Law Commons^™

Comment: Maryland State Bank: The Responsible Solution For Fostering The Growth Of Maryland's Medical Cannabis Program, David Bronfein

University of Baltimore Law Forum

In 2013, Maryland passed its initial medical cannabis law.1 Although seemingly a success in the medical cannabis reform movement, the law only allowed for “academic medical centers” to participate in the program.2 In essence, an academic medical center could dispense medical cannabis to patients who met the criteria for participation in their research program.3 The success of this type of program structure was a concern for medical cannabis advocates,4 and the concerns were validated when no academic medical centers decided to participate.5 As a result of this lackluster program, the General Assembly responded by passing a bill6 during the 2014 …

The Surety's Exposure For Wages And Related Liabilities, Lisa D. Sparks, Marc A. Campsen

All Faculty Scholarship

A surety faces potential exposure to a multitude of liabilities under payment and performance bonds issued for state and federally funded bonded projects as well as from the express obligations imposed by private common law performance and payment bonds. This paper, however, focuses only on a surety’s potential exposure for wage and related liabilities.

Under federal law, a surety faces possible liability under a Miller Act Payment Bond to laborers for the bonded principal’s failure to pay wages. Union trusts may also recover against a surety under a Miller Act Payment Bond for the bonded principal’s failure to remit union …

Post-Racial Lending?, Cassandra Jones Havard

All Faculty Scholarship

Should lenders have absolute discretion when setting mortgage loan prices regardless of the borrower's creditworthiness? How should a regulatory framework evaluate lending decisions for racial bias to determine if demographic or other variables are used as proxies for race? Congress enacted the Home Mortgage Disclosure Act in order to acquire data on mortgage lending patterns and to discourage geographical disinvestment. Basic HMDA data indicates that mortgage loan applications from black and Hispanic households are more likely to be denied than are applications from whites. Loan denial rates for blacks, Hispanics, and Asians are higher than white applicants at all income …

Comments: The Credit Card Act Of 2009 Was Not Enough: A National Usury Rate Would Provide Consumers With The Protection They Need, Eliot C. Schaefer

University of Baltimore Law Review

No abstract provided.

"On The Take": The Black Box Of Credit Scoring And Mortgage Discrimination, Cassandra Jones Havard

All Faculty Scholarship

Subprime credit, a relatively new method of risk-based pricing, has been hailed as a way to open up markets and provide access to credit to those who would otherwise be excluded. Evidence suggests that subprime mortgage segmentation increases rather than reduces exclusionary practices in lending. Furthermore, what is unclear is how lenders determine who qualifies as a subprime borrower. This concern became manifested when studies demonstrated that minority borrowers, regardless of creditworthiness, are more likely to receive expensive, sub-prime loans. The disparity is properly attributed to lenders’ credit pricing policies which included discretionary increases despite the objectively-determined risk-based interest rate …

Book Review (Reviewing Leonard Orland's A Final Accounting), Adeen Postar

All Faculty Scholarship

Leonard Orland is the Oliver Ellsworth Professor of Law at the University of Connecticut. He has written a fine, if a bit unwieldy, book that traces the sad history of money and other assets deposited in supposedly sacrosanct Swiss banks by European Jews during the Nazi era to its long overdue resolution by the American justice system. The book provides background and perspective on how and why the $12.1 billion in pre-war dollars (about $250 trillion today) of financial assets of Holocaust victims disappeared into thin air in the years following World War II. These assets were given over to …

"Goin' 'Round In Circles" ... And Letting The Bad Loans Win: When Subprime Lending Fails Borrowers: The Need For Uniform Broker Regulation, Cassandra Jones Havard

All Faculty Scholarship

This Article provides a framework for regulating mortgage brokers. After introductory comments about the prevalence of this industry and its functional importance in today's consumer mortgage finance market, the article briefly explores the underlying structural framework of the mortgage broker industry. Explaining the market in which mortgage brokers make sub-prime loans as a largely unregulated one, it examines the economics of the mortgage loan transaction from the perspective of the borrower and concludes that lenders are comfortable with the reckless nature of sub-prime home lending. Next, the article examines the dual banking system and its attendant concern of federalism. It …

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 …

Important Terms For Inclusion In Confidential Settlement Agreements For Financial Services Companies, Bryan D. Bolton

University of Baltimore Law Review

No abstract provided.

Advancing The Cra—Using The Cra's Strategic Plan Option To Promote Community Inclusion: The Cra And Community Inclusion, Cassandra Jones Havard

All Faculty Scholarship

Banks, banking regulators, and community organizations have spent nearly thirty years interpreting and re-interpreting the simple but ambiguous mandate of the Community Reinvestment Act (CRA). The statute imposes an affirmative duty requiring "regulated financial institutions to have continuing... obligations to help meet the credit needs of the local communities in which they are chartered." The CRA was met with much resistance and lax enforcement for almost a decade. Active protest from community groups, a more defined CRA exam, and innovative, profitable lending strategies, have resulted in a dramatic increase in community reinvestment dollar commitments and in loans to low- and …

To Lend Or Not To Lend: What The Cra Ought To Say About Sub-Prime And Predatory Lending, Cassandra Jones Havard

All Faculty Scholarship

Policies that support the expansion of affordable housing for low- and moderate-income persons must be reconciled with those policies that undercut the sustainability of home ownership. The sub-prime market represents a much needed expansion of credit markets to those who have been denied access to credit though they are creditworthy. The high failure rate of the sub-prime market indicates that market forces are ineffective in halting this economic abuse. This article argues that the public policy choices and justifications for certain practices have marginalized the concerns of particular consumer classes. It challenges the premise that the free market can and …

Reaching The Glass Usury Ceiling: Why State Ceilings And Federal Preemption Force Low-Income Borrowers Into Subprime Mortgage Loans, Anne Balcer Norton

University of Baltimore Law Review

No abstract provided.

