Law Commons^™

The Federal Reserve As Agent To Another Principal: Monetary Penalties 1997-2022, David Zaring

Indiana Law Journal

Enforcement is how agencies make policy, but the Federal Reserve Board, perhaps the country’s most important independent agency, and certainly its most important regulator of banks, does most of its enforcement in secret. This secrecy means that it is difficult for outside observers to see what the Fed is prioritizing. One exception to the secret sanction paradigm is the civil monetary penalty: once the Fed decides to fine a bank or a banker, no matter how small the amount, it must publicize the fine and the basis for it. We read twenty-five years’ worth of civil monetary penalty orders to …

A Case For Reforming The Anti-Money Laundering Regulatory Regime: How Financial Institutions’ Criminal Reporting Duties Have Created An Unfunded Private Police Force, Christopher Wilkes

Indiana Law Journal

Part I of this Note provides background information outlining the relevant BSA/AML laws that establish financial institutions’ affirmative duties to report financial crimes. Part II analyzes the contours of other laws that create mandatory criminal reporting obligations, including their extent, their underlying justifications, and how stringently government agencies enforce them. Part III demonstrates how financial institutions’ reporting duties are uniquely stringent and punitive compared to those imposed elsewhere in the law, and it questions the justifications of this policy. Lastly, Part IV of this Note argues that the BSA/AML regulatory regime could be reformed to reduce the costs and duties …

Introduction, Colin Crawford, Daniel Bonilla Maldonado

Indiana Journal of Global Legal Studies

The papers gathered in this volume analyze access to justice in Latin America, Europe, and North America from a philosophical, legal, and sociological perspective. In these three regions of the world, as in the rest of the globe, liberal democracies face a troubling gap between the normative and the descriptive: the access to justice promises made by the legal and political system are not fully realized in practice. The studies collected here, therefore, share two baseline assumptions. First, the right of access to justice is fundamental in a liberal state. Access to justice ensures that citizens are able to defend …

Upskirting, Bitcoin, And Crime, Oh My: Judicial Resistance To Applying Old Laws To New Crimes – What Is A Legislature To Do?, Michael Whiteman

Indiana Law Journal

As technology continues to advance at a break-neck speed, legislatures often find themselves scrambling to write laws to keep up with these advances. Prosecutors are frequently faced with the prospect of charging a defendant with a crime based on an existing law that does not quite fit the circumstances of the defendant’s actions. Judges, cognizant of the fact that legislatures, and not the judiciary, have the primary responsibility for creating crimes, have pushed back. Judges routinely refuse to convict a defendant if the statute does not fairly criminalize the defendant’s actions. To determine if a defendant’s actions fit within a …

A Coffee Break For Bitcoin, Margaret Ryznar

Indiana Law Journal

For many, the appeal of bitcoin is in its detachment from government regulation. However, the Coffee bonding theory, which initially arose in the context of foreign stocks, suggests certain benefits of regulation for bitcoin, including increased legitimacy. By invoking the Coffee bonding theory, this Article offers another perspective on the regulation of bitcoin.

Afterlife Of The Death Tax, Samuel D. Brunson

Indiana Law Journal

More than a century ago, Congress enacted the modern estate tax to help pay for World War I. Unlike previous iterations of the estate tax, though, this one outlived the war and accumulated additional goals beyond merely raising revenue. The estate tax helped ensure the progressivity of the tax system as a whole, and it limited the hereditary ability to accumulate wealth.

This modern estate tax almost instantly met with opposition, though. The opposition has never been sufficient to entirely eliminate the estate tax, but it has severely weakened its ability to raise revenue and to prevent the accumulation of …

Is High-Finance An Extractive Sector?, Saskia Sassen

Indiana Journal of Global Legal Studies

The article examines some of the key features of high finance (henceforth, simply finance) from the angle of the mix of capabilities that constitute the sector. It has a radically different organizing logic from that of, for instance, the typical mass consumer-oriented corporation. The article posits that finance has de-bordered the narrowly defined notion of finance as simply "financial firms and markets." It emphasizes its capacity to financialize a growing range of material and non-material elements. This has also meant that the sector by now encompasses a very broad range of financial and nonfinancial institutions, different types of jurisdictions, a …

Taking Systemic Risk Seriously In Financial Regulation, Todd Henderson, James C. Spindler

