase (making the Consumption Tax an obvious target for revenue enhancement) at exactly the same time the population is shrinking in overall size, thereby reducing the number of working-consumers who can pay the higher tax.

These are dramatic changes for the Japanese …

Responding To Foreclosures In Cuyahoga County: An Assessment Of Progress, Alan C. Weinstein, Kathryn W. Hexter, Molly Schnoke

Law Faculty Reports and Comments

In August 2006, Cleveland State University was asked to conduct an initial assessment of the Cuyahoga County Commissioners' Report and Recommendations on Foreclosure that would assist the county in planning for future phases of the project. This report presents the findings of this initial assessment of the first 18 months of the initiative. It documents the process undertaken by the county, assesses the progress made toward reaching goals, identifies successes and concerns, and offers some preliminary recommendations about program operations. It also offers suggestions for a more formal evaluation process going forward

New Basel Capital Accord: Hearing Before The S. Comm. On Banking, Housing, And Urban Affairs, 109th Cong., Sept. 26, 2006 (Statement Of Professor Daniel K. Tarullo, Geo. U. L. Center), Daniel K. Tarullo

Testimony Before Congress

No abstract provided.

Taxing Services Under The Eu Vat And Japanese Consumption Tax: A Comparative Assessment Of New Eu Place Of Taxation Rules For Services And Intangibles, Richard Thompson Ainsworth

Faculty Scholarship

Place of taxation rules are the seminal cross-jurisdictional provisions of any consumption tax regime. They determine where among competing jurisdictions a particular service is taxed. They are not important for transactions that are restricted to a single jurisdiction and to businesses or individuals belonging to that jurisdiction. However, when two or more jurisdictions are involved, these are the essential tools for revenue allocation and avoidance of double taxation.

It is therefore of considerable importance to Japanese businesses and consumers when the European Union (EU) undertakes a wholesale revision of the place of supply rules for services and intangibles. The European …

Digital Consumption Tax (D-Ct), Richard Thompson Ainsworth

Faculty Scholarship

Modern technology is dramatically changing the way consumption taxes are collected, but it is also changing the way policymakers assess the operation and impact of these taxes. Whether the design is a standard credit-invoice value added tax (VAT) of European design, or a retail sales tax (RST) of American design, or the credit subtraction VAT without invoices type of consumption tax (CT) of Japanese design, technology is having a profound impact.

Government certified transaction software is in place in the United States. The Streamlined Sales Tax offers taxpayers in 18 states the option of having their retail sales tax determined …

Biometrics: Solving The Regressivity Of Vats And Rsts With 'Smart Card' Technology, Richard Thompson Ainsworth

Faculty Scholarship

Biometric identifiers embedded in national identity cards puts a formerly impossible goal of consumption taxation within the grasp of policymakers for the first time. Never before has it been possible to design a broad-based, single rate consumption tax that is truly progressive.

No consumption tax has ever had all three of the critical attributes of a progressive consumption tax: a broad base, a single rate, and measured relief for those in greatest need. Although economists have urged that a broad base and a single rate be pursued over progressivity, most consumption taxes instead seek progressivity at the expense of both …

Two-Factor Authentication For Online Banking Applications, Gary C. Kessler

Security Studies & International Affairs - Daytona Beach

"Online banking: Features and risks; Phishing demo; DNS cache poisoning demo • FFIEC Guidance Overview • Authentication methods; Two-factor authentication; Options for online banking • Is two-factor authentication the correct approach?"--Overview

Two-Factor Authentication For Online Banking Applications, Gary C. Kessler

Applied Aviation Sciences - Daytona Beach

"Online banking: Features and risks; Phishing demo; DNS cache poisoning demo • FFIEC Guidance Overview • Authentication methods; Two-factor authentication; Options for online banking • Is two-factor authentication the correct approach?"--Overview

Carousel Fraud In The Eu: A Digital Vat Solution, Richard Thompson Ainsworth

Faculty Scholarship

Recent reports from the UK's Office for National Statistics estimate (as of May 11, 2006) that Missing Trader Intra-community Fraud (MTIC) may exceed 10 billion pounds this year.

Carousel fraud, a variant of MTIC where the same goods are sold over and over again, exploits the lingering non-certified, non-digital attributes of the EU VAT. The UK believes that carousel fraud cost the Exchequer between 1.12 and 1.9 billion pounds in the 2004-05 financial year. This article proposes that carousel fraud be eliminated in the EU through selective insertion of Digital VAT functionality into the present system. In other words, it …

The Hedge Fund Explosion: Is The Bang Worth The Buck?, Arindam Bandopadhyaya, James L. Grant

College of Management Working Papers and Reports

Any casual following of the financial news would reveal that hedge funds have experienced phenomenal growth, especially over the last fifteen years. In terms of numbers, there were an estimated 8000 hedge funds in 2005, up from only 500 in 1990. During this fifteen-year period assets under management have grown from an estimated $50 billion to $1.5 trillion. Moreover, the hedgefund industry has spawned a “fund of funds” business, which has slowly become the preferred way of investing in hedge funds, especially for institutional investors. Today, the number of these combination funds is estimated at about 4000.

