Drastic Times Call For Drastic Risk Measures: Why Value-At-Risk Is (Still) A Flawed Preventative Of Financial Crises And What Regulators Can Do About It, 2014 Pepperdine University
Drastic Times Call For Drastic Risk Measures: Why Value-At-Risk Is (Still) A Flawed Preventative Of Financial Crises And What Regulators Can Do About It, Andrew L. Mcelroy
The Journal of Business, Entrepreneurship & the Law
Bank regulators recently proposed the most fundamental reforms to U.S. banking law in decades, yet the value-at-risk statistic--replete with known deficiencies--remains the basis of the capital adequacy requirement. Consequently, there exists an unresolved tension in the law: the purpose of the banking rules is to require riskier financial institutions to hold additional capital, yet the value-at-risk statistic used to make this assessment induces a perverse incentive to hold the riskiest securities. Overlaid on this framework is the wide latitude afforded to banks in designing their value-at-risk models. This Article explores foreseeable issues with the regulatory reliance on value-at-risk. Moreover, it …
Improving Hedge Fund Governance, 2014 New York Law School
Improving Hedge Fund Governance, Houman B. Shadab
Articles & Chapters
This Article provides the first comprehensive scholarly analysis of the internal governance of hedge funds. Hedge fund governance consists of the funds’ underlying legal regime and the practices they adopt in response to lacking permanent capital and to reduce agency costs. Hedge fund governance is important because better governance can improve investor returns and help managers raise and retain capital. I argue that hedge fund governance is best understood as a type of responsive managerialism. It is a type of managerialism because applicable law and contracting structures give managers uniquely wide-ranging control over the fund and its operations. Hedge fund …
Virtual Currencies Bitcoin & What Now After Liberty Reserve, Silk Road, And Mt. Gox?, 2014 University of Richmond
Virtual Currencies Bitcoin & What Now After Liberty Reserve, Silk Road, And Mt. Gox?, Lawrence Trautman
Richmond Journal of Law & Technology
During 2013, the U.S. Treasury Department evoked the first use of the 2001 Patriot Act to exclude virtual currency provider Liberty Reserve from the U.S. financial system. This article will discuss: the regulation of virtual currencies, cybercrimes and payment systems, darknets, Tor and the “deep web,” Bitcoin; Liberty Reserve, Silk Road, and Mt. Gox. Virtual currencies have quickly become a reality, gaining significant traction in a very short period of time, and are evolving rapidly.
Banking, Structure, Regulation, And Supervision In 1993 And 2013: Comparison Across Countries And Over Time, 2014 Maurice A. Deane School of Law at Hofstra University
Banking, Structure, Regulation, And Supervision In 1993 And 2013: Comparison Across Countries And Over Time, James R. Barth, Daniel E. Nolle, Apanard (Penny) Prabha
Journal of International Business and Law
No abstract provided.
Speculative Tech: The Bitcoin Legal Quagmire & The Need For Legal Innovation, 2014 University of Maryland Francis King Carey School of Law
Speculative Tech: The Bitcoin Legal Quagmire & The Need For Legal Innovation, Paul H. Farmer Jr.
Journal of Business & Technology Law
No abstract provided.
Remic Tax Enforcement As Financial-Market Regulator, 2014 Brooklyn Law School
Remic Tax Enforcement As Financial-Market Regulator, Bradley T. Borden, David J. Reiss
Faculty Scholarship
No abstract provided.