Indiana Law Journal

Bank regulation failed in the run up to the financial crisis of2008, as it has numerous times in the course of U.S. history. This is despite the existence of traditional prudential regulation, such as capital adequacy mandates, reserve requirements, and bank examination, as well as more common legal remedies, such as tort and contract litigation. Unsurprisingly, in the wake of these failures, many reforms have been proposed, and some adopted, to try to reduce bank risk taking. These reforms include limiting bank size, requiring bank managers to be paid differently, restricting investment in high-risk financial products, and, of course, tightening …

Doux Commerce, Religion, And The Limits Of Antidiscrimination Law, Nathan B. Oman

Indiana Law Journal

This Article addresses the question of law, religion, and the market directly. It does so by developing three theories of how one might conceptualize the proper relationship between commerce and religion. The first two theories I offer are not meant to be summaries of any position explicitly articulated by any particular thinker. There is a paucity of explicit reflection on the question of markets and reli-gion and virtually no effort to generate broad legal theories of that relationship. Rather, these theories are an attempt to explicitly articulate clusters of intuitions that seem to travel together. My hope is to show …

Making Banks On A Global Scale: Management-Based Regulation As Agencement, Mika Viljanen

Indiana Journal of Global Legal Studies

This article seeks to provide a theoretical account of how management-based regulation (MBR), a new regulatory style used by many global regulators, affects its targets. The article centers on a case study. It introduces agencement theory as the theoretical heuristic to inform the analysis of a global, large-scale MBR scheme, the Basel Committee on Banking Supervision's Internal Capital Adequacy Assessment Program (ICAAP). In agencement theory, agency is understood in a neomaterialist frame. The core idea is that an actor's actions are determined by the material assemblage that constitutes her. The agencement heuristic allows ICAAP to be conceptualized as a regulatory …

The Esa Guidelines: Soft Law And Subjectivity In The European Financial Market-Capturing The Administrative Influence, Jakob Schemmel

Indiana Journal of Global Legal Studies

The disastrous performance of European financial-market regulation during the 2008 financial crisis convinced the European powers-that- be of the urgent need for further integration. Since then the European Union (EU) has established three European Supervisory Authorities (ESAs), which are commissioned to enhance capacity and harmonization of the European banking, insurance, and capital markets law. In carrying out this task, the ESAs employ so called ESA Guidelines, which have caught the attention of practitioners and scholars alike. As soft law, they bear a strong resemblance to instruments used on the global level to regulate the financial markets and therefore might fall …

The International Investment Regime After The Global Crisis Of Neoliberalism: Rupture Or Continuity?, Nicolas Perrone

Indiana Journal of Global Legal Studies

This article aims to show that the tools being used to recalibrate the international investment regime, in particular proportionality and corporate social responsibility, constitute continuity rather than rupture with neoliberalism and neoliberal legality. Neoliberalism has been discredited, and few actors suggest a return to self-regulation after the 2008 global economic crisis. This call for regulation, however, finds international economic law scholarship divided between those who claim that standards of review and corporate social responsibility can solve the crisis of neoliberalism, and those who believe that the problem is more profound. In the case of the international investment regime, this article …

Contesting Austerity: The Potential And Pitfalls Of Socioeconomic Rights Discourse, Joe Wills, Ben Warwick

Indiana Journal of Global Legal Studies

This article argues that, while socioeconomic rights have the potential to contribute to the contestation of austerity measures and the reimagining of a "postneoliberal" order, there are a number of features of socioeconomic rights as currently constructed under international law that limit these possibilities. We identify these limitations as falling into two categories: "contingent" and "structural". Contingent limitations are shortcomings in the current constitution of socioeconomic rights law that undermine its effectiveness for challenging austerity measures. By contrast, the structural limitations of socioeconomic rights law are those that pertain to the more basic presuppositions and axioms that provide the foundations …

Incentivizing The Protection Of Personally Identifying Consumer Data After The Home Depot Breach, Ryan F. Manion

Indiana Law Journal

The breach of payment card systems at the Home Depot in 2014 resulted in the theft of a wealth of information. This Note will examine the facts and legal consequences of the Home Depot breach under three separate frameworks. First, this Note will examine the Home Depot’s responsibilities arising under existing data breach notification statutes. Second, this Note examines the Home Depot’s potential liability if the recent bill introduced by Senator Leahy of Vermont proposing a federal data breach notification framework becomes law; ultimately, however, this Note finds that state notification statutes fail to adequately protect consumers, and Senator Leahy’s …

