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Full-Text Articles in Law
Systemic Risk, Steven L. Schwarcz
Systemic Risk, Steven L. Schwarcz
Faculty Scholarship
Governments and international organizations worry increasingly about systemic risk, under which the world’s financial system can collapse like a row of dominoes. There is widespread confusion, though, about the causes and even the definition of systemic risk, and uncertainty about how to control it. This Article offers a conceptual framework for examining what risks are truly “systemic,” what causes those risks, and how, if at all, those risks should be regulated. Scholars historically have tended to think of systemic risk primarily in terms of financial institutions such as banks. However, with the growth of disintermediation, in which companies can access …
Disclosure’S Failure In The Subprime Mortgage Crisis, Steven L. Schwarcz
Disclosure’S Failure In The Subprime Mortgage Crisis, Steven L. Schwarcz
Faculty Scholarship
This symposium article examines how disclosure, the regulatory focus of the federal securities laws, has failed to achieve transparency in the sub-prime mortgage crisis and what this failure means for modern financial securities markets.
Odious Debts And Nation-Building: When The Incubus Departs, Mitu Gulati, Lee C. Buchheit
Odious Debts And Nation-Building: When The Incubus Departs, Mitu Gulati, Lee C. Buchheit
Faculty Scholarship
No abstract provided.
Bond Defaults And The Dilemma Of The Indenture Trustee, Steven L. Schwarcz, Gregory M. Sergi
Bond Defaults And The Dilemma Of The Indenture Trustee, Steven L. Schwarcz, Gregory M. Sergi
Faculty Scholarship
The standard of care for indenture trustees after default is intolerably vague, generating cost and inefficiency in the public bond markets. Yet public bondholder governance is increasingly recognized as a critical component of the larger realm of corporate governance, and indeed more than eighty percent of capital market financing raised by U.S. corporations now occurs through public bond offerings. This article examines how that standard of care should be modified to make indenture trustees more effective.
Protecting Financial Markets: Lessons From The Subprime Mortgage Meltdown, Steven L. Schwarcz
Protecting Financial Markets: Lessons From The Subprime Mortgage Meltdown, Steven L. Schwarcz
Faculty Scholarship
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.
Markets, Systemic Risk, And The Subprime Mortgage Crisis, Steven L. Schwarcz
Markets, Systemic Risk, And The Subprime Mortgage Crisis, Steven L. Schwarcz
Faculty Scholarship
The recent subprime mortgage meltdown is undermining financial market stability and has the potential to cause a true systemic breakdown, collapsing the world's financial systems like a row of dominoes. This essay uses the subprime crisis to demonstrate that existing protections against systemic risk, which focus on banks and largely ignore financial markets, are anachronistic and misguided. Because companies increasingly access financial markets without going through banks, an effective framework for containing systemic risk must focus on markets.
A Convenient Untruth: Fact And Fantasy In The Doctrine Of Odious Debts, Sarah Ludington, Mitu Gulati
A Convenient Untruth: Fact And Fantasy In The Doctrine Of Odious Debts, Sarah Ludington, Mitu Gulati
Faculty Scholarship
The few years since the U.S. incursion into Iraq in 2003 have witnessed an explosion in the literature on odious debts - that is, debts incurred (a) without the consent of the people (e.g., by a despotic regime); (b) from which no benefits accrued to the people; and (c) when the creditors had knowledge of the foregoing. The key question in the literature is whether successors to the despotic regime are obligated to pay the debts of the despot. That is, whether the newly democratic nation of Iraq is obligated to pay the debts of Saddam Hussein. The starting point …