Law Commons^™

In The Midst Of Bankruptcy: How Cryptocurrency's Classification Affects Creditors Who Were Once Customers, Mia Qu

Washington Law Review

In 2022, Congress proposed the Digital Commodities Consumer Protection Act to amend the Commodity Exchange Act and define a new type of commodity: digital commodity. The definition of digital commodity encompasses cryptocurrency and provides the Commodity Futures Trading Commission with jurisdiction over digital asset transactions. This definition of digital commodity has two important implications. First, it signals the lawmakers’ tendency to generalize cryptocurrency as a commodity. Second, it brings complications into how creditors—especially individual crypto account holders—can recover in the recent bankruptcy cases involving prominent crypto companies. This Comment contains four components. First, it provides a brief explanation of cryptocurrency …

Structural Barriers To Inclusion In Arbitrator Pools, Nicole G. Iannarone

Washington Law Review

Critics increasingly challenge mandatory arbitration because the pools from which decisionmakers are selected are neither diverse nor inclusive. Evaluating diversity and inclusion in arbitrator pools is difficult due to the black box nature of mandatory arbitration. This Article evaluates inclusion in arbitrator pools through a case study on securities arbitration. The Article relies upon the relatively greater transparency of the Financial Industry Regulatory Authority (FINRA) forum. It begins by describing the unique role that small claims securities arbitration plays in maintaining investor trust and confidence in the securities markets before describing why ensuring that the FINRA arbitrator pool is both …

Hostile Restructurings, Diane L. Dick

Washington Law Review

The conventional wisdom holds that out-of-court loan restructurings are mostly consensual and collaborative. But this is no longer accurate. Highly aggressive, nonconsensual restructuring transactions—what I call “hostile restructurings”—are becoming a common feature of the capital markets. Relying on hypertechnical interpretations of loan agreements, one increasingly popular hostile restructuring method involves issuing new debt that enjoys higher priority than the existing debt; another involves transferring the most valuable collateral away from existing lenders to secure new borrowing.

These transactions are distinguishable from normal out-of-court restructurings by their use of coercive tactics to overcome not only the traditional minority lender holdout problem, …

Contracting In The Age Of Smart Contracts, Farshad Ghodoosi

Washington Law Review

Smart contracts lie at the heart of blockchain technology. There are two principal problems, however, with existing smart contracts: first, the enforceability of smart contracts remains ambiguous. Second, smart contracts are limited in scope and capability barring more complex contracts from being executed via blockchain technology. Drawing from the existing literature on contracts and smart contracting, this Article suggests new approaches to address these two problems. First, it proposes a framework based on reliance-based contracting to analyze smart contracts. Second, the Article analyzes the seismic shifts in contractual disputes, and offers new insights into its features including decentralized decision-making, network-based …

Public Or Private Venture Capital?, Darian M. Ibrahim

Washington Law Review

The United States has an unparalled entrepreneurial ecosystem. Silicon Valley startups commercialize cutting-edge science, create plentiful jobs, and spur economic growth. Without angel investors and venture capital funds (VCs) willing to gamble on these high-risk, high-tech companies, none of this would be possible. From a law-and-economics perspective, startup investing is incredibly risky. Information asymmetry and agency costs abound. In the United States, angels and VCs successfully mitigate these problems through private ordering and informal means. Countries without the robust private venture capital system that exists in the United States have attempted to fund startups publicly by creating junior stock exchanges …

Rethinking Virtual Currency Regulation In The Bitcoin Age, Kevin V. Tu, Michael W. Meredith

Washington Law Review

This Article investigates an increasingly important yet under-developed body of law: regulation of virtual currency. At its peak in March of 2014, the daily volume of Bitcoin transactions in United States dollars exceeded $575,000,000. The growing mainstream acceptance of Bitcoin, however, is best illustrated by the growing number of leading merchants that have decided to accept Bitcoin payments. While Bitcoin’s rise as an alternative payment method is well-chronicled, Bitcoin’s impact extends further due to its use as an investment vehicle and its ability to spur the growth of an industry of Bitcoin-based businesses. Despite increasingly widespread use, Bitcoin (and other …

