Banking and Finance Law Commons^™

The Role Of Rival Litigation In Wilmarth's New Glass-Steagall, Heidi Mandanis Schooner

Scholarly Articles

The role of private enforcement of public law is an uneven one among financial regulators. Private litigation has played an important role in the enforcement of the federal securities laws since the Supreme Court recognized an implied private cause of action for violations of the anti-fraud provisions. In contrast, courts have been unwilling to establish an implied private right of action under the federal banking laws. Private litigation, however, played a significant role in the enforcement of the Glass-Steagall Act, the New-Deal-era restrictions that separated the financial industry into its three traditional roles: commercial banking, investment banking, and insurance underwriting. …

Profiting From Our Pain: Privileged Access To Social Impact Investing, Cary Martin Shelby

Scholarly Articles

Social impacting investing has become the latest trend to permeate the financial markets. With massive anticipated funding gaps for sustainable development goals, and a millennial-driven thirst for doing good while doing well, this trend is likely to continue in the coming decades. This burgeoning industry is poised to experience yet an additional boost, since it provides an alternative mechanism for private actors to “profit from our pain,” particularly in the wake of the COVID-19 pandemic and the Black Lives Matter movement.

As to be expected, the law has not sufficiently adapted to this new wave of innovation. Scholars have thus …

How Did We Get Here? Dissecting The Hedge Fund Conundrum Through An Institutional Theory Lens, Cary Martin Shelby

Scholarly Articles

This article dissects both the origins and resulting harms of what the author terms the "hedge fund conundrum," in which institutional investors, such as pension plans and endowments, have consistently increased hedge fund allocations over the past decade despite pervasive evidence of excessive fees and subpar returns. It then utilizes an historical institutionalist lens to examine how lawmakers may have enabled a conundrum of this magnitude. By and large, this phenomenon is a symptom of regulatory loopholes that have permitted the private hedge fund market to increase in "publicness" through its expanding access and subsequent harm to retail investors. Such …

Justice Kavanaugh, Lorenzo V. Sec, And The Post-Kennedy Supreme Court, Matthew C. Turk, Karen E. Woody

Scholarly Articles

This Article analyzes a recent Supreme Court case, Lorenzo v. Securities and Exchange Commission, and explains why it provides a valuable window into the Court's future now that Justice Kennedy has retired and his seat filled by Justice Brett Kavanaugh. Lorenzo is an important case that raises fundamental interpretative questions about the reach of federal securities statutes. But most significant is its unique procedural posture: when the Supreme Court issues its decision on Lorenzo in 2019, Justice Kavanaugh will be recused while the other eight Justices rule on a lower court opinion from the D.C. Circuit in which he wrote …

Leidos And The Roberts Court's Improvident Securities Law Docket, Matthew C. Turk, Karen E. Woody

Scholarly Articles

For its October 2017 term, the U.S. Supreme Court took up a noteworthy securities law case, Leidos, Inc. v. Indiana Public Retirement System. The legal question presented in Leidos was whether a failure to comply with a regulation issued by the Securities and Exchange Commission (SEC), Item 303 of Regulation S-K (Item 303), can be grounds for a securities fraud claim pursuant to Rule 10b-5 and the related Section 10(b) of the 1934 Securities Exchange Act. Leidos teed up a significant set of issues because Item 303 concerns one of the more controversial corporate disclosures mandated by the SEC—an …

Big Bank Boards: The Case For Heightened Administrative Enforcement, Heidi Mandanis Schooner

Scholarly Articles

This article first considers the possible liability of the JP Morgan board in the London Whale matter. This discussion is not meant to assign liability in that case. Rather, the London Whale episode is considered as a springboard to a broader discussion of big bank officer and director liability. While it may be tempting to shrug off the regulatory implications of the London Whale episode because the losses did not threaten the solvency of JP Morgan, the significance of such management failures should not be ignored. Effective management of large banks is essential to financial stability. The type of poor …

