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Full-Text Articles in Law
A Process For Politics, Anna Gelpern
A Process For Politics, Anna Gelpern
Georgetown Law Faculty Publications and Other Works
I argue that consistent and public process observance has a distinctly valuable function in sovereign debt restructuring, with no precise equivalent in national insolvency regimes. National regimes reflect the distribution bargains of their enactment, presumptively legitimate and binding. Debtors and creditors allocate insolvency losses in their shadow, with liquidation as a backstop and politics just outside the frame. All else equal, the restructuring process has a harder job with sovereign debt. There is no liquidation backstop and no default distribution scenario. Each crisis resolution episode must allocate losses from scratch among the country’s citizens, foreign and domestic creditors, and other …
Financing Failure: Bankruptcy Lending, Credit Market Conditions, And The Financial Crisis, Frederick Tung
Financing Failure: Bankruptcy Lending, Credit Market Conditions, And The Financial Crisis, Frederick Tung
Faculty Scholarship
When contemplating Chapter 11, firms often need to seek financing for their continuing operations in bankruptcy. Because such financing would otherwise be hard to find, the Bankruptcy Code authorizes debtors to offer sweeteners to debtor-in-possession (DIP) lenders. These inducements can be effective in attracting financing, but because they are thought to come at the expense of other stakeholders, the Code permits these inducements only if no less generous a package would have been sufficient to obtain the loan.
Anecdotal evidence suggests that the use of certain controversial inducements — I focus on roll-ups and milestones — skyrocketed in recent years, …
Cacs And Doorknobs, Anna Gelpern, Jeromin Zettelmeyer
Cacs And Doorknobs, Anna Gelpern, Jeromin Zettelmeyer
Georgetown Law Faculty Publications and Other Works
In response to debt crises, policy makers often feature Collective Action Clauses (CACs) in sovereign bonds among the pillars of international financial architecture. However, the content of official pronouncements about CACs suggests that CACs are more like doorknobs: a process tool with limited impact on the incidence or ultimate outcome of a debt restructuring. We ask whether CACs are welfare improving and, if so, whether they are pillars or doorknobs. The history of CACs in corporate debt suggests that CACs can be good, bad or unimportant depending on their vulnerability to abuse and the available alternatives, including bankruptcy and debt …
Regulating The “Too Big To Jail” Financial Institutions, Jerry W. Markham
Regulating The “Too Big To Jail” Financial Institutions, Jerry W. Markham
Faculty Publications
This article addresses the “too big to jail” regulatory model in which large banks pay hundreds of billions of dollars to settle multiple and duplicative regulatory charges brought by a horde of state, federal, and even foreign regulators. The banks pay those massive settlements in order to keep their banking charters and to obtain immunity from prosecution for senior executives. In turn, regulators benefit from the headlines these fines generate. Much criticism has been directed at these settlements because the banks are allowed to continue business as usual and no senior executives are jailed. Other critics contend that these settlements …
The Remaking Of Wall Street, Andrew F. Tuch
The Remaking Of Wall Street, Andrew F. Tuch
Scholarship@WashULaw
This Article critically examines the transformation of the financial services industry during and since the Financial Crisis of 2007–2009. This transformation has been marked by the demise of the major investment banks and the related rise of a set of powerful players known as private equity firms or alternative asset managers – pools of assets structured as private funds. First, this Article argues that private equity firms now mirror investment banks in their mix of activities; ethos of entrepreneurialism, innovation, and risk-taking; role as “shadow banks”; and overall power and influence.
These similarities might suggest that private equity firms pose …
Diversifying To Mitigate Risk: Can Dodd–Frank Section 342 Help Stabilize The Financial Sector?, Steven A. Ramirez, Kristin N. Johnson, Cary Martin Shelby
Diversifying To Mitigate Risk: Can Dodd–Frank Section 342 Help Stabilize The Financial Sector?, Steven A. Ramirez, Kristin N. Johnson, Cary Martin Shelby
Faculty Publications & Other Works
No abstract provided.