The Scored Society: Due Process For Automated Predictions, Danielle Keats Citron, Frank Pasquale

Washington Law Review

Big Data is increasingly mined to rank and rate individuals. Predictive algorithms assess whether we are good credit risks, desirable employees, reliable tenants, valuable customers—or deadbeats, shirkers, menaces, and “wastes of time.” Crucial opportunities are on the line, including the ability to obtain loans, work, housing, and insurance. Though automated scoring is pervasive and consequential, it is also opaque and lacking oversight. In one area where regulation does prevail—credit—the law focuses on credit history, not the derivation of scores from data. Procedural regularity is essential for those stigmatized by “artificially intelligent” scoring systems. The American due process tradition should inform …

Governing Financial Markets: Regulating Conflicts, Kristin N. Johnson

Washington Law Review

Payment, clearing, and settlement systems constitute a central component in the infrastructure of financial markets. These businesses provide channels for executing the largest and smallest commercial transactions in local, national, and international financial markets. Notwithstanding this significant role, there is a dearth of legal scholarship exploring central clearing counterparties (CCPs) and their contributions to the regulation of financial markets. To address this gap in the literature, this Article sketches the contours of the theory that frames regulation within financial institutions and across financial markets, examines the merits of implementing CCPs, and explores the role of CCPs as primary regulators within …

Code, Crash, And Open Source: The Outsourcing Of Financial Regulation To Risk Models And The Global Financial Crisis, Erik F. Gerding

Washington Law Review

The widespread use of computer-based risk models in the financial industry during the last two decades enabled the marketing of more complex financial products to consumers, the growth of securitization and derivatives, and the development of sophisticated risk-management strategies by financial institutions. Over this same period, regulators increasingly delegated or outsourced vast responsibility for regulating risk in both consumer finance and financial markets to these privately owned industry models. Proprietary risk models of financial institutions thus came to serve as a “new financial code” that regulated transfers of risk among consumers, financial institutions, and investors. The spectacular failure of financial-industry …

The Functions Of Consumer Reporting Agencies Under The Fair Credit Reporting Act—Bryant V. Trw, Inc., 689 F.2d 72 (6th Cir. 1982), Barbara C. Sherland

Washington Law Review

This Note first reviews the purpose and function of a consumer reporting agency and discusses the provisions of the FCRA that pertain to consumer reporting agencies and judicial interpretations of those provisions. It then analyzes the Bryant decision in light of the policies behind the FCRA and criticizes the effect of the FCRA in sheltering reporting creditors. This Note concludes that the Bryant decision should be read narrowly to reflect the true spirit of the FCRA. Consumer reporting agencies must be permitted to function as mere conduits of information without incurring liability for inaccuracies over which they have no control. …

State Regulation Of Federally Chartered Financial Institutions: Washington's Anti-Redlining Act, Richard H. Cleva

Washington Law Review

The purpose of this comment is to analyze the law on state regulation of federal financial institutions and then to apply that analysis to the Washington act in order to determine whether the act can validly be applied to national banks and federal savings and loan associations. Part II critically describes the Washington act and compares it with federal law on the same subject. Part III surveys the judicially developed limits on state regulation of federal financial institutions. Part IV then considers the validity of the Washington act as applied to federal financial institutions in light of the judicial limits …

A Suggested Analysis For Regulation Of Equal Credit Opportunity, Linda S. Hume

Washington Law Review

In its 1972 report to the President and Congress, the National Commission on Consumer Finance called for legislation to insure that every consumer would have equal access to the credit market and "that credit should never be denied solely because of characteristics such as race, creed, color, occupation or sex." This call reflected both a recognition of the growing economic importance of the ability to make credit purchases and a concern that many consumers were denied credit because of their membership in a class, rather than because of any individual lack of credit worthiness. As part of this broader investigation …

Bank Branching In Washington: A Need For Reappraisal, Richard B. Cohen

Washington Law Review

Washington bank branching policy, which essentially limits geographic bank expansion to mergers with existing banks, is being frustrated by aggressive enforcement of federal antitrust statutes. Given the federal restrictions on bank concentration and the need for a responsive and competitive commercial banking structure at the local level, the author concludes that Washington should revamp current statutory policy and allow limited de novo bank branching.