Invisible Markets Netting Visible Results: When Sub-Prime Lending Becomes Predatory, Cassandra Jones Havard

All Faculty Scholarship

In this article, I argue that Ellison's metaphor of social invisibility—the societal undervaluing of minorities—is analogous to economic invisibility—the denial of fair access to credit to minorities. I then use the metaphor of invisibility as a basis for understanding the contemporary legal problem of predatory lending, or making credit available to borrowers at unreasonably high interest rates. Disguised as credit access to high-risk, underserved borrowers, predatory lending helps to create risk by offering borrowers products that do not adequately measure risk and that are not fairly priced.

African-American Farmers And Fair Lending: Racializing Rural Economic Space, Cassandra Jones Havard

All Faculty Scholarship

This article critiques the federal policy and legislation that makes USDA a financial intermediary designed to give farmers access to credit in light of the federal class action settlement of claims between African-American farmers and USDA. The challenged statutory scheme allows locally elected farmers to make decisions regarding these low-cost loan funds. USDA's approach has both federalist and economic underpinnings. The article identifies the arguments supporting devolution of power from the federal government to local jurisdictions and examines the competing theories of information costs, transaction costs, and agency costs as they relate to USDA as a financial intermediary. Finally, it …

Synergy And Friction – Cra, Bhcs, Sba And Community Development Lending, Cassandra Jones Havard

All Faculty Scholarship

The era of federal funding retrenchment makes acute the need for community businesses to have access to capital. The Small Business Administration (SBA) provides small businesses with access to low-cost loans funds. The existing SBA regulatory scheme fosters an approach which allows a private mechanism, lenders, to make public policy decisions about the socio-economic character of communities. Implicit in the Community Reinvestment Act (CRA) and its recent reforms are a recognition of the complex interdependence among policy objectives. The reform statute specifically recognizes that geographical disinvestment has an equally deleterious effect on small business lending as it does on residential …

Reconciling The Dormant Conflict: Crafting A Banking Exception To The Fraudulent Conveyance Provision Of The Bankruptcy Code For Bank Holding Company Asset Transfers, Cassandra Jones Havard

All Faculty Scholarship

Banking law and bankruptcy law clash. This is most evident when a bank holding company (parent company) becomes insolvent after it has made an asset transfer to its financially troubled bank subsidiary.

The Bankruptcy Code (Code) governs the insolvency proceedings of the bank holding company. Predictably, the parent company's trustee, appointed for the protection of all the creditors of the bankrupt entity, uses the fraudulent conveyance provision of the Code to have any asset transfers that were made to the bank subsidiary returned to the debtor's estate. The good faith exception to that provision will protect the asset transfer only …

Back To The Parent: Holding Company Liability For Subsidiary Banks — A Discussion Of The Net Worth Maintenance Agreement, The Source Of Strength Doctrine, And The Prompt Corrective Action Provision, Cassandra Jones Havard

All Faculty Scholarship

Given the statutory goal of parental accountability, this Article focuses on a narrow issue: Whether parental guarantees are the most effective regulatory tool for shielding the federal deposit insurance fund from losses when insured banking subsidiaries that are members of a multibank holding company system are insolvent. This Article posits that a needed complement to parental guarantees is temporary substantive consolidation of a holding company's affiliated banks. This would require the parent company to combine the assets of its banking siblings to facilitate the reorganization of a financially troubled subsidiary. Temporary enterprise consolidation is a necessary regulatory tool because it …

Price Effects Of Horizontal Mergers, Alan A. Fisher Ph.D., Frederick I. Johnson Ph.D., Robert H. Lande

All Faculty Scholarship

When should the government challenge a merger that might increase market power but also generate efficiency gains? The dominant belief has been that the government and courts should evaluate these mergers solely in terms of economic efficiency. Congress, however, wanted the courts to stop any merger significantly likely to raise prices. Substantially likely efficiency gains should therefore affect the legality of mergers to the extent that they are likely to prevent price increases. This standard is more strict than the economic efficiency criterion, because the latter would permit mergers substantially likely to lead to higher prices, if sufficient efficiency gains …

Comments: Regulation Of Financial Planners, Gary S. Kull

University of Baltimore Law Review

In the last ten years, financial planning has grown from a business practiced by a small number of persons into a large and sophisticated industry. This expansion has come as a result of recent changes and developments in the financial services industry, including increases in the availablility of financial products and services. The substantial increase in the number of individuals engaged in financial planning has not been accompanied by the creation of a corresponding system of financial planner regulation. This situation has led the federal government, certain state governments, and several securities and financial planner associations to consider regulating the …

Casenotes: Debtor-Creditor Relations — Garnishment — Garnishee Who Enters Into A Bona Fide Pregarnishment Contract With A Debtor Does Not Have Possession Of Debtor's Property And Is Not Liable For Fees Received By Debtor. Cocco V. Merchants Mortgage Co., 69 Md. App. 68, 516 A.2d 596 (1986), James E. Urmin

University of Baltimore Law Review

No abstract provided.

Maryland's Savings And Loan Crisis Of 1985: The Resulting Legislative Reform, Steven I. Batoff

University of Baltimore Law Review

Maryland's publicized savings and loan crisis was caused, in part, by insufficient state regulation of the savings and loan industry. Legislation subsequently was enacted by the Maryland General Assembly to prevent recurrence of the crisis. This article, written by one of the primary drafters of the curative legislation, reviews the history of savings and loan associations in Maryland, the causes of the crisis that arose in 1985, and the legislation enacted to prevent a reprise.