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Is The Bankruptcy Code An Adequate Mechanism For Resolving The Distress Of Systemically Important Institutions, Edward R. Morrison Jan 2009

Is The Bankruptcy Code An Adequate Mechanism For Resolving The Distress Of Systemically Important Institutions, Edward R. Morrison

Faculty Scholarship

Lehman’s bankruptcy has triggered calls for new approaches to rescuing systemically important institutions. This essay assesses and confirms the need for a new approach. It identifies the inadequacies of the Bankruptcy Code and advocates an approach modeled on the current regime governing commercial banks. That regime includes both close monitoring when a bank is healthy and aggressive intervention when it is distressed. The two tasks – monitoring and intervention – are closely tied, ensuring that intervention occurs only when there is a well-established need for it. The same approach should be applied to all systemically important institutions. President Obama and the ...


Banking Reform In The Chinese Mirror, Katharina Pistor Jan 2009

Banking Reform In The Chinese Mirror, Katharina Pistor

Faculty Scholarship

This paper analyzes the transactions that led to the partial privatization of China’s three largest banks in 2005-06. It suggests that these transactions were structured to allow for inter-organizational learning under conditions of uncertainty. For the involved foreign investors, participation in large financial intermediaries of central importance to the Chinese economy gave them the opportunity to learn about financial governance in China. For the Chinese banks partnering with more than one foreign investor, their participation allowed them to benefit from the input by different players in the global financial market place and to learn from the range of technical ...


Into The Void: Governing Finance In Central & Eastern Europe, Katharina Pistor Jan 2009

Into The Void: Governing Finance In Central & Eastern Europe, Katharina Pistor

Faculty Scholarship

Twenty years after the fall of the iron curtain, which for decades had separated East from West, many countries of Central and Eastern Europe (CEE) are now members of the European Union and some have even adopted the Euro. Their readiness to open their borders to foreign capital and their faith in the viability of market self-governance as well as supra-national governance of finance is both remarkable and almost unprecedented. The eagerness of the countries in CEE to join the West and to become part of a regional and global regime as a way of escaping their closeted socialist past ...


The Constitutional Legitimacy Of Freestanding Federalism, Gillian E. Metzger Jan 2009

The Constitutional Legitimacy Of Freestanding Federalism, Gillian E. Metzger

Faculty Scholarship

Responding to John F. Manning, Federalism and the Generality Problem in Constitutional Interpretation, 122 Harv.. L. Rev. 2003 (2009).


A Convenient Constitution? Extraterritoriality After Boumediene, Christina Duffy Ponsa-Kraus Jan 2009

A Convenient Constitution? Extraterritoriality After Boumediene, Christina Duffy Ponsa-Kraus

Faculty Scholarship

Questions concerning the extraterritorial applicability of the Constitution have come to the fore during the "war on terror." In Boumediene v. Bush, the Supreme Court held that noncitizens detained in Guantánamo have the right to challenge their detention in federal court. To reach this conclusion, the Court used the "impracticable and anomalous" test, also known as the 'functional" approach because of its reliance on pragmatic or consequentialist considerations. The test first appeared in a concurring opinion over fifty years ago; in Boumediene, it garnered the votes of a majority.

This Article argues that the Boumediene Court was right to hold ...


A Proposed Petroleum Fuel Price Stabilization Plan, David M. Schizer, Thomas W. Merrill Jan 2009

A Proposed Petroleum Fuel Price Stabilization Plan, David M. Schizer, Thomas W. Merrill

Faculty Scholarship

The high level of petroleum consumption in the United States contributes to environmental harms, burdens national security, and increases urban sprawl and traffic congestion. In response, the Obama administration has proposed targeted subsidies and regulatory mandates. We do not believe this will be an effective strategy because Congress has no comparative advantage in picking technological winners and losers. Among serious policy analysts, there is consensus that the best approach is to increase prices through a gas tax. The problem, however, is intense and widespread public opposition to this approach.

We propose an alternative that offers many important benefits of a ...