Usury—Installment Sales Contracts: Limitation Of The Scope Of The Time Price Doctrine—National Bank Of Commerce Of Seattle V. Thomsen, 80 Wn.2d 406, 495 P.2d 332 (1972), P. A. H.

Washington Law Review

In 1965 Greg Thomsen entered into an agreement with Carter Motors for the purchase of an automobile. In addition to signing a purchase order, Thomsen executed a conditional sales contract which provided that payments were to be made to the National Bank of Commerce (NBC) and showed a time price differential of $242.15, the equivalent of a 14.61 percent annual finance charge. A Carter Motors salesman had requested that Thomsen finance the purchase through NBC, which had supplied the contract form and other documents used in the transaction. Carter Motors immediately assigned the contract to NBC pursuant to a financing …

Purchase Of Note Constitutes Usurious Loan, Anon

Washington Law Review

Defendant applied for a loan to an investment broker to whom he gave a mortgage and a promissory note payable to, and subsequently endorsed in blank by, a third party. The broker, whose name appeared on neither instrument, then sold the 6,000 dollar note at a six per cent discount to plaintiff after deducting a commission of 890 dollars. Defendant received only 4,750 dollars for his note. Plaintiff did not know that his money constituted the original consideration for the note, which bore ten per cent annual interest. After defendant's default, plaintiff brought this action to foreclose the mortgage. The …

Effect Of Joint Accounts With Right Of Survivorship In Washington, Virginia B. Lyness

Washington Law Review

The recent passage in Washington of Initiative No. 208 providing for creation of joint tenancies in real and personal property provides the occasion for a reconsideration of the current status of the statutory and case law in Washington relating to the effect given to "joint tenancy" accounts with right of survivorship. Such an account typically takes the form of a deposit opened in the name of the depositor and another, payable to either or to the survivor. Does such an account, by virtue of present statutes, in fact create a joint tenancy with all its incidents as known to the …

Community Property, Lawrence M. Ross

Washington Law Review

Covers cases on the right of survivorship in joint tenancy bank accounts.

Negotiable Instruments, Rex M. Walker

Washington Law Review

Covers cases on bills and notes—corporate endorsement.

Creditor's Rights, Myron J. Carlson, Ivor Lusty

Washington Law Review

Covers cases on the declaration of homestead—effect on existing judgment liens (Carlson) and on the mortgage acceleration clause (Lusty).

Houseshold Finance Case: Statutory Review Of Discretionary Power To License, Roger I. Lewis

Washington Law Review

The recent case of Household Finance Co. v. State involves judicial review of a discretionary power to issue small loan licenses; but the language used by the court is of such breadth that the entire field of judicial review of administrative licensing must be re-examined. The plaintiff (Household Finance Co.) desired to open small loan agencies in Seattle and Vancouver. In compliance with statute, it made application to the Supervisor of Banks for the necessary licenses, but the application was denied. In accordance with statutory procedure, the superior court of Thurston County held a trial de novo. At the conclusion …

Statutory Redemption: The Enemy Of Home Financing, Ernest M. Murray

Washington Law Review

Although much has been written criticizing the statutory right of redemption from real estate foreclosures, it still exists in Washington and a majority of the United States. The basic reason for its continued existence is the strong trend throughout modern timnes to give greater protection to the "oppressed debtor." The history of the moratoria legislation of the last depression is the strongest evidence of the sympathy for the debtor class, and the statutory right of redemption comprises not only a large part of the trend, but it is the place where the policy of favoring the mortgage debtor has reached …

Worthless Check Transactions: Rem. Rev. Stat. 2129, Sections 23 And 24 Of The Uniform Sales Act, The Motor Vehicle Registration Act, James M. Dolliver

Washington Law Review

Recently the Washington Supreme Court considered two cases involving the exchange of goods for a worthless check with a subsequent sale to a bona fide purchaser. In the first case the Court found for the bona fide purchaser while in the later case the original owner prevailed. Fairness to the Court compels the statement that the reason for this surprising reversal was not mere caprice but seemed rather to stem from a little used statute passed in 1854, the construction of which was controlling in each opinion.

