Law Commons^™

The Fed Of The Future: A Framework To Optimize Short-Term Lending Practices, Emma Macfarlane, Karin Thrasher

University of Michigan Journal of Law Reform

Underbanked individuals currently face significant risk when accessing short-term credit. While payday loans are the least expensive short-term credit option when compared to alternatives like overdraft fees, they can also have an extraordinarily high cost of borrowing. Unable to pay the cost of the loan, borrowers often find themselves in a vicious cycle that drives them further into debt. This Note sets forth a proposal as to how payday loans can be better regulated to create affordable access to short-term credit. Specifically, this Note advocates for congressional and Federal Reserve intervention in the payday lending market.

This Note first analyzes …

Public Pensions And Fiduciary Law: A View From Equity, T. Leigh Anenson

University of Michigan Journal of Law Reform

Controversies involving fund management may be the next frontier of public pension litigation. Recent scandals involving fraud, bribery, and corruption of public pension officials and other third parties have drawn the public eye toward the management of retirement assets. Individual and entity custodians, including pension boards of trustees, are charged with making investment and other decisions relating to pension funds. Unlike private pensions, there is no federal oversight of asset managers or others in control of retirement funds. Yet these funds hold more than three trillion dollars in assets. Until now, the guardians of these monies have operated almost invisibly …

Where Kafka Reigns: A Call For Metamorphosis In Unlawful Detainer Law, John Campbell

University of Michigan Journal of Law Reform

This story reflects a new reality in which nonjudicial foreclosure, combined with draconian unlawful detainer laws, concretizes the injuries associated with wrongful foreclosure, degrades the perceived legitimacy of the courts, and suppresses valid claims of wrongful foreclosure. Indeed, this very scenario happens regularly in a variety of states. This story is a very real tale of how homeowners are harmed by a foreclosure process that has largely escaped scholarly review. Rooted in the belief that sunshine is a powerful disinfectant, this Article aims to shed light on states that hogtie homeowners and makes a normative argument that such a process …

The New Road To Serfdom: The Curse Of Bigness And The Failure Of Antitrust, Carl T. Bogus

University of Michigan Journal of Law Reform

This Article argues for a paradigm shift in modern antitrust policy. Rather than being concerned exclusively with consumer welfare, antitrust law should also be concerned with consolidated corporate power. Regulators and courts should consider the social and political, as well as the economic, consequences of corporate mergers. The vision that antitrust must be a key tool for limiting consolidated corporate power has a venerable legacy, extending back to the origins of antitrust law in early seventeenth century England, running throughout American history, and influencing the enactment of U.S. antitrust laws. However, the Chicago School’s view that antitrust law should be …

Opening Schumer’S Box: The Empirical Foundations Of Modern Consumer Finance Disclosure Law, Hosea H. Harvey

University of Michigan Journal of Law Reform

This Article explores the fundamental failure of Congress’ twenty-five-year quest to utilize disclosure as the primary tool to both regulate credit card issuers and educate consumers. From inception until present, reforms to this disclosure regime, even when premised on judgment and decision-making behavioralism, were nomothetic in orientation and ignored clear differences in population behavior and the heterogeniety of consumers. Current law prohibits credit card issuers from acquiring consumer socio-demographic data and prevents issuers and regulators from using market and policy experimentation to enhance disclosure’s efficacy. To explain why this regime was structured this way and why it must change, this …

The Federal Reserve As Last Resort, Colleen Baker

University of Michigan Journal of Law Reform

The Federal Reserve, the central bank of the United States, is one of the most important and powerful institutions in the world. Surprisingly, legal scholarship hardly pays any attention to the Federal Reserve or to the law structuring and governing its legal authority. This is especially curious given the amount of legal scholarship focused on administrative agencies that do not have anywhere near as critical a domestic and international role as that of the Federal Reserve. At the core of what the Federal Reserve does and should do is to conduct monetary policy so as to safeguard pricing, including that …

Fair Lending 2.0: A Borrower-Based Solution To Discrimination In Mortgage Lending, Jared Ruiz Bybee

University of Michigan Journal of Law Reform

Fair lending laws promise that borrowers with similar credit profiles will receive similar loan products-regardless of their race. Yet, studies reveal that black and Latino borrowers consistently receive loan products that are inferior to those of white borrowers with similar credit characteristics. Despite frequent amendments since their passage during the Civil Rights Era, the Fair Lending Laws that opened doors for minority borrowers are unable to root out the subtle discrimination that persists in today's mortgage lending market. These traditional Fair Lending Laws are built on an outdated framework that focuses exclusively on punishing lenders and righting past wrongs. This …

Addressing Gaps In The Dodd-Frank Act: Directors' Risk Management Oversight Obligations, Kristin N. Johnson