Beyond The Wto? An Anatomy Of Eu And Us Preferential Trade Agreements, Henrik Horn, Petros C. Mavroidis, André Sapir Jan 2009

Beyond The Wto? An Anatomy Of Eu And Us Preferential Trade Agreements, Henrik Horn, Petros C. Mavroidis, André Sapir

Faculty Scholarship

It is often alleged that PTAs involving the EC and the US include a significant number of obligations in areas not currently covered by the WTO Agreement, such as investment protection, competition policy, labour standards and environmental protection. The primary purpose of this study is to highlight the extent to which these claims are true. The study divides the contents of all PTAs involving the EC and the US currently notified to the WTO, into 14 'WTO' and 38 'WTO-X' areas, where WTO provisions come under the current mandate of the WTO, and WTO-X provisions deal with issues lying outside ...


Henry Louis Gates And Racial Profiling: What's The Problem?, Bernard E. Harcourt Jan 2009

Henry Louis Gates And Racial Profiling: What's The Problem?, Bernard E. Harcourt

Faculty Scholarship

A string of recent studies has documented significant racial disparities in police stops, searches, and arrests across the country. The issue of racial profiling, however, did not receive national attention until the arrest of Professor Henry Louis Gates, Jr., at his home in Cambridge. This raises three questions: First, did Sergeant Crowley engage in racial profiling when he arrested Professor Gates? Second, why does it take the wrongful arrest of a respected member of an elite community to focus the attention of the country? Third, why is racial profiling so pervasive in American policing?

The answers to these questions are ...


Subsidizing Creativity Through Network Design: Zero Pricing And Net Neutrality, Robin S. Lee, Tim Wu Jan 2009

Subsidizing Creativity Through Network Design: Zero Pricing And Net Neutrality, Robin S. Lee, Tim Wu

Faculty Scholarship

Today, through historical practice, there exists a de facto ban on termination fees – also referred to as a “zero-price” rule (Hemphill, 2008) – which forbids an Internet service provider from charging an additional fee to a content provider who wishes to reach that ISP’s customers. The question is whether this zero-pricing structure should be preserved, or whether carriers should be allowed to charge termination fees and engage in other practices that have the effect of requiring payment to reach users. This paper begins with a defense of the de facto zero-price rule currently in existence. We point out that the ...


The Interdependent Relationship Between Internal And External Separation Of Powers, Gillian E. Metzger Jan 2009

The Interdependent Relationship Between Internal And External Separation Of Powers, Gillian E. Metzger

Faculty Scholarship

This Essay, prepared as part of the Emory Law Journal’s 2009 Thrower Symposium on Executive Power, addresses internal separation of powers constraints on the executive branch. After briefly describing the form such constraints take and assessing their constitutional legitimacy, the Essay takes up the question of whether internal constraints can be an effective restraint on presidential aggrandizement. I argue that although such constraints can have some purchase, focusing solely on internal measures frames the inquiry too narrowly and ignores the important interdependent relationship between internal and external checks on executive power. The Essay concludes with an assessment of one ...


Geier V. American Honda Motor Co.: A Story Of Statutes, Regulation And The Common Law, Peter L. Strauss Jan 2009

Geier V. American Honda Motor Co.: A Story Of Statutes, Regulation And The Common Law, Peter L. Strauss

Faculty Scholarship

This essay was written as a contribution to one of Foundation's "Story" series. In Geier, a lawsuit had been brought on behalf of a teenager whose injuries from an accident might have been lessened if her car had contained an airbag. Plaintiffs sued on the straightforward basis that the design choice to omit a safety device of proven merit made the car unreasonably hazardous. Federal safety regulations had required the maker of her car to install some such device as an airbag in at least 10% of the cars it made the year it made her car – but her ...


Executions, Deterrence And Homicide: A Tale Of Two Cities, Franklin Zimring, Jeffrey Fagan, David T. Johnson Jan 2009

Executions, Deterrence And Homicide: A Tale Of Two Cities, Franklin Zimring, Jeffrey Fagan, David T. Johnson

Faculty Scholarship

We compare homicide rates in two quite similar cities with vastly different execution risks. Singapore had an execution rate close to 1 per million per year until an explosive twentyfold increase in 1994-95 and 1996-97 to a level that we show was probably the highest in the world. Then over the next 11 years, Singapore executions dropped by about 95%. Hong Kong, by contrast,has no executions all during the last generation and abolished capital punishment in 1993. Homicide levels and trends are remarkably similar in these two cities over the 35 years after 1973, with neither the surge in ...


