Law Commons^™

“Private” Means To “Public” Ends: Governments As Market Actors, Robert C. Hockett, Saule T. Omarova

Saule T. Omarova

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 …

“Private” Means To “Public” Ends: Governments As Market Actors, Robert C. Hockett, Saule T. Omarova

Robert C. Hockett

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 …

The Orderly Liquidation Authority: Fanatical Or Familiar? Idealistic Or Unrealistic?, Stephanie P. Massman

Stephanie P Massman

The systemic financial crisis of 2008 spurred the failure of numerous financial and non-financial entities. Regulators addressed each of these failures on an ad hoc ex-post basis, granting multiple bailouts in various forms. The refusal to extend these bailouts to one firm, Lehman Brothers, however, caused further panic and contagion throughout the already unstable market as one of the largest financial institutions of the U.S. underwent an extremely lengthy and value-destructive Chapter 11 bankruptcy. Criticism surrounding not only the bailouts, but also the decision to allow Lehman to fail under the Bankruptcy Code, led to the inclusion of the Orderly …

Unfit For Duty: The Officer And Director Bar As A Remedy For Fraud, Renee Jones

Renee Jones

Many commentators have questioned the efficacy of the SEC’s enforcement program in the aftermath of the 2008 financial crisis. Some criticize the agency for allowing corporate defendants to settle charges without admitting or denying liability. Others dispute the impact of astronomical fines levied against too-big-to-fail financial institutions. Still others urge prosecutors to bring criminal charges against those who led the failed financial firms to ruin. This Article, written for a symposium on SEC enforcement, focuses attention on an underutilized weapon in the SEC’s arsenal: the power to bar officers and directors of public companies from future service in such roles. …

Enhancing The Transparency Dialogue In The “Santiago Principles” For Sovereign Wealth Funds, Adam D. Dixon

Seattle University Law Review

The financial crisis ultimately caused Western governments to welcome sovereign wealth fund (SWF) investment as a way to put a floor under collapsing markets and to provide a set of voluntary principles that would underwrite SWFs’ claim to legitimacy in the international community. In the autumn of 2007, then U.S. Treasury Secretary Henry Paulson, in conjunction with the International Monetary Fund, convened the International Working Group of SWFs (IWG) to draft a set of generally accepted principles and practices. These principles are referred to as the “Santiago Principles.” The implicit objective of these twenty-four voluntary principles is to promote greater …

“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 …

A Preliminary Look At State Structures For Regulating Financial Services, Elizabeth F. Brown

Elizabeth F Brown

Within the past thirty-five years approximately fifty nations have consolidated their financial regulatory agencies into either a single integrated agency or into two semi-integrated agencies. The United States has resisted this trend, due in part to a concern that the costs of such significant consolidation would exceed its benefits. The existing studies that compare the costs of the consolidated regulators around the world with the United States regime have often been discounted because they have been unable to control for differences in culture and regulatory intensity between those other countries and the United States. This article attempts to address this …

Hazardous Hedging: The (Unacknowledged) Risks Of Hedging With Credit Derivatives, Gina-Gail S. Fletcher

Articles by Maurer Faculty

Is hedging with credit derivatives always beneficial? The benefit of hedging with credit derivatives, such as credit default swaps, is presumed by the Dodd-Frank Act, which excludes hedge transactions from much of the new financial regulation. Yet, new, significant risks can arise when credit derivatives are used to manage risks. Hedging, therefore, should be defined not only in relation to whether a transaction offsets risks, but also whether, on balance, the risks that are mitigated, as well as any new risks that arise, are outweighed by the potential benefits.

Firms using credit derivatives to hedge often fail to account for …