Law Commons^™

The Subprime Crisis--A Test Match For The Bankers: Glass-Steagall Vs. Gramm-Leach-Bliley, Jerry W. Markham

Jerry W. Markham

This article addresses the ongoing debate over whether the repeal of the Glass-Steagall Act of 1933 by the Gramm-Leach-Bliley Act of 1999 (“GLBA”) laid the groundwork for the subprime crisis. The Glass-Steagall Act prohibited commercial banks from engaging in investment banking activities such as underwriting and dealing in equity securities. The GLBA removed that barrier, allowing banks to become financial supermarkets. However, the article concludes that GLBA played little if any role in the events surrounding the subprime crisis.

Hedge Funds: The Missing Link In Executive Pay Reform, Robert Illig

Robert C Illig

No abstract provided.

Et Tu, Brute? The Downfall Of Wachovia Bank And The Proper Roll Of The Federal Deposit Insurance Corporation In Providing Open Bank Assistance, Angelo M. Metaxatos

Angelo Metaxatos

In the autumn of 2008, our country’s banking system, crippled by risky lending practices and over-leveraging, was teetering on the precipice of widespread failure. During this period, the Federal Deposit Insurance Corporation (FDIC) played a crucial role in assisting some banks, and acting as a receiver with others. When Wachovia Bank, one of our country’s largest financial institutions, was in danger of failing at the peak of the crisis, the FDIC concluded they were “too big to fail” and took the extraordinary step of providing open bank assistance. When, as a result of this assistance, Citigroup offered to purchase Wachovia …

Securitization And Systemic Risk Amid Deregulation And Regulatory Failure

Patricia A. McCoy

During the recent housing boom, private-label securitization without regulation was unsustainable. Without regulation, securitization allowed mortgage industry actors to gain fees and to put off risks. The ability to pass off risk allowed lenders and securitizers to compete for market share by lowering their lending standards, which activated more borrowing. Lenders who did not join in the easing of lending standards were crowded out of the market. Meanwhile, the mortgages underlying securities became more exposed to growing default risk, but investors did not receive higher rates of return. Artificially low risk premia caused the asset price of houses to go …

Should The Hvcc Settlement Be Treated As An Agency Rulemaking?, Ted C. Koshiol

Ted C. Koshiol

Abstract On March 3, 2008, the New York Attorney General’s reached an important settlement with Fannie Mae, Freddie Mac, and the Office of Federal Housing Enterprise Oversight. Under the terms of the agreement, Fannie and Freddie agreed to only purchase mortgages from banks that would abide by a new set of appraisal standards. Observers immediately recognized that the impact of the agreement would be widespread, effectively imposing new rules on every mortgage lender in America. The scenario raises a novel legal issue: is a settlement agreement always an adjudicatory action, or are there instances where it should be required to …

The New Regulation: From Command To Coordination In The Modern Administrative State, Robert B. Ahdieh

Robert B. Ahdieh

The New Regulation: From Command To Coordination In The Modern Administrative State, Robert B. Ahdieh

Robert B. Ahdieh

The New Regulation: From Command To Coordination In The Modern Administrative State, Robert B. Ahdieh

Robert B. Ahdieh

The New Regulation: From Command To Coordination In The Modern Administrative State, Robert B. Ahdieh

Robert B. Ahdieh

The New Regulation: From Command To Coordination In The Modern Administrative State, Robert B. Ahdieh

Robert B. Ahdieh

Complexity As A Catalyst Of Market Failure', Steven L. Schwarcz

Steven L Schwarcz

This article examines how the complexities of modern financial markets and investment securities can trigger market failure. The article also analyzes what steps, including possible regulation, should be taken to reduce the potential for failure. Because market complexities and failures are characteristic of complexities and failures in engineering systems with nonlinear feedback, the article employs a law and engineering analysis, drawing on the literature analyzing those systems.

Learning From Our History: Evaluating The Modern Housing Finance Market In Light Of Ancient Principles Of Justice, Brian M. Mccall

Brian M McCall

Since I first accepted an invitation to join this symposium, the subprime mortgage crisis has exploded into a systemic financial crisis. Analysis and pundits alike seem on a quest to outdo each other in using dramatic phrases to describe its historic proportions. The causes of a crisis so large must have a multiplicity of causes lying in the realms of bank regulation and supervision, the operation and regulation of the securitization market and the derivatives and insurance markets. Yet, the root and spark of the various financial reverberations initiated in the home mortgage finance market. My presentation will focus on …

It's Just Secured Credit: The Natural Law Case In Defense Of Some Forms Of Secured Credit, Brian M. Mccall

Brian M McCall

For decades scholars have been debating whether of not the institution of security can be explained and justified. After much discussion from varying points of view and hermeneutics, although some insights have been gained, the answer to the original question remains unresolved. This article attempts to bring new life to this debate by building on Professors Mooney and Harris’ idea of security interest as property right while taking account of the valid concerns of scholars such as Elizabeth Warren and Lyn Lopucki that certain results produced by the current system seem unjust. This reconciliation of these two strands of secured …