Until recently, hedge …

Productive Preservation And The Reinvention Of Industrial America, Jonathan Flynn

Georgetown Law Historic Preservation Papers Series

This paper explores the problem of why the traditional model preservation, characterized by a strict and inflexible interpretation of the law, often fails in struggling communities. Particular emphasis is given to early industrial cities, where the existing urban infrastructure and difficult economic situation often conspire to make preservation exceptionally challenging. A solution is proposed for making preservation productive these distressed communities. Through a broader, and more flexible reading of existing law, a major preservation problem may be solved, and history can used as a valuable tool for growth and positive change.

What's Your Sign? -- International Norms, Signals, And Compliance, Charles K. Whitehead

Cornell Law Faculty Publications

This Article proposes a new approach to analyzing state compliance with international obligations, positing that increased interaction among the world's regulators has reinforced norms within cross-border regulatory networks, influencing the actions of senior regulators who are network members and, in turn, affecting levels of state compliance.

Network norms help define what state actions constitute signals and the meanings of those signals. Certain actions, such as implementing a substantive network standard, may be considered a concrete expression of an abstract network norm. States that fail to implement that standard risk failing to send the right signal, potentially incurring significant network sanctions. …

Borrowing Trouble? Vi: High-Cost Mortgage Lending In Greater Boston, 2004, Jim Campen

Gastón Institute Publications

Five years ago, in response to numerous reports of the growth of predatory lending, both locally and nationwide, the Massachusetts Community & Banking Council (MCBC) – whose Board of Directors has an equal number of bank and community representatives – commissioned a study of subprime refinance lending in the city of Boston and surrounding communities. The resulting report, Borrowing Trouble? Subprime Mortgage Lending in Greater Boston, 1999, was the first detailed look at subprime lending in the city of Boston and in twenty-seven surrounding communities.

This is the sixth report in the annual series begun by that initial study. …

Using Spread And Net Trading Range To Measure Risk In Suitability Cases, Richard A. Booth

Working Paper Series

Suitability is one of the most common issues that arises in securities arbitrations. Yet it is also one of the most difficult issues to resolve. Up to now there has been no easy and reliable way to compare the risk of one stock or portfolio with another stock or portfolio measured as of the time the investment decision in question was made. As I argued in an earlier article, spread is potentially a promising way to measure risk in real time as perceived collectively by competing market makers. But with the advent of decimal quotes and other recent changes in …

Bond Covenants And Creditor Protection: Economics And Law, Theory And Practice, Substance And Process, William Wilson Bratton

Articles

This article examines contractual protection of unsecured financial creditors in US credit markets. Borrowers and lenders in the United States contract against a minimal legal background that imposes the burden of protection on the lender. A working, constantly updated, set of contractual protections has emerged in response. But actual use of available contractual technology varies widely, depending on the level of risk and the institutional context. The credit markets sort borrowers according to the degree of the risk of financial distress, imposing substantial constraints only on the borrowers with the most dangerous incentives. At the same time, the contracting practice …

Paternalistic Regulation Of Public Company Management: Lessons From Bank Management, James A. Fanto

Faculty Scholarship

No abstract provided.

Democratizing Credit: Examining The Structural Inequities Of Subprime Lending, Cassandra Jones Havard

All Faculty Scholarship

This Article critiques the current regime of mortgage lending, which favors economic subordination. Minorities and low-and moderate income persons, regardless of their creditworthiness, are receiving higher loan rates. This is due to three market phenomena- the dominance of sub-prime lenders in the market in which prime lenders are more restricted to lend, the segmentation of the market so that certain products are offered to certain consumers, and the liquidity of the secondary market, which encourages lenders to make loans that are easily sold, but which may be inappropriately and impermissibly priced. Only by incorporating some transparency into the process will …

The Peripatetic Debtor: Choice Of Law And Choice Of Exemptions, Laura B. Bartell

Law Faculty Research Publications

No abstract provided.