Foreclosure Of A Deed Of Trust In Virginia, Doug Rendleman

Scholarly Articles

This article deals with foreclosure of a deed of trust in Virginia. The Introduction discusses the deed of trust or mortgage as a social and political institution and the foreclosure crisis that seems to be ending. Part I is a brief history of mortgage law. It provides a short history of the modern mortgage system in the United States. Part II follows with a description of the approach that Virginia takes to mortgages. It localizes the mortgage institution to Virginia and introduces Virginia's vocabulary and technical details, the deed of trust, and the parties' rights and obligations. Part III provides …

Top-Down Bank Capital Regulation, Heidi Mandanis Schooner

Scholarly Articles

In proposing a top-down system of capital regulation, this Article shares a precautionary attitude toward bank regulation found increasingly in post-Financial Crisis scholarship. The viewpoint is one that favors ex ante financial regulation in which regulators are charged with avoiding public harm. More broadly, this Article rejects the notion that regulation is the enemy of markets and therefore must be minimized. Regulation is viewed neutrally—neither inherently good nor inherently bad—as a co-existing partner in highly complex and ever evolving financial markets.

To develop the case for a top-down system of capital regulation, this Article continues as follows, Part II describes …

The New Global Financial Regulatory Order: Can Macroprudential Regulation Prevent Another Global Financial Disaster?, Behzad Gohari, Karen E. Woody

Scholarly Articles

This Article posits that the success of macroprudential regulation will depend on four factors. First, the economic philosophy of the central banker in charge of the domestic institution with jurisdiction over macroprudential regulation will prove crucial in the implementation of adopted regulation. If, like Chairman Greenspan, the banker is averse to the exercise of the Central Bank's regulatory oversight authority, then no amount or volume of policy or regulation will prevent or mitigate systemic risks and the accompanying shocks. Second, a sufficiently deep level of international cooperation is required to mitigate regulatory arbitrage, without being so broad that the ensuing …

Grade Incomplete: Examining The Securities And Exchange Commission's Attempt To Implement Credit Rating And Certain Corporate Governance Reforms Of Dodd-Frank, Tod Perry, Randle B. Pollard

Scholarly Articles

Following the financial crisis of 2007-2009, Congress passed the Dodd-Frank Act with stated goals, among others, of creating a sound economic foundation and protecting consumers. The Dodd-Frank Act creates several new agencies and restructures the financial regulatory system, yet controversies remain on the promulgation of new rules and the overall effectiveness in accomplishing the stated goals of the Act.

This Article briefly discusses the status of rulemaking by newly created agencies and the restructured financial regulatory system mandated by the Dodd- Frank Act three years after its passage. Next, we focus on certain aspects of the SEC and its charge …

Big Banks And Business Method Patents, Megan M. La Belle, Heidi Mandanis Schooner

Scholarly Articles

The banking industry and the patent system are longstanding American institutions whose histories date back to the founding of this country. Historically, however, the paths of these two institutions rarely crossed. Although financial firms have been increasing their innovative output for decades now, until recently they relied on trade secrecy, first mover advantages, and other business mechanisms to protect and monetize their intellectual property — not patents.

Through a convergence of circumstances over the past several years, that pattern has changed. The shift began when the Federal Circuit decided that business methods — banks’ primary mode of innovation — are …

Conceptions Of Corporate Purpose In Post-Crisis Financial Firms, Christopher M. Bruner

Scholarly Articles

American "populism" has had a major impact on the development of U.S. corporate governance throughout its history. Specifically, appeals to the perceived interests of average working people have exerted enormous social and political influence over prevailing conceptions of corporate purpose - the aims toward which society expects corporate decision-making to be directed. This article assesses the impact of American populism upon prevailing conceptions of corporate purpose - contrasting its unique expression in the context of financial firms with that arising in other contexts - and then examines its impact upon corporate governance reforms enacted in the wake of the financial …

The Changing Face Of Money, Christopher M. Bruner

Scholarly Articles

In this essay I argue that widespread failure to comprehend the intrinsic nature of modern money loomed large in the recent financial and economic crisis, and that broader comprehension of its meaning is a precondition for effective post-crisis reforms. First, I provide a brief history of money, emphasizing its gradual divergence from inherent value. I then consider the value of today's dollar in economic, legal, and psychological terms, arguing that each perspective conveys a single over-arching lesson - that better comprehending our money requires better comprehending ourselves. The introspection that this exercise demands reveals with unique clarity some of the …