Human Rights In The Emerging World Order, Joseph Raz Jan 2009

Human Rights In The Emerging World Order, Joseph Raz

Faculty Scholarship

This article has been published by the journal Transnational Legal Theory. The article is an expanded and revised version of the lecture I gave at the opening plenary session of the 24th IVR World Congress in Beijing, September 2009, which was entitled and previously uploaded as ‘Human Rights in a New World Order.’ The unrevised ‘Human Rights in a New World Order’ speech will appear in the IVR proceedings as well as in translation in Chinese. The present article is made available for download here immediately after publication by special arrangement with the journal. The article is a reflection on ...


On Uncertainty, Ambiguity, And Contractual Conditions, Eric L. Talley Jan 2009

On Uncertainty, Ambiguity, And Contractual Conditions, Eric L. Talley

Faculty Scholarship

This article uses the recent Delaware Chancery Court case of Hexion v. Huntsman as a template for motivating thoughts about how contract law should interpret contractual conditions in general – and "material adverse event" provisions in particular – within environments of extreme ambiguity (as opposed to risk). Although ambiguity and aversion thereto bear some facial similarities to risk and risk aversion, an optimal contractual allocation of uncertainty does not always track the optimal allocation of risk. After establishing these intuitions as a conceptual proposition, I endeavor to test them empirically, using a unique data set of 528 actual material adverse event provisions ...


Optimization And Its Discontents In Regulatory Design: Bank Regulation As An Example, William H. Simon Jan 2009

Optimization And Its Discontents In Regulatory Design: Bank Regulation As An Example, William H. Simon

Faculty Scholarship

Economists and economically-trained lawyers tend to speak about regulation from a perspective organized around the basic norm of optimization. By contrast, an important managerial literature espouses a perspective organized around the basic norm of reliability. The perspectives are not logically inconsistent, but the economist’s view sometimes leads in practice to a preoccupation with decisional simplicity and cost minimization at the expense of complex judgment and learning. Drawing on a literature often ignored by economists and lawyers, I elaborate the contrast between the optimization and reliability perspectives. I then show how it illuminates current discussions of the reform of bank ...


Universal Exceptionalism In International Law, Anu Bradford, Eric A. Posner Jan 2009

Universal Exceptionalism In International Law, Anu Bradford, Eric A. Posner

Faculty Scholarship

A trope of international law scholarship is that the United States is an “exceptionalist” nation, one that takes a distinctive (frequently hostile, unilateralist, or hypocritical) stance toward international law. However, all major powers are similarly “exceptionalist,” in the sense that they take distinctive approaches to international law that reflect their values and interests. We illustrate these arguments with discussions of China, the European Union, and the United States. Charges of international-law exceptionalism betray an undefended assumption that one particular view of international law (for scholars, usually the European view) is universally valid.


Restating The U.S. Law Of International Commercial Arbitration, George Bermann, Jack J. Coe, Christopher R. Drahozal, Catherine A. Rogers Jan 2009

Restating The U.S. Law Of International Commercial Arbitration, George Bermann, Jack J. Coe, Christopher R. Drahozal, Catherine A. Rogers

Faculty Scholarship

In December 2007, the American Law Institute ("ALI") approved the development of a new Restatement, Third, of the U.S. Law of International Commercial Arbitration (the "Restatement"). On February 23, 2009, the Restaters and authors of this Essay presented a Preliminary Draft of a chapter of the Restatement (the "Draft") at an invitational meeting in New York. The Draft addresses Recognition and Enforcement of Arbitral Awards. This brief Essay provides some reflections of the Reporters from the process of producing and presenting the Draft. Subsequent Drafts have been produced and approved by the ALI.


Restating The U.S. Law Of International Commercial Arbitration, George A. Bermann Jan 2009

Restating The U.S. Law Of International Commercial Arbitration, George A. Bermann

Faculty Scholarship

The American Law Institute's new Restatement of the U.S. Law of International Commercial Arbitration is only barely underway, and the reporters began with a chapter, on the recognition and enforcement of awards, that should represent for them a comfort zone of sorts within the overall project. Yet already a number of difficult, and to some extent unexpectedly difficult, questions have arisen. Some of the difficulties stem from the very nature of an ALl Restatement project. Others stem from the nature of arbitration itself and, more particularly, from the inherent tension between arbitral and judicial functions in the arbitration ...


