Law Commons^™

Exiting The Disaster, Evading The Responsibility? Wadi Al-Qamar -- The Moon Valley, Suzan Nada

Perspectives

This essay explores a case that delivered no results for the complainants, where harm was not prevented, and where stakeholders who filed the complaint were not compensated. Investigated by the Compliance Advisor Ombudsman (CAO) of the International Finance Corporation (IFC), the Wadi al-Qamar case illustrates some of the limitations of accountability mechanisms in limiting the harms caused directly or indirectly by projects in which the International Financial Institutions (IFIs) invest.

The River Of Accountability Mechanisms: Then And Now, Suresh Nanwani

Perspectives

In 1993, the river of international accountability mechanisms (IAMs) commenced from its source – the World Bank Inspection Panel (The Panel). In its journey the river was fed by the tributaries of similar accountability mechanisms from other development institutions, including four regional development banks – the Inter-American Development Bank in 1994, the Asian Development Bank in 1995, the European Bank for Reconstruction and Development in 2003, and the African Development Bank in 2006. It also welcomed other entities – bilateral institutions like Japan Bank for International Cooperation (2003) and Proparco (2018), United Nations Development Program (2014) and other organizations like …

Legal Risk And Accountability In Development Finance: Lessons From Jam V. International Finance Corporation, Michelle Harrison, Shannon Marcoux

Perspectives

In a landmark decision in 2019, the U.S. Supreme Court ruled in Jam v. International Finance Corporation that international organizations like the International Finance Corporation (IFC), the private lending arm of the World Bank Group, can be sued in U.S. courts, ending the “absolute immunity” from suit that they had long claimed. The Jam lawsuit arose out of IFC’s gross mishandling of the Tata Mundra coal-fired power plant project in Gujarat, India, which has destroyed the livelihoods, environment, and way of life of local communities living in its shadow. The lawsuit, and especially the clash between IFC’s sweeping assertions of …

Brandeisian Banking, Kathryn Judge

Faculty Scholarship

Banking law shapes the structure of the banking system, which in turn shapes the structure of the economy. One of the most significant ways that banking law in the United States traditionally sought to promote Brandeisian values of stability and decentralization was through a combination of carrots and sticks that enabled small banks across the country to thrive. To see this requires a richer understanding of Brandeis as someone who valued not just atomistic competition but also small business and broad flourishing. It also requires a deeper understanding of the ways different parts of banking law worked together during the …

Glass Half-Full Or Glass Half-Empty? Thirty Years Of Accountability At The Inspection Panel--The Impact Of Its Work And What The Data Tells Us, Ramanie Kunanayagam, Mark Goldsmith, Ibrahim James Pam, Serge Selwan, Richard Wyness, Ayako Kubodera, Camila Jorge Do Amarel, Rupes Dalai

Perspectives

“A stroke of a genius”, “a bold experiment in transparency and accountability that has worked to the benefit of all concerned”, “a precedent under international law”, and a “citizen-based accountability mechanism” are some of the ways in which close observers have described the World Bank Inspection Panel, which celebrated its thirtieth anniversary in 2023.

Credit Supports For Italian Specialty Products: The Case Of Prosciutto And Long-Aged Cheese, Jorge L. Esquirol

FIU Law Review

No abstract provided.

In Code(Rs) We Trust: Software Developers As Fiduciaries In Public Blockchains, Angela Walch

Faculty Articles

A decade into Bitcoin's existence, governance questions around it and other public blockchains abound. Do these 'decentralized' structures even have governance? If so, what does it look like? Who has power, and how is it channeled or constrained? Are power structures implicit or explicit? How can we improve upon the ad hoc governance structures of early blockchains? ls ‘on-chain governance,’ like that proposed by Tezos and others, the path forward?

In August 2016, in the aftermath of the DAO theft and resulting Ethereum hard fork, I argued in American Banker that the core developers and significant miners of public blockchains …

The Path Of The Blockchain Lexicon (And The Law), Angela Walch

Faculty Articles

The terminology around blockchain technology is notoriously confusing, with disputes over whether a blockchain is the same as a distributed ledger or whether an appcoin is the same as a protocol token. In this article, I examine the difficulties the rapidly shifting, contested vocabulary poses for regulators seeking to understand, govern, and potentially use blockchain technology, and I offer suggestions for how to fight through the haze of unclear language.