Joint Tenancy In Washington Bank Accounts, Ivan C. Rutledge

Washington Law Review

What is this statutory creature, the deposit owned in joint tenancy with right of survivorship?

Mortgages Of Personal Property To Be Subsequently Acquired, Frank C. Latcham

Washington Law Review

Since a man cannot transfer what is not his, a sale of property to be subsequently acquired by the vendor is ordinarily given effect only as a contract to sell such goods after they have been acquired. Such a bargain, under the law of sales, is not self-operating to pass the property in future goods to the purchaser on their mere acquisition by the seller, but requires a subsequent act of performance by the seller assented to by the buyer to carry out the obligation, usually termed a subsequent act of appropriation. The most important exception to this rule is …

Rights Of Beneficiaries Of Government Savings Bonds, Frank Latcham

Washington Law Review

In 1939 the Washington Court in Decker v. Fowler virtually eliminated the effect of the beneficiary provision in government savings bonds by holding that beneficiaries named in the bonds have no right to the proceeds on the death of the purchaser unless there has been a valid inter vivos gift of the bond between the purchaser and the beneficiary. The majority of the court apparently failed to recognize that there was a donee beneficiary contract entered into between the purchaser and the government. In two subsequent Washington cases, where the court has found a contract relation in somewhat analogous situations, …

Future Advances On Mortgages In Washington, John B. Krilich

Washington Law Review

When Elnmendorf-Anthony Co. v. Dunn was decided in August, 1941, it completed the law of future advances on mortgages in this jurisdiction. The case dealt with the problem of optional advances by the mortgagee, and the effect of intervening encumbrances upon such advances. Perhaps it will be well to show the fact situation in order to see the problem more clearly.

Regulation Of Small Loans In Washington, Warren L. Shattuck

Washington Law Review

During the past 40 years legislative attempts to solve the small loan problem have taken various forms. Fairly typical are the Washington statutes which are the main subject matter of this paper.

Survivorship In Joint Bank Accouns, And Wilson V. Ivers, M. Bayard Crutcher

Washington Law Review

Joint bank accounts have given rise to considerable litigation, concerning a number of questions. A deposits money in a bank, payable in any part to himself or to B, or to the survivor. If A draws upon the account, may B assert an interest in the money taken, or in property purchased with it? If B withdraws money, can A reclaim it? If A dies must the bank pay B because the account is "payable to the survivor," though B has no claim of ownership? If B is permitted to keep what remains at A's death, is the account subject …

Preference In Bank Deposits, Frank T. Rosenquist

Washington Law Review

While it is possible to expressly create a general, a special, or a specific bank deposit, the determination of the type established usually is a matter of construing the intention of the parties from the facts and circumstances surrounding the transaction. No set form is necessary for their validity Like any other contract, the relationship established arises out of the mutual understanding of those creating it. The Restatement of the Law of Trusts has taken the view that the relationship depends upon the manifest intention of the parties, and that if the money is to be kept or used for …

Liability Of Banks Issuing Letter Of Credit When Good Fail To Comply With Documentary Description, Muriel A. Mawer

Washington Law Review

The decision of the United States Circuit Court of Appeals (Ninth Circuit) in the case of Contmnental Natwnal Bank v. National City Bank has reopened the question which received much attention in the legal and commercial periodicals following the writing of the opinions in O'Meara v. National Park Bank and Laudisi v. American Exchange Bank as to the liability of the issuing bank when the goods do not measure up to the description contained in the documents accompanying the draft drawn under the letter of credit. It seems that the problem can be best understood by examining the various situations …