Bitcoin Financial Regulation: Securities, Derivatives, Prediction Markets, And Gambling, 2014 New York Law School
Bitcoin Financial Regulation: Securities, Derivatives, Prediction Markets, And Gambling, Jerry Brito, Houman B. Shadab, Andrea Castillo
Articles & Chapters
The next major wave of Bitcoin regulation will likely be aimed at financial instruments, including securities and derivatives, as well as prediction markets and even gambling. While there are many easily regulated intermediaries when it comes to traditional securities and derivatives, emerging bitcoin denominated instruments rely much less on traditional intermediaries such as banks and securities exchanges. Additionally, the block chain technology that Bitcoin introduced for the first time makes completely decentralized markets and exchanges possible, thus eliminating the need for intermediaries in complex financial transactions. In this Article we survey the type of financial instruments and transactions that will …
Performance-Sensitive Debt: From Asset-Based Loans To Startup Financing, 2014 New York Law School
Performance-Sensitive Debt: From Asset-Based Loans To Startup Financing, Houman B. Shadab
Articles & Chapters
This Article develops a unique theory of performance-sensitive debt and argues that certain revenue-stage startups may be missing out on an important source of capital from asset-based loans. Debt contracts are performance sensitive to the extent any of the borrower’s obligations adjust in response to the performance of the borrower. The three main types of performance sensitivity I identify are (1) a loan’s interest rate adjusting based on the performance of the borrower; (2) the amount of available credit adjusting based on the value of collateral; and (3) renegotiation following breach of a loan covenant. Conceptualizing performance sensitivity as a …
It's Critical: Legal Participatory Action Research, 2014 University of Cincinnati College of Law
It's Critical: Legal Participatory Action Research, Emily M.S. Houh, Kristin Kalsen
Michigan Journal of Race and Law
This Article introduces a method of research that we term “legal participatory action research” or “legal PAR” as a way for legal scholars and activists to put various strands of critical legal theory into practice. Specifically, through the lens of legal PAR, this Article contributes to a rapidly developing legal literature on the “fringe economy” that comprises “alternative lending services” and products, including but not limited to pawnshops, check cashers, payday lenders, direct deposit loans, (tax) refund anticipation loans, and car title loans. As importantly, this article also contributes to the related fields of critical race theory, feminist legal theory, …
Post-Racial Lending?, 2014 University of Baltimore School of Law
Post-Racial Lending?, Cassandra Jones Havard
All Faculty Scholarship
Should lenders have absolute discretion when setting mortgage loan prices regardless of the borrower's creditworthiness? How should a regulatory framework evaluate lending decisions for racial bias to determine if demographic or other variables are used as proxies for race? Congress enacted the Home Mortgage Disclosure Act in order to acquire data on mortgage lending patterns and to discourage geographical disinvestment. Basic HMDA data indicates that mortgage loan applications from black and Hispanic households are more likely to be denied than are applications from whites. Loan denial rates for blacks, Hispanics, and Asians are higher than white applicants at all income …
Managing The Public Trust: How To Make Natural Resource Funds Work For Citizens, 2014 Natural Resource Governance Institute
Managing The Public Trust: How To Make Natural Resource Funds Work For Citizens, Andrew Bauer, Perrine Toledano, Malan Rietveld
Columbia Center on Sustainable Investment Staff Publications
Given their collective size – approximately $3.5 trillion in assets as of end-2013 and growing – and concerns about the motivations of their government owners, much has been written on natural resource funds (NRFs), their investments and global influence. However their impacts on governance and public financial accountability at home have received far less attention.
On the one hand, these funds can be used to serve the public interest, for example by covering budget deficits when resource revenues decline, saving for future generations, or helping to mitigate Dutch Disease through fiscal sterilization. On the other hand, they can undermine public …
Revisiting The Causes Of The Financial Crisis, 2014 Florida International University College of Law
Revisiting The Causes Of The Financial Crisis, Antony Page
Faculty Publications
Much has been written on the legal causes of the financial crisis and its aftermath, often referred to as the Great Recession. Presumably the debate will continue for many years to come, much as scholars continue to debate the causes of the Great Depression. Lost, however, in the descriptions of arcane laws and complex derivative financial products, is a relatively brief and straightforward account of the crisis and its most likely causes for interested lawyers, law students, or graduate students who are not specialists and do not want to become specialists. This Essay, based on a presentation at the Indiana …
Hedge Fund Activism Report: 2013-2014, 2014 New York Law School
Hedge Fund Activism Report: 2013-2014, New York Law School
Center Projects
No abstract provided.