The Role Of Central Banks In Global Austerity, Timothy A. Canova

Indiana Journal of Global Legal Studies

The literature on austerity, by scholars and policymakers alike, has largely downplayed the important role of central banks in designing and implementing global austerity both before and since the 2008 financial crisis. This article considers how and why the world's leading central banks display an inherent bias toward austerity. As central banks have become increasingly influenced and even captured by large private banks and financial institutions, they have pursued policy agendas that favor those same private interests. The structure of the U.S. Federal Reserve suggests a central bank that has been captured by design and is rife with inherent conflicts …

Reforming The Regulation Of Community, Tanya D. Marsh

Indiana Law Journal

The regulatory framework for financial institutions in the United States imposes significant costs on community banks without providing benefits to consumers or the economy that justify those costs. The Dodd-Frank Wall Street Reform and Consumer Protection Act builds on decades of “one-size-fits-all” regulation of financial institutions, an ill-conceived regulatory strategy that puts community banks at a competitive disadvantage as compared with their larger, more complex competitors. The imposition of regulatory burdens on community banks without attendant benefits ultimately harms both consumers and the economy by (1) forcing community banks to consolidate or go out of business, furthering the concentration of …

Dollar Unilateralism: The New Frontline Of National Security, Suzanne Katzenstein

Indiana Law Journal

This Article makes three points. First, it draws attention to a profound shift toward “dollar unilateralism” by the U.S. government as it advances core national security goals. Relying on the special status of the U.S. dollar, the government has enlisted foreign banks to isolate targeted entities and track illicit financial flows. Second, drawing on examples such as Iran’s nuclear program, the Article identifies three formal and informal legal tactics the government has used to implement dollar unilateralism: financial sticks, high-profile blacklists, and direct diplomacy. Finally, the Article discusses the efficacy of dollar unilateralism and its implications for U.S. accountability. Dollar …

The Greek Debt Crisis: The Need For "Heroic" Economic Policy Reforms In The European Economic And Monetary Union, Peter Robbins

Indiana Journal of Global Legal Studies

Greece is in the midst of a devastating economic and financial crisis that the European Union has been trying ardently to resolve since the default of Lehman Brothers in 2008. A significant number of other European Union (EU) Member States are also in crisis due to various state-level economic and monetary causes. Meanwhile, the European Union has consistently used the existing treaty articles and legislation within its competence to impose traditional and homogenized austerity measures on highly indebted Member States, most notably Greece. In sum, the European Union has zealously advocated for fiscal conservatism driven by the German "diber-fear" of …

Changing Tides: Tax Haven Reform And The Changing Views Of Transnational Capital Flow Regulation And The Role Of States In A Globalized World, Jeffrey Kraft

Indiana Journal of Global Legal Studies

The transnational free flow of capital represents one of the core factors driving the globalization of the world since the beginning of the Bretton-Woods era. Under the "traditional" Neoliberal theory of globalization, this free flow of capital remains sacrosanct, an unstoppable force with which state actors cannot and should not interfere. However, the recent financial crisis has caused some to question this absolute faith in the benefits of unregulated transnational capital flows and to assert that the state still has a role to play in influencing the creation of international norms on capital. Tax haven regulation represents one area that …

Magnifying Deterrence By Prosecuting Professionals, Scott Schumacher

Indiana Law Journal

This Article examines the recent series of criminal prosecutions against tax professionals and offshore bankers. These criminal cases, brought against the largest Swiss bank (UBS), the oldest Swiss bank (Wegelin), one of the largest accounting firms in the world (KPMG), as well as numerous lawyers and accountants, represent a dramatic shift for the U.S. Department of Justice. After decades of tolerating abusive tax shelters and tax haven banks, the government changed its policy. However, rather than indicting the individuals and corporations who invested in tax shelters or hid money in offshore accounts, the Justice Department indicted the lawyers, accountants, and …

A Review Of "Values In Translation: Human Rights And The Culture Of The World Bank," By Galit A. Sarfaty, Amanda Craig

Indiana Journal of Global Legal Studies

No abstract provided.

The Political Economy Of International Financial Regulation, Pierre-Hugues Verdier

Indiana Law Journal

No abstract provided.