University of Michigan Journal of Law Reform

In the years leading to the recent financial crisis, finance theorists introduced innovative methods, including quantitative financial models and derivative instruments, to measure and mitigate risk exposure. During the financial crisis, financial institutions facing insolvency revealed pervasive misunderstandings, misapplications, and mistaken assumptions regarding these complex risk management methods. As losses in financial markets escalated and caused liquidity and solvency crises, commentators sharply criticized directors and executives at large financial institutions for their risk management decisions. By adopting the Dodd-Frank Wall Street Reform and Consumer Protection Act, Congress directly and indirectly addresses certain risk management oversight concerns at large, complex financial …

Risky Ventures: The Impact Of Irs Health Care Joint Venture Policy, Roger P. Meyers

University of Michigan Journal of Law Reform

IRS oversight of joint ventures between exempt and for-profit organizations has undergone substantial change over the past thirty years. This change has important consequences for the health care industry, where joint ventures have grown increasingly common. In the face of unclear guidance and aggressive enforcement of exemption-policing tools such as the private benefit doctrine and the control test, a hospital risks revocation of its tax-exempt status, or liability for unrelated business income tax, when it engages in a joint venture directly. It may be able to eliminate this risk by operating the same joint venture through a for-profit subsidiary; however, …

Race, Class, And Suburbia: The Modern Black Suburb As A 'Race-Making Situation', Mary Jo Wiggins

University of Michigan Journal of Law Reform

In her Article, Professor Wiggins discusses the complex social phenomenon of "Black suburbanization, " focusing on the commercial "disinvestment" in and around predominately Black suburbs. She traces the historical relationship between Black Americans and the suburbs, and describes in detail the commercial disinvestment in two contemporary Black suburbs, Prince George's County, Maryland, and south DeKalb, Georgia. In her Article, she offers possible explanations for disinvestment, including the application of protective zoning; inefficient zoning laws and practices; prior investment decisions; demographic explanations; and independent effects .of race. Wiggins analyzes some of the resulting negative social and economic consequences, including a sense …

Facing The Facts: An Empirical Study Of The Fairness And Efficiency Of Foreclosures And A Proposal For Reform, Debra Pogrund Stark

University of Michigan Journal of Law Reform

Lenders view real estate foreclosures as too expensive and time consuming a process which needlessly increases the costs of making loans. Others complain that the foreclosure process fails to adequately protect the borrower's equity (the value of the property in excess of the debt secured by the property) in the mortgaged property.

This article tests these views by gathering new data on the fairness and efficiency of the foreclosure process. Based on the data collected (which confirms some assumptions but disproves others), the author proposes a reform of the foreclosure process to promote the interest of both lenders and borrowers. …

Community Development Banking Strategy For Revitalizing Our Communities, Rochelle E. Lento

University of Michigan Journal of Law Reform

CDCUs and CDLFs may outnumber CDBs, but their scope of lending activity pales in comparison. Despite CDBs' relatively small number, their impact on their respective communities warrants an in-depth discussion of their structures and formulas for success. This Article will provide an overview of the CDBs in the United States. Part I first sets forth the legal structure and purpose of CDBs, and then reviews the history and current status of mature CDBs and emerging CDBs. Part II considers community development credit unions, after which Part III gives community development loan funds similar treatment. Finally, Part IV analyzes the potential …

Eliminating The Labyrinth: A Proposal To Simplify Federal Mortgage Lending Discrimination Laws, Stephen M. Dane

University of Michigan Journal of Law Reform

The object of this Article is to demonstrate that the statutory and regulatory framework established by the federal government in its efforts to fight mortgage-lending discrimination is an extremely complicated labyrinth of dead ends, false passages, and elusive goals. Instead of addressing the mortgage-lending discrimination problem directly and comprehensively, Congress has taken a piecemeal and incomplete approach that generally has failed to bring the mortgage-lending industry into equal access compliance.

After pointing out the problems and deficiencies in the current statutory and regulatory scheme, this Article suggests a bold, comprehensive solution to the problem that, if implemented effectively, should ensure …

Comparative Negligence Under The Code: Protecting Negligent Banks Against Negligent Customers, Julianna J. Zekan

University of Michigan Journal of Law Reform

This Article will examine modern banking practices with respect to processing checks and the effect of technology on liability for forged or altered checks. Part I describes the magnetic ink character-recognition system. Part II discusses check truncation. Part III recounts the evolution of contract and tort theories of liability from traditional to modern bank practices. Part IV analyzes the new comparative negligence provisions. Part V investigates the standards of ordinary care. Part VI evaluates the respective duties of the banks and their customers in light of the provisions that reflect the banking industry's transformation from the Paper Age to the …

Alternative Mortgage Instruments: Authorizing And Implementing Price Level Adjusted Mortgages, Joel J. Goldberg