Of Progressive Property And Public Debt, Christopher K. Odinet
Of Progressive Property And Public Debt, Christopher K. Odinet
Faculty Scholarship
Debt is property, and, because of this, property law has a lot to say about how debts are resolved. Indeed, property law is deeply woven into the fabric of the bankruptcy process — a fact that has been woefully neglected by many scholars. The ability to provide debtors with relief and the ability of creditors to demand protections from discharge or diminished payments are both concepts that are intimately tied to property law. However, despite the doctrinal workings of property law in this context, from a theoretical standpoint property law has been underutilized. This is particularly true, as this Article …
Sovereign Debt: Now What?, Anna Gelpern
Sovereign Debt: Now What?, Anna Gelpern
Georgetown Law Faculty Publications and Other Works
The sovereign debt restructuring regime looks like it is coming apart. Changing patterns of capital flows, old creditors’ weakening commitment to past practices, and other stakeholders’ inability to take over, or coalesce behind a viable alternative, have challenged the regime from the moment it took shape in the mid-1990s. By 2016, its survival cannot be taken for granted. Crises in Argentina, Greece, and Ukraine since 2010 exposed the regime’s perennial failures and new shortcomings. Until an alternative emerges, there may be messier, more protracted restructurings, more demands on public resources, and more pressure on national courts to intervene in disputes …
Conceptions Of Corporate Purpose In Post-Crisis Financial Firms, Christopher M. Bruner
Conceptions Of Corporate Purpose In Post-Crisis Financial Firms, Christopher M. Bruner
Scholarly Works
American "populism" has had a major impact on the development of U.S. corporate governance throughout its history. Specifically, appeals to the perceived interests of average working people have exerted enormous social and political influence over prevailing conceptions of corporate purpose - the aims toward which society expects corporate decision-making to be directed. This article assesses the impact of American populism upon prevailing conceptions of corporate purpose - contrasting its unique expression in the context of financial firms with that arising in other contexts - and then examines its impact upon corporategovernance reforms enacted in the wake of the financial and …
Conceptions Of Corporate Purpose In Post-Crisis Financial Firms, Christopher M. Bruner
Conceptions Of Corporate Purpose In Post-Crisis Financial Firms, Christopher M. Bruner
Scholarly Articles
American "populism" has had a major impact on the development of U.S. corporate governance throughout its history. Specifically, appeals to the perceived interests of average working people have exerted enormous social and political influence over prevailing conceptions of corporate purpose - the aims toward which society expects corporate decision-making to be directed. This article assesses the impact of American populism upon prevailing conceptions of corporate purpose - contrasting its unique expression in the context of financial firms with that arising in other contexts - and then examines its impact upon corporate governance reforms enacted in the wake of the financial …
Towards A Legal Theory Of Finance, Katharina Pistor
Towards A Legal Theory Of Finance, Katharina Pistor
Faculty Scholarship
This paper develops the building blocks for a legal theory of finance. LTF holds that financial markets are legally constructed and as such occupy an essentially hybrid place between state and market, public and private. At the same time, financial markets exhibit dynamics that frequently put them in direct tension with commitments enshrined in law or contracts. This is the case especially in times of financial crises when the full enforcement of legal commitments would result in the self-destruction of the financial system. This law-finance paradox tends to be resolved by suspending the full force of law where the survival …
Government Governance And The Need To Reconcile Government Regulation With Board Fiduciary Duties, Lisa Fairfax
Government Governance And The Need To Reconcile Government Regulation With Board Fiduciary Duties, Lisa Fairfax
All Faculty Scholarship
Corporate governance scandals inevitably raise concerns about the extent to which corporate directors failed in their responsibility to monitor the corporation and its managers, especially in terms of the latter's’ misdeeds. Corporate governance reforms strive to shore up directors' roles by seeking to ensure that boards have sufficient incentives to engage in effective oversight and to hold the boards more accountable. The current financial crisis has ushered in an era of significant government reform of the financial system and involvement in corporate governance matters. Such involvement has increased board of directors' responsibilities but has not reconciled those responsibilities with board …
Corporate Governance Reform In A Time Of Crisis, Christopher M. Bruner
Corporate Governance Reform In A Time Of Crisis, Christopher M. Bruner
Scholarly Works
In this article I argue that crisis-driven corporate governance reform efforts in the United States and the United Kingdom that aim to empower shareholders are misguided, and offer an explanation of why policymakers in each country have reacted to the financial crisis as they have. I first discuss the risk incentives of shareholders and managers in financial firms, and examine how excessive leverage and risk-taking in pursuit of short-term returns for shareholders led to the crisis. I then describe the far greater power and centrality that U.K. shareholders have historically possessed relative to their U.S. counterparts, and explore historical and …
Deregulation Pas De Deux: Dual Regulatory Classes Of Financial Institutions And The Path To Financial Crisis In Sweden And The United States, Erik F. Gerding
Deregulation Pas De Deux: Dual Regulatory Classes Of Financial Institutions And The Path To Financial Crisis In Sweden And The United States, Erik F. Gerding
Publications
This article presents the following model of two regulatory classes of financial institutions interacting in financial and political markets to spur deregulation and riskier lending and investment, which in turn contributes to the severity of a financial crisis: 1) Regulation creates two categories of financial institutions. The first class faces greater restrictions in lending or investment activities but enjoys regulatory subsidies, such as an explicit or implicit government guarantee, while the second class is more loosely regulated and can make riskier loans or investments and earn additional profits. 2) These additional profits leads to calls for deregulation to enable the …