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Articles 1 - 11 of 11
Full-Text Articles in Law
The Merchants Of Wall Street: Banking, Commerce, And Commodities, Saule T. Omarova
The Merchants Of Wall Street: Banking, Commerce, And Commodities, Saule T. Omarova
Saule T. Omarova
This Article explores the legal, regulatory, policy, and theoretical aspects of an ongoing transformation of large U.S. banking organizations into global merchants of physical commodities and energy. In the absence of detailed and reliable information, it is difficult to draw definitive conclusions as to the social efficiency and desirability of allowing this transformation to continue. What we can already ascertain about U.S. financial institutions' physical commodity assets and activities, however, raises potentially serious public policy concerns that must be addressed through a fully-informed public deliberation. Even if big U.S. FHCs were, in fact, to scale down their physical commodity operations …
The Dodd-Frank Act: A New Deal For A New Age?, Saule T. Omarova
The Dodd-Frank Act: A New Deal For A New Age?, Saule T. Omarova
Saule T. Omarova
This short essay is an attempt to present a few early "big picture" observations on the broad regulatory philosophy underlying the Dodd-Frank Act. The question raised here is whether the Dodd-Frank Act, in fact, provides a blueprint for the twenty-first-century version of the New Deal - a qualitatively new approach to resolving the regulatory challenges posed by today's financial markets. Answering this complex question in full is hardly possible at this stage in the process, when many critical details of the new legal and regulatory regime are yet to be determined. Nevertheless, it is worthwhile to reflect upon some of …
Rethinking The Future Of Self-Regulation In The Financial Industry, Saule T. Omarova
Rethinking The Future Of Self-Regulation In The Financial Industry, Saule T. Omarova
Saule T. Omarova
In today's post-crisis world, arguing in favor of self-regulation in the financial services industry is sure to raise many eyebrows and invite significant disagreement. Much of the skepticism in this respect may be fully justified: the lack of truly effective incentives or political obstacles may ultimately foreclose the possibility of creating a new regime of embedded self-regulation aimed at detection and prevention of systemic financial risks. Nevertheless, as this Article sought to demonstrate, the realities of today's financial marketplace make it critically important that we give the idea of industry self-regulation a full consideration. The main goal of this Article …
Wall Street As Community Of Fate: Toward Financial Industry Self-Regulation, Saule T. Omarova
Wall Street As Community Of Fate: Toward Financial Industry Self-Regulation, Saule T. Omarova
Saule T. Omarova
This Article proposes an approach to regulatory design that aims to create structural incentives for the emergence of a new model of embedded self-regulation in the financial industry. Without a doubt, the ideas laid out in this Article are more of a thought experiment than a polished set of fully developed regulatory proposals. These ideas and suggestions need a great deal of additional thought and a deeper, more granular and rigorous analysis of their potential consequences, benefits, and costs. Moreover, this Article explores only how to create conditions conducive to the emergence of comprehensive industry self-regulation that is embedded in …
Beyond Finance: Permissible Commercial Activities Of U.S. Financial Holding Companies, Saule T. Omarova
Beyond Finance: Permissible Commercial Activities Of U.S. Financial Holding Companies, Saule T. Omarova
Saule T. Omarova
!is essay explains the legal basis for, and examines public policy implications of, recent expansion of large U.S. financial holding companies’ non-financial business activities. Despite its potentially significant impact on economic growth and systemic stability, this phenomenon of financial conglomeration beyond finance remains poorly understood. Yet, any truly comprehensive and effective reform of financial services regulation must address public policy issues that arise when “too-big-to-fail” banks grow even bigger and more systemically significant by combining finance with commerce.