International Rule Of Law And The Market Economy - An Outline, Samuel Bufford

Journal Articles

Law matters in economic development. The Rule of Law is an indispensable foundation for a market economy, which provides an essential environment for the creation and preservation of wealth, economic security, and well-being, and the improvement of the quality of life. The Rule of Law is part of the "software" of governmental regulation that is needed to operate the "hardware" of free markets. Its promotion can make a major contribution to economic growth, and an infrastructure that creates and promites legal rights is an essential platform for economic development. The cumulative costs of doing without the Rule of Law in …

Just What The Doctor Ordered: Is It Time For Your Bank To Start Offering A Health Savings Account (Hsa)? Here's What You Need To Know About This New Product, Rachel Juhas Suddarth

Law Faculty Publications

In recent years. The ever-increasing cost of health insurance has left many consumers and employers desperate for lower-cost coverage options. As a result, employers are moving away from expensive defined-benefit plans to alternatives that offer higher deductibles in exchange for a reduction in premium costs. The health savings account (HSA) grew out of this quest for choice. The HSA was designed as a tax-efficient way for consumers with high-deductible plans to pay for health costs accrued before the insurance kicked in. These high-deductible plans are touted as being more affordable for both employers and consumers as well as for having …

Information Society Challenges To Financial Regulation, Caroline Bradley

Articles

No abstract provided.

Odious Debt Or Odious Payments - Using Anti-Corruption Measures To Prevent Odious Debt, Anita Ramasastry

Articles

This article focuses on ways to stem the tide of odious payments and to stop such payments, when made, from moving offshore into foreign bank accounts. To the extent that such payments leave a country, fewer funds are available to repay sovereign debts in the event of a regime change, or to feed and shelter the population. This article focuses on emerging anti-corruption mechanisms as a means of dealing with odious payments and odious debt. It also focuses on the role of financial institutions (banks) as gatekeepers. Part I of this article focuses on the way in which banks are …

Financial Moral Panic! Sarbanes-Oxley, Financier Folk Devils, And Off-Balance Sheet Arrangement, Jose M. Gabilondo

Faculty Publications

No abstract provided.

Cachet Not Cash: Another Sort Of World Bank Group Borrowing, Natasha Affolder

All Faculty Publications

This article explores the extent to which the World Bank's Environmental and Social Guidelines now serve as standards of acceptable global environmental and social behavior for transnational corporations. Although the World Bank Standards were not created for the purpose of providing global rules for business on social and environmental issues, they are frequently cited as de facto global standards. This article reveals the unlikely rise in prominence of these standards and the widespread adoption of these rules by corporations, public and private financial institutions, governments, and export credit agencies. This example of private borrowing of public standards is intriguing not …

Consuming Debt: Structuring The Federal Response To Abuses In Consumer Credit, Heidi Mandanis Schooner

Scholarly Articles

Predatory lending is an avaricious fraud that demands attention. Several states have enacted new laws to combat predatory lending. Moreover, the battle against predatory lending and other abusive practices has focused attention on the overall structure of consumer credit laws. The current structure is dual; both state and federal governments play significant roles in combating credit fraud. The dual structure has been the source of controversy as federal regulators have claimed the power to preempt state law. This article furthers the structural debate and the effort to combat predatory lending by examining the architecture of consumer credit laws within the …

Credit Markets, Exemptions, And Households With Nothing To Exempt, Richard M. Hynes

Faculty Publications

American bankruptcy law has offered a "fresh start" in every state for over one hundred years. As a result, econometric studies of consumer bankruptcy often focus on one of the few aspects of the law that has varied significantly across time and across states: exemptions. Professors Gropp, Scholz and White published the first article to test the effect of exemptions on credit markets. Consistent with theory, they found that residents of states with larger exemptions pay higher interest rates than those in states with lower exemptions andface an increased probability that they will be denied credit. These effects were most …

Still Mortgaging The American Dream: Predatory Lending, Preemption, And Federally Supported Lenders, Julia Patterson Forrester Rogers

Faculty Journal Articles and Book Chapters

This Article discusses the continuing problem of predatory lending abuses in the subprime home mortgage lending market and federal and state attempts to address the problem. Over the protests of consumer advocates, federal agencies have recently issued regulations preempting state predatory lending statutes as applied to national banks and thrifts. In addition, Congress is considering legislation that would preempt state predatory lending laws for all lenders. The Article considers the preemption debate, particularly in the context of federally supported lenders-banks, thrifts, and the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac. Banks and thrifts receive support through the federal safety …

The Digital Vat (D-Vat), Richard Thompson Ainsworth

Faculty Scholarship

The most sustained U.S. tax policy debate of the past 30 years concerns proposals to replace and/ or supplement the Federal Income Tax with a consumption tax. Public finance economists and legal tax policy scholars challenged and defended the current income tax system on grounds of fairness, efficiency, and simplicity.

This debate over revamping the national taxing scheme has not been argued purely in the academic forum. Concrete legislative proposals have been advanced for a national retail sales tax, a European-style Value Added Tax, as well as a whole host of what David Bradford calls "the two-tiered consumption taxes."

From …