Law Commons^™

Sustainable Finance & China’S Green Credit Reforms: A Test Case For Bank Monitoring Of Environmental Risk, Virginia Harper Ho

Cornell International Law Journal

In the past few years, the focus of international organizations on sustainable finance— the integration of environmental, social, and governance (“ESG”) considerations into global financial systems— has intensified because of its potential to promote financial stability, better risk assessment, and more efficient allocation of capital. The success of these efforts depends in part on whether banks and other financial institutions can manage, price, and monitor environmental risk.

This Article offers new answers to this question from China— one of the most important global test sites for sustainable finance. Corporate governance theory suggests that creditor monitoring can promote managerial accountability and …

Too Big To Supervise: The Rise Of Financial Conglomerates And The Decline Of Discretionary Oversight In Banking, Lev Menand

Cornell Law Review

The authority of government officials to define and eliminate “unsafe and unsound” banking practices is one of the oldest and broadest powers in U.S. banking law. But this authority has been neglected in the recent literature, in part because of a movement in the 1990s to convert many supervisory judgments about “safety and soundness” into bright-line rules. This movement did not entirely do away with discretionary oversight, but it refocused supervisors on compliance, risk management, and governance—in other words, on internal bank processes.

Drawing on the rules versus standards debate, this Article develops a taxonomy for parsing the various approaches …

The Shadow Payment System, Dan Awrey, Kristin Van Zwieten

Cornell Law Faculty Publications

Banking, derivatives, and structured finance may attract the lion's share of accolades and approbation in global finance-but payment systems are where the money is. Historically, payment systems in most jurisdictions have been legally and operationally intertwined with the conventional banking system. The stability of these payment systems has thus parasitically benefited from the unique prudential regulatory strategies imposed on deposit-taking banks. These strategies include emergency liquidity assistance or "lender of last resort" facilities, deposit guarantee schemes, and special bankruptcy or "resolution" regimes for failing banks. Importantly, these strategies have the practical effect of relaxing the strict application of corporate bankruptcy …

The Capital Commons: Digital Money And Citizens' Finance In A Productive Commercial Republic, Robert C. Hockett

Cornell Law Faculty Working Papers

All societies must address two questions where the organization of productive activity is concerned. The first is whether production will be mainly publicly managed, privately managed, or 'mixed.' The second is whether the financing of production will be mainly publicly managed, privately managed, or mixed.

In the American commercial republic, we seem more or less to have answered the 'who does production' question to our own satisfaction. From the founding era to the present, we have elected to leave production primarily, though not of course solely, 'in private hands.' Where the financing of production is concerned, on the other hand, …

Central Bank Independence In The Southern African Development Community: Legal Reform Progress And Prospects, Mzwanele Mfunwa, Henry Lubinda

Southern African Journal of Policy and Development

Public commitments by political leaders to fast-track economic integration in the Southern African Development Community (SADC) have been at variance with the extremely slow pace of domesticating the 2009 SADC Central Bank Model Law. This paper identifies specific legislative gaps in the national central bank laws that member states need to address in order to enhance institutional uniformity and promote central bank independence in the SADC region. Countries with recent amendments have made adjustments for more compliance, while others have not done so. The paper recommends that member states should speedily effect the needed legislative alignments if the frequently delayed …

Private Wealth And Public Goods: A Case For A National Investment Authority, Robert C. Hockett, Saule T. Omarova

Cornell Law Faculty Publications

Much American electoral and policy debate now centers on how best to reignite the nation’s economic dynamism and rebuild its competitive strength. Any such undertaking presents an extraordinary challenge, demanding a correspondingly extraordinary institutional response. This Article proposes precisely such a response. It designs and advocates a new public instrumentality--a National Investment Authority (“NIA”)--charged with the critical task of devising and implementing a comprehensive long-term development strategy for the United States.

Patterned in part after the New Deal-era Reconstruction Finance Corporation, in part after modern sovereign wealth funds, and in part after private equity and venture capital firms, the NIA …

Ethical Finance As A Systemic Challenge: Risk, Culture, And Structure, Saule T. Omarova

Cornell Journal of Law and Public Policy

This Article analyzes the principal themes in the newly reinvigorated public debate on the role of ethical norms and cultural factors in financial markets and identifies its key conceptual and normative limitations. It argues that the principal flaw in that debate is that it tends to ignore the critical role of systemic, structural factors in shaping individual firms' internal cultural norms and attitudes toward legitimate business conduct. Reversing the causality assumption underlying the current academic and policy discourse on institutional culture, the Article discusses how broader reform measures seeking to alter the fundamental structure and dynamics of the financial market-on …