The Devil Made Me Do It: The Corporate Purchase Of Insurance, Victor P. Goldberg Jan 2009

The Devil Made Me Do It: The Corporate Purchase Of Insurance, Victor P. Goldberg

Faculty Scholarship

Despite the fact that public corporations ought to be risk neutral, they often carry insurance. This note first considers why insurance (or, more precisely, the package of services provided by insurance companies) might create value, regardless of the risk preferences of managers, shareholders, or other corporate stakeholders. One motive is that their contractual counter parties-buyers, lessors, and lenders – require that they carry insurance. Two explanations for why the requirement might be value enhancing are proposed.


Decisional Dignity: Teenage Abortion, Bypass Hearings, And The Misuse Of Law, Carol Sanger Jan 2009

Decisional Dignity: Teenage Abortion, Bypass Hearings, And The Misuse Of Law, Carol Sanger

Faculty Scholarship

How might we think about reforming abortion regulation in a world in which the basic legality of abortion may, as a matter of constitutional law, at last be relatively secure? I have in mind the era just upon us in which the overturn of Roe v. Wadeno longer looms so threateningly over the reproductive rights community in the United States and is no longer necessarily its central concern. There is now a general and seemingly well-founded optimism that under the Obama administration, those who support and rely on reproductive rights will not have to pray nightly for the health ...


Town Of Telluride V. San Miguel Valley Corp.: Extraterritoriality And Local Autonomy, Richard Briffault Jan 2009

Town Of Telluride V. San Miguel Valley Corp.: Extraterritoriality And Local Autonomy, Richard Briffault

Faculty Scholarship

At first blush, the decision of the Colorado Supreme Court in Town of Telluride v. San Miguel Valley Corp. seems like an extraordinary endorsement of home rule and a significant milestone in the evolution of local power. The Colorado Supreme Court adopted a very broad construction of the power of a home rule municipality under the state constitution and invalidated a state statute that expressly sought to limit that power. The power in question – extraterritorial eminent domain – seems to go well beyond even the most generous assumptions about local government authority. As the uproar following the United States Supreme Court ...


Rethinking The "Law And Finance" Paradigm, Katharina Pistor Jan 2009

Rethinking The "Law And Finance" Paradigm, Katharina Pistor

Faculty Scholarship

The label "Law and Finance" stands for a body of literature that has dominated policy-making and academic debates for the past decade. The literature has its origin in a series of papers co-authored by Andrei Shleifer, Rafael La Porta, Florencio Lopez-de-Silanes and a cohort of other researchers, including Robert Vishny, Simeon Djankov et al. (hereinafter referred to as LLS et al.). More than ten years after "Law and Finance" was first published, it seems appropriate to step back and consider the contribution this literature has made, but also to point out where it has gone astray and deviated attention from ...


Charles H. Whitebread, Michael J. Graetz Jan 2009

Charles H. Whitebread, Michael J. Graetz

Faculty Scholarship

Late in April when Charlie Whitebread learned that he had Stage 4 lung cancer, it occurred to me that I might someday be asked to say a few words about him. But these are comments I hoped never to make. I do not have words to describe to you the emptiness in my life that Charlie had filled for so many years. But our purpose here is not to mourn our loss; rather it is to celebrate Charlie's life.


Surrogacy And The Politics Of Commodification, Elizabeth S. Scott Jan 2009

Surrogacy And The Politics Of Commodification, Elizabeth S. Scott

Faculty Scholarship

In 2004, the Illinois legislature passed the Gestational Surrogacy Act, which provides that a child conceived through in vitro fertilization (IVF) and born to a surrogate mother automatically becomes the legal child of the intended parents at birth if certain conditions are met. Under the Act, the woman who bears the child has no parental status. The bill generated modest media attention, but little controversy; it passed unanimously in both houses of the legislature and was signed into law by the governor.

This mundane story of the legislative process in action stands in sharp contrast to the political tale of ...