Social Movements As Constituent Power: The Italian Struggle For The Commons, Saki Bailey, Ugo Mattei

Indiana Journal of Global Legal Studies

The Italian commons (beni comuni) movement is a powerful example of the way in which social movements are emerging as the new pouvoir constituant serving not only to enforce the protections and guarantees of national constitutions but also, in the context of the declining power of the nation-state, as a counter hegemonic force against the neoliberal economic constitutionalism of the international economic institutions. The common goods social movement in Italy was born out of the concerted action of a number of civil society groups combatting neoliberal privatizations. This commons movement, as will be argued in this paper, is an instance …

A Diamond Scheme Is Forever Lost: The Kimberley Process's Deteriorating Tripartite Structure And Its Consequences For The Scheme's Survival, Andrew H. Winetroub

Indiana Journal of Global Legal Studies

Oversight of the multi-billion dollar global diamond trade involves state actors, multinational corporations, and sophisticated civil society groups operating under the umbrella of the Kimberley Process. This unique tripartite governance structure created an opportunity for the parties to develop a system in which conflict diamonds could not enter the stream of commerce, transparency would be institutionalized, and governments and industry participants would be held to account. Yet, the successes of the Kimberley Process are increasingly jeopardized by an overly statist approach that has led to subjugation of the participating nongovernmental organizations. This note argues that for the Kimberley Process to …

Competition And Crisis In Mortgage Securitization, Michael Simkovic

Indiana Law Journal

U.S. policy makers often treat market competition as a panacea. However, in the case of mortgage securitization, policy makers’ faith in competition is misplaced. Competitive mortgage securitization has been tried three times in U.S. history— during the 1880s, the 1920s, and the 2000s—and every time it has collapsed. Most recently, competition between mortgage securitizers led to a race to the bottom on mortgage underwriting standards that ended in the late 2000s financial crisis. This Article provides original evidence that when competition was less intense and securitizers had more buyer power, securitizers acted to monitor mortgage originators and to maintain prudent …

Bank Capital Regulation By Enforcement: An Empirical Study, Julie A. Hill

Indiana Law Journal

Improving commercial bank capital requirements has been a top priority on the regulatory agenda since the beginning of the 2008 financial crisis. Unfortunately, some of the information necessary to make informed decisions about capital regulation has been missing. Existing regulations establish numerical capital requirements. Regulators, however, have significant discretion to set higher capital requirements for individual banks. In considering necessary reforms, regulators often focus on specific numerical requirements but sometimes ignore enforcement efforts. Without clear information about capital enforcement, it is impossible to make informed judgments about the current capital regulation system.

This Article provides a more complete picture of …

Beyond Bailouts: Federal Tools For Preventing State Budget Crises, Brian D. Galle, Kirk J. Stark

Indiana Law Journal

More than two years after the official end of the Great Recession, state governments still face significant budget deficits that cannot be addressed without further drastic spending cuts or substantial revenue increases. The structural origins of the ongoing state fiscal crisis are well known. Excessively procyclical revenue structures, combined with spending obligations that increase with economic downturns, have resulted in a budget dynamic for the states that is not sustainable over the long term. The consensus solution to this problem is for states to save money during boom times (via budget stabilization or “rainy day” funds) and to draw on …

Application Of Default Rules To Address Financial Conflicts Of Interest In Academic Medical Centers, Joanna K. Sax

Indiana Law Journal

This Essay proposes that the rules governing financial conflicts of interest for scientists within the National Institutes of Health apply to scientists at Academic Medical Centers because scientists at both places receive federal funding. The rules governing financial conflicts of interest within the National Institutes of Health are stricter than the rules at Academic Medical Centers. The cornerstone of financial conflicts of interest rules at Academic Medical Centers is disclosure, which is inadequate. This Essay builds on previous work calling for significant changes to rules addressing financial conflicts of interest, and it promotes changes by calling for the application of …

Regulating On The Fringe: Reexamining The Link Between Fringe Banking And Financial Distress, Jim Hawkins

Indiana Law Journal

Critics of fringe banking—products like payday loans, pawn loans, and rent-toown leases—frequently argue that these products cause borrowers to experience financial distress. This argument has enormous intuitive appeal: Fringe credit is very costly, and usually the borrowers who use it are already in a serious financial bind. Taking on additional debt and paying high prices for it, the reasoning goes, drive them over the brink. Surprisingly, however, linking financial distress to fringe banking is extremely difficult to do. This Article represents the first attempt to uncover the relationship between fringe banking and financial distress by systematically analyzing the structure of …

Money Can't Buy You Law: The Effects Of Foreign Aid On The Rule Of Law In Developing Countries, Katherine Erbeznik

Indiana Journal of Global Legal Studies

The rule of law is often touted as a panacea for the problems faced by the developing world. As a result, billions of dollars in foreign aid have been spent trying to promote the rule of law in developing countries. However, in many cases, little observable progress has been made. This Note explores some of the reasons rule of law reform efforts have stalled. One reason is that reform has focused solely on formal rule of law institutions, rather than on the informal political or cultural norms that are needed to support such institutions. Little is known, however, about how …