From Gramm-Leach-Bliley To Dodd-Frank: The Unfulfilled Promise Of Section 23a Of The Federal Reserve Act, Saule T. Omarova
From Gramm-Leach-Bliley To Dodd-Frank: The Unfulfilled Promise Of Section 23a Of The Federal Reserve Act, Saule T. Omarova
Saule T. Omarova
This Article examines the recent history and implementation of one of the central provisions in U.S. banking law, section 23A of the Federal Reserve Act. Enacted in 1933 in response to one of the perceived causes of the Great Depression, section 23A imposes quantitative limitations on certain extensions of credit and other transactions between a bank and its affiliates that expose a bank to an affiliate's credit or investment risk, prohibits banks from purchasing low-quality assets from their nonbank affiliates, and imposes strict collateral requirements with respect to extensions of credit to affiliates. The key purpose of these restrictions is …
That Which We Call A Bank: Revisiting The History Of Bank Holding Company Regulations In The United States, Saule T. Omarova, Tahyar E. Margaret
That Which We Call A Bank: Revisiting The History Of Bank Holding Company Regulations In The United States, Saule T. Omarova, Tahyar E. Margaret
Saule T. Omarova
This Article does not purport to present an exhaustive and detailed analysis of the entire political or economic history of bank holding company regulation in the United States. Rather, its goal is to examine one particular aspect of that history-the evolution of the BHCA definition of "bank" and the principal exemptions from that definition. Incomplete as it may be, this story highlights some of the key economic, social and political factors that shaped the current institutional structure of the U.S. financial services market and regulation. Without a thorough understanding of the genesis of that structure, it is difficult to envision …
The New Crisis For The New Century: Some Observations On The "Big-Picture" Lessons Of The Global Financial Crisis Of 2008, Saule T. Omarova
The New Crisis For The New Century: Some Observations On The "Big-Picture" Lessons Of The Global Financial Crisis Of 2008, Saule T. Omarova
Saule T. Omarova
The unprecedented scale and complex contagion effects of the current financial crisis, which rapidly spread across geographic borders and market segmentation lines, forcefully underscored the urgent need for policy-makers, financial regulators, and market participants around the world to develop a deeper substantive understanding of the fundamental changes in the dynamics of modern financial markets. Although, in a historical perspective, all financial crises tend to display certain basic commonalities, two key factors make the crisis of 2008 qualitatively different from the panics and crashes of the past centuries. First, this is the world's first truly global financial crisis. Second, this is …
The Quiet Metamorphosis: How Derivatives Changed The "Business Of Banking", Saule T. Omarova
The Quiet Metamorphosis: How Derivatives Changed The "Business Of Banking", Saule T. Omarova
Saule T. Omarova
In the wake of an unprecedented global financial crisis, one of the fundamental questions preoccupying policymakers and students of financial regulation worldwide is "How did we get here?" This Article uncovers and analyzes an important part of our recent regulatory history, which provides a key to understanding some of the deeper, hidden causes of the crisis but whose significance legal scholars have so far failed to appreciate. The Article examines interpretive letters issued by the Office of the Comptroller of the Currency (OCC), the primary regulator of federally chartered U.S. banks, interpreting the National Bank Act of 1863 to allow …
“Private” Means To “Public” Ends: Governments As Market Actors, Robert C. Hockett, Saule T. Omarova
“Private” Means To “Public” Ends: Governments As Market Actors, Robert C. Hockett, Saule T. Omarova
Saule T. Omarova
Many people recognize that governments can play salutary roles in relation to markets by (a) “overseeing” market behavior from “above,” or (b) supplying foundational “rules of the game” from “below.” It is probably no accident that these widely recognized roles also sit comfortably with traditional conceptions of government and market, pursuant to which people tend categorically to distinguish between “public” and “private” spheres of activity. There is a third form of government action that receives less attention than forms (a) and (b), however, possibly owing in part to its straddling the traditional public/private divide. We call it the “government as …
Bankers, Bureaucrats, And Guardians: Toward Tripartism In Financial Services Regulation, Saule T. Omarova
Bankers, Bureaucrats, And Guardians: Toward Tripartism In Financial Services Regulation, Saule T. Omarova
Saule T. Omarova
This Article advocates the statutory creation of a new form of tripartite regulatory regime aimed at the detection and prevention of systemic risk in the financial sector. Although it leaves many significant details blank and many important questions unanswered, this Article offers a radically new vision of the financial services regulation as a process involving three equal participants: bankers, bureaucrats, and guardians of the public interest. Admittedly, this vision is not likely to become reality in the near future. Nor is it meant as a comprehensive plan to solve the problem of effective systemic risk regulation in the financial sector. …