Is The Bankruptcy Code An Adequate Mechanism For Resolving The Distress Of Systemically Important Institutions?, Edward R. Morrison Jan 2009

Is The Bankruptcy Code An Adequate Mechanism For Resolving The Distress Of Systemically Important Institutions?, Edward R. Morrison

Faculty Scholarship

The President and members of Congress are considering proposals that would give the government broad authority to rescue financial institutions whose failure might threaten market stability. These systemically important institutions include bank and insurance holding companies, investment banks, and other "large, highly leveraged, and interconnected" entities that are not currently subject to federal resolution authority. Interest in these proposals stems from the credit crisis, particularly the bankruptcy of Lehman Brothers. That bankruptcy, according to some observers, caused massive destabilization in credit markets for two reasons. First, market participants were surprised that the government would permit a massive market player to ...


Accession And Original Ownership, Thomas W. Merrill Jan 2009

Accession And Original Ownership, Thomas W. Merrill

Faculty Scholarship

Although first possession is generally assumed to be the dominant means of establishing original ownership of property, there is a second but less studied principle for initiating ownership, called accession, which awards new resources to the owner of existing property most prominently connected to the new resource. Accession applies across a wide variety of areas, from determining rights to baby animals and growing crops to determining ownership of derivative rights under intellectual property laws. Accession shares common features with first possession, in that both principles assign ownership uniquely in a way that imposes minimal information cost burdens on society. But ...


Civil Liability And Mandatory Disclosure, Merritt B. Fox Jan 2009

Civil Liability And Mandatory Disclosure, Merritt B. Fox

Faculty Scholarship

This Article explores the efficient design of civil liability for mandatory securities disclosure violations by established issuers. An issuer not publicly offering securities at the time of a violation should have no liability. Its annual filings should be signed by an external certifier – an investment bank or other well-capitalized entity with financial expertise. If the filing contains a material misstatement and the certifier fails to do due diligence, the certifier should face measured liability. Officers and directors should face similar liability, capped relative to their compensation but with no indemnification or insurance allowed. Damages should be payable to the issuer ...


The Correspondence Of Contract And Promise, Jody S. Kraus Jan 2009

The Correspondence Of Contract And Promise, Jody S. Kraus

Faculty Scholarship

Correspondence accounts of the relationship between contract and promise hold either that contract law is justified to the extent it enforces a corresponding moral responsibility for a promise or unjustified to the extent it undermines promissory morality by refusing to enforce a corresponding moral responsibility for a promise. In this Article, I claim that contract scholars have mistakenly presumed that they can assess the correspondence between contract and promise without first providing a theory of self-imposed moral responsibility that explains and justifies the promise principle. I argue that any plausible theory of self-imposed moral responsibility is inconsistent with a strong ...


Contract Design And The Structure Of Contractual Intent, Jody S. Kraus, Robert E. Scott Jan 2009

Contract Design And The Structure Of Contractual Intent, Jody S. Kraus, Robert E. Scott

Faculty Scholarship

Modern contract law is governed by a two-stage adjudicative regime – an inheritance of the centuries-old conflict between law and equity. Under this regime, formal contract terms are treated as prima facie provisions that courts can override by invoking equitable doctrines so as to substantially "correct" the parties' contract by realigning it with their contractual intent. This ex post judicial determination of the contractual obligation serves as a fallback mechanism for vindicating the parties' contractual intent whenever the formal contract terms fall short of achieving the parties' purposes. Honoring the contractual intent of the parties is thus the central objective of ...


Contracting For Innovation: Vertical Disintegration And Interfirm Collaboration, Ronald J. Gilson, Charles F. Sabel, Robert E. Scott Jan 2009

Contracting For Innovation: Vertical Disintegration And Interfirm Collaboration, Ronald J. Gilson, Charles F. Sabel, Robert E. Scott

Faculty Scholarship

Rapidly innovating industries are not behaving the way theory expects. Conventional industrial organization theory predicts that, when parties in a supply chain have to make transaction-specific investments, the risk of opportunism will drive them away from contracts and toward vertical integration. Despite the conventional theory, however, contemporary practice is moving in the other direction. Instead of vertical integration, we observe vertical disintegration in a significant number of industries, as producers recognize that they cannot themselves maintain cutting-edge technology in every field required for the success of their products. In doing this, the parties are developing forms of contracting beyond the ...