I provide examples of the fluctuating, contested language in the blockchain technology space and describe the forces at play in shaping the language. I then lay out the problems the …

Banks: A Broken Social Contract, Mehrsa Baradaran

Scholarly Works

This article explores how how the Financial Crisis of 2008 affected the banking industry and brought three specific problems: The first was that the banks and non‐bank financial institutions created due to deregulation were huge, interconnected, and highly leveraged; Second, the panic started in the “shadow banking” sector and showed that the short‐term credit transactions and derivatives that non‐bank financial institutions traded and used for funding for years were similar to banking, and thus prone to runs; and Third, the entire premise of deregulation rested on an assumption that individual firms and market players could accurately calculate and manage risks, …

Payday Lending Isn’T Helping The Poor. Here’S What Might, Mehrsa Baradaran

Popular Media

This article appearing in the Washington Post on June 28, 2016 by Mehrsa Baradaran, J. Alton Hosch Associate Professor of Law at the University of Georgia School of Law explores how postal banking could benefit the poor and reduce their reliance on payday lending.

Credit Is A Double Edge Sword, Mehrsa Baradaran

Popular Media

This commentary, which appeared in the Atlantic on April 26, 2016 discusses the Marquette decision by the Supreme Court and how it de-stigmatized the practice of usury.

Postal Banking Worked—Let’S Bring It Back, Mehrsa Baradaran

Popular Media

This article appearing in The Nation on January 9, 2016 examines how Postal Banking could assist low-income individuals.

Why The Poor Face A Higher Cost Of Banking, Mehrsa Baradaran

Popular Media

Professor Baradaran appeared on PBS Newshour to discuss inequality in the banking system on January 6, 2016.

It's Time For A Public Option In Banking, Mehrsa Baradaran

Popular Media

Associate Professor Mehrsa Baradaran published this article in The Harvard Law Record on November 16, 2015. It discusses how post offices can provide ordinary citizens with banking services.

How The Us Post Office Can Save America—And Itself, Matt Phillips

Popular Media

Professor Mehrsa Baradaran is interviewed by Quartz on her thoughts about postal banking.

If The U.S. Government Treated Poor People As Well As It Treats Banks, Mehrsa Baradaran

Popular Media

One of the great ironies in modern America is that the less money you have, the more you pay to use it. The country’s “unbanked” must pay high fees to fringe banks to turn their paychecks into cash, pay their monthly bills, or send money to a spouse or a child. The unbanked pay much of their income—up to 10 percent—just to use their money. For these families, the total price of simple financial services each month is more than they spend on food. Indeed, it is very expensive to be poor. This article makes a proposal, transform underused post …

Postal Banking: A Lifesaver For America's Poor, Mehrsa Baradaran

Popular Media

If banks are not providing credit to the poor, the state should provide it directly.The existing post office framework represents the most promising path toward effectuating such a public option. American banks long ago deserted their most impoverished communities, but post offices, even two centuries later, have remained — still rooted in an egalitarian mission. There have never been barriers to entry at post offices, and their services have been available to all, regardless of income.

Hold The Champagne On Ge Capital's Breakup, Mehrsa Baradaran

Popular Media

General Electric announced last week plans to sell off the bulk of its financing arm, GE Capital. Some have claimed that this move is a win for regulators trying to curb "too big to fail" conglomerates and suggested it's a sign that financial reform is working. I'm not so sure. I think it just means that the conglomerates left standing are now even more homogeneous and risk-prone.

Maggie Walker's Bank, Mehrsa Baradaran

Popular Media

Maggie Walker was the first woman of any race to own a bank. What makes this achievement remarkable is that she was born in 1867 to a former slave in Richmond, Va. Her mother was widowed and left destitute when her father was murdered. She and her mother survived by doing laundry for whites families in the area, an experience that shaped her understanding of wealth and race inequality. But Maggie was a brilliant student and finished high school at 16. She became a teacher, but was forced to quit when she married as it was unlawful for married women …

Banking And Financial Regulation, Steven L. Schwarcz

Faculty Scholarship

This chapter provides a basic overview of banking and financial regulation for the forthcoming Oxford Handbook of Law and Economics (Francesco Paris, ed.). Among other things, the chapter compares traditional and shadow banking and their regulation, differentiating “micro prudential” regulation (which focuses on protecting individual components of the financial system, such as banks) and “macro prudential” regulation (which focuses on protecting against systemic risk). The chapter also examines how regulation can help to correct market failures that undermine financial efficiency. In that context, it discusses, among other things, capital requirements, ring-fencing, and stress testing. Finally, the chapter examines how regulation …

Regulation By Hypothetical, Mehrsa Baradaran

Scholarly Works

A new paradigm is afoot in banking regulation—and it involves a turn toward the more speculative. Previous regulatory instruments have included geographic restrictions, activity restrictions, disclosure mandates, capital requirements, and risk management oversight to ensure the safety of the banking system. This Article describes and contextualizes these regulatory tools and shows how and why they were formed to deal with industry change. The financial crisis of 2008 exposed the shortcomings in each of these regimes. In important ways, the Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”) departs from these past regimes and proposes something new: Call it …