Private Enforcement Of Systemic Risk Regulation, Heidi Mandanis Schooner

Scholarly Articles

The failure of the regulatory system is at least one of the contributing causes to the 2008 Financial Crisis. The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) will have a far-reaching impact on the financial services industry particularly in its attempt to regulate systemic risk. The Dodd-Frank Act, however, does not sufficiently address the problem of agency discretion generally, or the problem of an agency’s discretion to forebear, in particular. Under Dodd-Frank, the agencies retain considerable discretion and the effectiveness of the new regime depends on the optimal exercise of such discretion. This Article maintains that an …

Consuming Debt: Structuring The Federal Response To Abuses In Consumer Credit, Heidi Mandanis Schooner

Scholarly Articles

Predatory lending is an avaricious fraud that demands attention. Several states have enacted new laws to combat predatory lending. Moreover, the battle against predatory lending and other abusive practices has focused attention on the overall structure of consumer credit laws. The current structure is dual; both state and federal governments play significant roles in combating credit fraud. The dual structure has been the source of controversy as federal regulators have claimed the power to preempt state law. This article furthers the structural debate and the effort to combat predatory lending by examining the architecture of consumer credit laws within the …

Bank Insolvency Regimes In The United States And The United Kingdom, Heidi Mandanis Schooner

Scholarly Articles

Bank insolvency regimes vary widely. First, many countries maintain separate bank insolvency rules from those that govern insolvency of other firms or individuals. Other countries have no special regime and rely on their general insolvency law for bank closure. Second, some countries rely on an administrative process for bank closure in which the bank supervisor, bank insurer, or other agency has the power to appoint the conservator or receiver, and, in some instances, may appoint itself to the job. Other countries rely on a judicial process in which the bank supervisor (or bank managers or creditors) must apply to the …

Tila ‘Finance’ And ‘Other’ Charges In Open-End Credit: The Cost-Of Credit Principle Applied To Charges For Optional Products Or Services, Ralph J. Rohner, Thomas Durkin

Scholarly Articles

The thesis of this article is that a more workable approach to characterizing fees for optional products and services is possible by focusing on charges that represent payment for discrete products or services of value to the consumer, freely chosen by consumers as contract options which do not affect the amount of credit available to the consumer, the consumer's access to it, or the allocation of payment responsibility and credit risk in the transaction or plan. In other words, these fees are for separate-or separable-purchases, analogous to subsequent events in closed-end credit that require no new disclosure or adjustment in …

United Kingdom And United States Responses To The Regulatory Challenges Of Modern Financial Markets, Heidi Mandanis Schooner

Scholarly Articles

The modernization of world financial markets over the last 20 years has raised profound regulatory challenges. Our article considers whether the United States' Gramm-Leach-Bliley Act of 1999 (GLB) and the United Kingdom's Financial Services and Markets Act 2000 (FSMA) meet those challenges. We posit that the most compelling regulatory issue is not whether the financial industry should be allowed to consolidate. Rather, we believe that the organization and practices of the regulators, i.e., the question of which agencies regulate which firms and under what set of laws, should be the focal point. We call this an issue of regulatory modernization. …

Central Banks’ Role In Bank Supervision In The United States And United Kingdom, Heidi Mandanis Schooner

Scholarly Articles

Driven in part by the question of bank supervision in euro-area countries, a growing body of literature addresses whether central banking and bank supervision should be combined. This paper address this debate in light of recent legislation in the United Kingdom and the United States. Recent legislation in the United Kingdom stripped the Bank of England of its responsibility for bank supervision and established the Financial Services Authority as an integrated supervisor of financial services. In the United States, the Gramm-Leach-Bliley Act of 1999 expanded the regulatory authority of the Federal Reserve. In light of international trends, I consider how …

Secrets Of Bank Regulation: A Reply To Professor Cohen, Heidi Mandanis Schooner

Scholarly Articles

No abstract provided.

The Uniform Consumer Leases Act Arrives In Connecticut, Ralph J. Rohner

Scholarly Articles

No abstract provided.

