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Full-Text Articles in Law
Disintermediating Avarice: A Legal Framework For Commercially Sustainable Microfinance, Steven L. Schwarcz
Disintermediating Avarice: A Legal Framework For Commercially Sustainable Microfinance, Steven L. Schwarcz
Steven L Schwarcz
Although microfinance has emerged as a key tool to alleviate poverty, the need for microfinance lending vastly exceeds the amount of funds that can be raised from charitable donors. Commercial bank lending is supplementing donor money, but microfinance loans made by banks are expensive and sometimes even exploitive. This article examines how innovative legal structures can enable microfinance loans to be funded directly from lower-cost, and virtually limitless, capital market sources by removing, or “disintermediating,” the need for a bank intermediary. In that context, the article identifies and attempts to resolve the resulting law-and-business issues of first impression and also …
Distorting Legal Principles, Steven L. Schwarcz
Distorting Legal Principles, Steven L. Schwarcz
Steven L Schwarcz
This article explores the important but until now largely neglected problem of distorting legal principles. Although legal principles enable society to order itself by preserving broadly based expectations, parties sometimes transact in ways that are so inconsistent with accepted principles as to create uncertainty or confusion that undermines the basis for reasoning afforded by the principles. The article starts by examining a fundamental distortion of the nemo dat legal principle (one cannot give what one does not have), which was a trigger of Lehman Brothers’ recent downfall. A practice called “rehypothecation” so distorted nemo dat that Lehman’s customers were uncertain …
Complexity As A Catalyst Of Market Failure: A Law And Engineering Inquiry, Steven L. Schwarcz
Complexity As A Catalyst Of Market Failure: A Law And Engineering Inquiry, Steven L. Schwarcz
Steven L Schwarcz
This article examines how the complexities of modern investment securities and the assets underlying them can trigger a breakdown of financial markets and also analyzes what should be done to mitigate the potential for market failure. Because these complexities are characteristic of complexities in nonlinear engineering systems, the article’s analysis draws on the literature analyzing these systems.
Protecting Financial Markets: Lessons From The Subprime Mortgage Meltdown, Steven L. Schwarcz
Protecting Financial Markets: Lessons From The Subprime Mortgage Meltdown, Steven L. Schwarcz
Steven L Schwarcz
Why did the recent subprime mortgage meltdown undermine financial market stability notwithstanding the protections provided by market norms and financial regulation? This article attempts to answer that question by identifying anomalies and obvious protections that failed to work, and then by examining hypotheses that might explain the anomalies and failures. The resulting explanations provide critical insights into protecting financial markets.
To Make Or To Buy: In-House Lawyering And Value Creation, Steven L. Schwarcz
To Make Or To Buy: In-House Lawyering And Value Creation, Steven L. Schwarcz
Steven L Schwarcz
In recent years, companies have been shifting much of their transactional legal work from outside law firms to in-house lawyers, and some large companies now staff transactions almost exclusively in-house. Although this transformation redefines the very nature of the business lawyer, scholars have largely ignored it. This article seeks to remedy that omission, using empirical evidence as well as economic theory to help explain why in-house lawyers are taking over, and whether they are likely to continue to take over, these functions and roles of outside lawyers. The findings are surprising, suggesting that in-house lawyers may now be performing as …
To Make Or To Buy: In-House Lawyering And Value Creation, Steven L. Schwarcz
To Make Or To Buy: In-House Lawyering And Value Creation, Steven L. Schwarcz
Steven L Schwarcz
No abstract provided.