The Post Office Banks On The Poor, Mehrsa Baradaran

Popular Media

Approximately 88 million people in the United States, or 28 percent of the population, have no bank account at all, or do have a bank account, but primarily rely on check-cashing storefronts, payday lenders, title lenders, or even pawnshops to meet their financial needs. And these lenders charge much more for their services than traditional banks. The average annual income for an “unbanked” family is $25,500, and about 10 percent of that income, or $2,412, goes to fees and interest for gaining access to credit or other financial services. But a possible solution has appeared, in the unlikely guise of …

Banking And The Social Contract, Mehrsa Baradaran

Scholarly Works

This article asserts that there exists today and has always existed an interdependent relationship between banks and the state. I refer to this connection and its mutual benefits and responsibilities as a social contract. When Alexander Hamilton responded to President Washington’s inquiry about the advisability of a national bank, he wrote that “such a Bank is not a mere matter of private property, but a political machine of the greatest importance to the State.” This social contract has existed since the inception of banking in the United States and has been reinforced over time, but it has recently become weakened …

It’S Time For Postal Banking, Mehrsa Baradaran

Scholarly Works

This essay makes the case that the USPS is in a unique position to provide much-needed financial services for the large population of unbanked or underbanked Americans. First, the post office can offer credit at lower rates than fringe lenders by taking advantage of economies of scale as well as their position in the federal bureaucracy. Second, they already have branches in many low-income neighborhoods that have been long deserted by commercial banks. And, third, people at every level of society, including the unbanked, have a level of familiarity and comfort with the post office that they do not have …

Götterdämmerung, Lawrence G. Baxter

Faculty Scholarship

In his panel remarks on the future direction of financial regulation after the 2012 elections, Professor Lawrence Baxter argues that the age of large banks and “too big to fail” is destined to come to an end, but not through the traditional avenue of governmental oversight. Baxter starts by detailing the warning signs that illuminate the unsustainable nature of the current financial model and moves to a discussion on the deficiencies of modern banking regulations. Some hope for an end to giant banking behemoths, Baxter finally posits, lies in stricter market discipline and a realization that smaller, less-complex banks provide …

There Goes The Neighborhood: Regulating Away The Community Bank - An Analysis Of The Costs Of Current Regulations On Community Banks, Alan J. Wilson

West Virginia Law Review

No abstract provided.

Don’T ‘Screw Joe The Plummer’: The Sausage-Making Of Financial Reform, Kimberly D. Krawiec

Faculty Scholarship

This Article examines agency-level activity during the preproposal rulemaking phase—a time period about which little is known despite its importance to policy outcomes—through an analysis of federal agency activity in connection with section 619 of the Dodd–Frank Act, popularly known as the Volcker Rule. By capitalizing on transparency efforts specific to Dodd–Frank, I am able to access information on agency contacts whose disclosure is not required by the Administrative Procedure Act and, therefore, not typically available to researchers.

I analyze the roughly 8,000 public comment letters received by the Financial Stability Oversight Council in advance of its study regarding Volcker …

Why Mortgage "Formalities" Matter, David A. Dana

Faculty Working Papers

This Article argues that adherence to mortgage formalities regarding foreclosure is valuable for expressive reasons and also as a potential deterrent to future undesirable underwriting and securitization practices. The Article reviews how some courts have in effect written procedural requirements for foreclosure out of the law, and asks why these courts have done so and whether lenders' behavior might have been improved during this housing crisis had the state courts uniformly afforded equal respect to the legal rights of homeowners and those of lenders.

A Current Assessment Of Some Extraterritorial Impacts Of The Dodd-Frank Act With Special Focus On The Volcker Rule And Derivatives Regulation, Lawrence G. Baxter

Faculty Scholarship

As the world struggles to emerge from the Global Financial Crisis the vision of a harmonious framework of global financial regulation seems as distant as ever. Important progress made by international committees such as the Basel Committee on Banking Supervision and the Financial Stability Board notwithstanding, there seem to be increasing signs of unilateral, extraterritorial action by major jurisdictions, including the United States. This paper reviews the framework created by the US financial reforms, in particular anti money laundering provisions, the Volcker Rule and the proposed OTC derivatives margin requirements, and considers some of the dilemmas presented by modern global …

Betting Big: Value, Caution And Accountability In An Era Of ­Large Banks And Complex Finance, Lawrence G. Baxter

Faculty Scholarship

Big banks are controversial. Their supporters maintain that they offer products, services and infrastructure that smaller banks simply cannot match and enjoy unprecedented economies of scale and scope. Detractors worry about the risks generated by big banks, their threats to financial stability, and the way they externalize costs of operation to the public. This article explains why there is no conclusive argument one way or the other and why simple measures for restricting the danger of big banks are neither plausible nor effective.

The complex ecology of modern finance and the management and regulatory challenges generated by ultra-large banking, however, …