"We Buy Houses": Market Heroes Or Criminals?, 2014 Florida A&M University College of Law
"We Buy Houses": Market Heroes Or Criminals?, Cori Harvey
Journal Publications
The residential sale/leaseback/buyback transaction is a socially beneficial foreclosure rescue transaction that is being regulated increasingly by the criminal courts to the detriment of the homeowners, investors, and society at large. Because the transaction is being regulated more aggressively with the criminal law, peculiar outcomes arise, which include investors being sentenced, in some cases, to draconian sentences --a trend that will eviscerate the transactions rather than improving them.
In calling for a retreat from that position, this Article makes both descriptive and prescriptive claims. The first descriptive claim is that the transaction is a beneficial one and that it has …
Foreign Corrupt Practices Act Ripples, 2014 Southern Illinois University School of Law
Foreign Corrupt Practices Act Ripples, Mike Koehler
American University Business Law Review
No abstract provided.
Curbing The Exploitation Of Passive Creditors In Chapter 11 Reorganization By Leveraging The Oversight Role Of The United States Trustee, 2014 American University Washington College of Law
Curbing The Exploitation Of Passive Creditors In Chapter 11 Reorganization By Leveraging The Oversight Role Of The United States Trustee, Addison Pierce
American University Business Law Review
No abstract provided.
Incentives And Ideology, 2014 University of Connecticut School of Law
Incentives And Ideology, James Kwak
Faculty Articles and Papers
This is a response to Adam Levitin's article, The Politics of Financial Regulation and the Regulation of Financial Politics: A Review Essay, 127 Harv. L. Rev. 1991 (2014). Levitin discusses various reasons for regulatory capture and highlights several potential solutions that aim to change the political governance of financial regulation. In this response, I highlight the importance of ideology (in this case, the ideology of free financial markets) in producing regulatory outcomes that are good for industry, and therefore the need for solutions that mitigate ideological capture.
Securitize Me: Stimulating Renewable Energy Financing By Embracing The Capital Markets, 2014 Trinity College, B.A. 2007; University of Connecticut School of Law, J.D. 2013
Securitize Me: Stimulating Renewable Energy Financing By Embracing The Capital Markets, Andrew C. Fink
The University of New Hampshire Law Review
The current system of financing renewable energy projects is broken and inadequate, especially when compared to the framework for participating in oil and gas ventures. The solution lies in borrowing accepted energy business practices and adapting them to solar and wind energy projects. This Article focuses on the current issues facing renewable energy project financing in the United States, analyzes failed attempts to stimulate growth, and presents the securitization of renewable energy assets as a solution. Drawing on current legal structure and debates from the corporate sphere, this Article also discusses specific securitization techniques that can help to democratize and …
Third Party Funding Of Personal Injury Tort Claims: Keep The Baby And Change The Bathwater, 2014 Chicago-Kent College of Law
Third Party Funding Of Personal Injury Tort Claims: Keep The Baby And Change The Bathwater, Terrence Cain
Chicago-Kent Law Review
In the early 1990s, a period of high-risk lending at high interest rates, a new entrant emerged in civil litigation: the Litigation Finance Company (“LFC”). LFCs advance money to plaintiffs involved in contingency fee litigation. The money is provided on a non-recourse basis, meaning the plaintiff repays the LFC only if she obtains money from the lawsuit through a settlement, judgment, or verdict. If the plaintiff recovers nothing, she will not owe the LFC anything. When she does repay the LFC, however, she could end up paying as much as 280% of the amount advanced by the LFC. As one …
“Private” Means To “Public” Ends: Governments As Market Actors, 2014 Cornell Law School
“Private” Means To “Public” Ends: Governments As Market Actors, Robert C. Hockett, Saule T. Omarova
Cornell Law Faculty Publications
Many people recognize that governments can play salutary roles in relation to markets by (a) “overseeing” market behavior from “above,” or (b) supplying foundational “rules of the game” from “below.” It is probably no accident that these widely recognized roles also sit comfortably with traditional conceptions of government and market, pursuant to which people tend categorically to distinguish between “public” and “private” spheres of activity.
There is a third form of government action that receives less attention than forms (a) and (b), however, possibly owing in part to its straddling the traditional public/private divide. We call it the “government as …