University of Michigan Journal of Law Reform

Of the institutions authorized to make mortgage funds available, only federally-chartered and a small minority of state-chartered savings and loan associations are presently authorized to make PLAM loans. This is due, in part, to a variety of legal and underwriting problems that may outweigh the theoretical advantages of PLAM financing. This Note evaluates these legal and underwriting problems and proposes legal measures to accommodate PLAM financing. Part I discusses the development and advantages of the PLAM. Part II analyzes the legal and practical underwriting objections to PLAM financing, including interest regulations, tax ramifications, and commercial desirability. Part II also suggests …

Selected Problems In Wrap-Around Financing: Suggested Approaches To Due-On-Sale Clauses And Purchaser's Depreciable Basis, Sanford M. Guerin

University of Michigan Journal of Law Reform

This article will address two unresolved issues surrounding the WA transaction which result from the inherent flexibility available for negotiating financing terms in the absence of an institutional lender. Part I discusses the circumstances warranting exclusion of the WA loan from the purchaser's depreciable basis. Part II addresses whether, and when, a due-on-sale clause in the senior mortgage should negate the possibility of utilizing WA financing.

The Right To Financial Privacy Act Of 1978-The Congressional Response To United States V. Miller: A Procedural Right To Challenge Government Access To Financial Records, Nancy M. Kirschner

University of Michigan Journal of Law Reform

This article will review the factors leading to the Miller decision and the legislative response to that decision. Part I will examine the bank customer's expectation of privacy and the way Miller affects this expectation. Part II will discuss the congressional response to Miller and the competing interests which led to the Right to Financial Privacy Act. The Act itself will be discussed in detail in Part III. Part IV will evaluate the Act, and offer recommendations for reform. The article concludes that the Act, by adopting a purely procedural approach, fails to provide adequate protection to bank customers.

An Empirical Analysis Of The Equal Credit Opportunity Act, James A. Burns Jr.

University of Michigan Journal of Law Reform

This article will first examine the legislative history of the ECOA to discover (1) the impetus for its enactment; (2) the views of proponents and opponents of the legislation concerning the presence of credit discrimination, its proper cure, and the proposed provisions of the bills introduced to deal with the problem; and (3) the congressional intent as to the use of various credit-granting factors described by the Act. Regulation B will then be similarly examined to find out how the broad mandates of the ECOA have been made concrete for the use of creditors. Finally, the article will focus on …

Efts: Consumer Protection Under The Ucc, Susan E. Jinnett

University of Michigan Journal of Law Reform

In view of the economic significance of the payments system, the laws governing it must be equitable and comprehensive. The development of the commercial law applicable to EFTS's, however, currently lags behind the growth of these systems. Threats to the integrity of EFTS's stem from lost, stolen, or forged access cards, illegal taps into communication lines, physical impairment of the equipment, or improper programming. The legal rights and liabilities of consumers where the integrity of an EFTS has been breached remains unclear, in part because the status of EFTS's under current law is uncertain. The rights of the parties involved …

Bank Securities Activities And The Need To Separate Trust Departments From Large Commercial Banks, Thomas J. Schoenbaum

University of Michigan Journal of Law Reform

This article (1) analyzes the traditional Glass-Steagall Act restrictions on banks and the leading case of Investment Company Institute v. Camp, where the Supreme Court held that the offering by commercial banks of commingled agency accounts violated the Glass-Steagall Act prohibition against underwriting securities, (2) considers the. developments since that decision, and (3) offers suggestions on an approach to devising solutions to the policy questions involved.

What Ever Happened To The "Checkless Society"?, Isaiah Baker

University of Michigan Journal of Law Reform

In the late 1960's and early 1970's, a proliferation of articles in law reviews and other scholarly journals predicted a fundamental change in the payments systems in the United States. The "checkless society" was hailed as the coming thing-the latest and best innovation to come along in the vast areas of law covered by the Uniform Commercial Code provisions governing commercial paper and bank collections. Despite the claims that present technology is capable of effecting basic alterations in the existing check collection and payment systems, changes have been slow to come and are coming with deliberate speed rather than the …

Determining Permissible Municipal Expenditures: The Public Purpose Doctrine Revived, Richard A. Van Wert

University of Michigan Journal of Law Reform

This article surveys the criteria presently used by courts, commentators, and city officials in determining whether an expenditure of public funds is legally permissible. Each factor is then reevaluated to ascertain its place in a new attempt to determine more consistently the nature of proposed expenditures.

Proposed Sec Rules For Private Offerings: The Impact On Venture Capital Financing, Gregory A. Kearns

University of Michigan Journal of Law Reform

In order to facilitate venture capital financing, corporations rely upon the private offering exemption from the registration and prospectus requirements of the Securities Act of 1933. In an attempt to prevent this exemption from serving as a conduit for the flow of securities into the public securities markets, the Securities and Exchange Commission (SEC) has proposed new rules regulating the resale of securities purchased in a private offering. These proposals would alter, among other things, the existing holding period, sales limitation, and financial information requirements. This article will examine the impact of the proposed *rules on venture capital financing of …