Leasing Consumer Goods: The Spotlight Shifts To The Uniform Consumer Leases Act, Ralph J. Rohner

Scholarly Articles

As a participant throughout the drafting process for the Uniform Consumer Leases Act ("U.C.L.A." or "the Act"), I believe that the Act deserves serious consideration in the state legislatures to fill gaps in existing consumer protections for consumer lessees. The Act complements the Uniform Commercial Code ("U.C.C.") Article 2A (Leases), which creates a basic legal framework for all leases of goods, commercial and consumer alike, and the federal Consumer Leasing Act, which prescribes advertising and disclosure rules for consumer leases. The U.C.L.A. is also intended to reinforce, or be reinforced by, certain existing state laws, such as those prohibiting unfair …

Popular Images Of Bankers Reflected In Regulation, Heidi Mandanis Schooner

Scholarly Articles

No abstract provided.

Convergence And Competition: The Case Of Bank Regulation In Britain And The United States, Heidi Mandanis Schooner, Michael Taylor

Scholarly Articles

Our article considers whether the existence of a global banking market has resulted in the convergence of bank supervisory policy among different nationally-based regulatory regimes. In particular, we consider whether regulatory authorities in the United States and Great Britain, as providers of regulatory services, compete on the basis of the "net regulatory benefit" (NRB) that they provide to their respective regulatees, i.e., banks. After a detailed examination of the history of bank regulation in the US and UK, we observe that there is no clear trend towards convergence by competition. We find that, while regulatory competition may play an important …

Regulating Risk Not Function, Heidi Mandanis Schooner

Scholarly Articles

This Article examines our current scheme of bank regulation through an analysis of banks' securities activities -- how such activities are currently regulated and how they might be regulated in the future.

Part I summarizes the major restrictions on banks' securities activities, emphasizing recent regulatory initiatives aimed toward expanding banks' participation in the securities business.

Part II examines the application of the federal securities laws to banks' securities activities. (While banks enjoy some exemptions from the federal securities laws, they are subject to many of the most important provisions.) In addition, Part II sets forth the division of responsibility for …

Re-Examining Truth In Lending: Do Borrowers Actually Use Consumer Disclosures?, Ralph J. Rohner

Scholarly Articles

No abstract provided.

Whither Truth In Lending?, Ralph J. Rohner

Scholarly Articles

No abstract provided.

Recent Challenges To The Persistent Dual Banking System, Heidi Mandanis Schooner

Scholarly Articles

This essay begins with a brief discussion of the history of the dual banking system in Part I. Part II reviews the justifications for, and criticisms of, the dual banking system. Part III details the recent challenges to the dual banking system. Part IV looks to the future of the dual banking system and concludes that Congress has chosen not to preempt entirely the states' authority despite the continued erosion of states' authority over safety and soundness issues. This leaves the states with a continuing opportunity to serve as laboratories of innovation in bank regulation. If the states seize this …

Who Determines When Enough Is Enough - Refocusing Regulatory Limitations On Banks’ Compensation Practices, Heidi Mandanis Schooner

Scholarly Articles

This article examines the banking agencies' authority-both old and new-to regulate banks' compensation practices. The article considers whether the agencies' implementation of their statutory authority is appropriate. In evaluating the appropriateness of regulation in this area, the regulators' mandate to preserve the safety and soundness of banks is balanced against the banks' need to compete in an increasingly competitive marketplace.' 9 Also, the banking agencies' activities in this area are viewed against the backdrop of considerable legal and management scholarship addressing issues of compensation. Parts I, II and III of the article address the sources of the agencies' authority to …

Fiduciary Duties’ Demanding Cousin: Bank Director Liability For Unsafe Or Unsound Banking Practices, Heidi Mandanis Schooner

Scholarly Articles

The term "unsafe or unsound banking practices" serves as a statutory trigger for virtually every key administrative sanction available against bank directors. Congress has not defined either the term "unsafe or unsound banking practices" or its counterpart "safety and soundness," leaving the federal banking agencies considerable discretion in the interpretation and application of the term. Given the potential breadth of the term, the banking agencies have the ability to seek administrative remedies in cases covering a broad range of director conducL Thus, "unsafe or unsound banking practices" is a potent source of director liability.

Professor Schooner argues that "unsafe or …