Law Commons^™

Against Regulatory Displacement: An Institutional Analysis Of Financial Crises, Jonathan C. Lipson

Jonathan C. Lipson

This paper uses “institutional analysis”—the study of the relative capacities of markets, courts, and regulators—to make three claims about financial crises.

First, financial crises are increasingly a problem of “regulatory displacement.” Through the ad hoc rescues of 2008 and the Dodd-Frank reforms of 2010, regulators displace market and judicial processes that ordinarily prevent financial distress from becoming financial crises. Because regulators are vulnerable to capture by large financial services firms, however, they cannot address the pathologies that create crises: market concentration and complexity. Indeed, regulators may inadvertently aggravate these conditions through resolution tactics that consolidate firms, and the volume and …

Financial Institution Executive Compensation: The Problem Of Financially Motivated Excessive Risk-Taking, The Regulatory Response, And Common Sense Solutions, Jesse D. Gossett

Jesse D Gossett

This article addresses the issue of executive compensation at financial institutions as it relates to encouraging excessive risk-taking at these firms. First, I examine the economics of compensation and its relationship to risk-taking at financial firms. Next, I take a critical look at compensation provisions of Dodd-Frank (and to a lesser extent, Sarbanes-Oxley) and describe not only what Dodd-Frank does, but more importantly what it does not do. I then make specific recommendations for rules regulators should adopt under Dodd-Frank for the purpose of using compensation plans as a way of reducing excessive risk at financial institutions. I make these …

The Underutilized Foreign Investor, Griffin Weaver

Griffin Weaver

For most states, if not all, the push for economic advancement is at the front of every administration’s agenda. This is especially true for developing countries in the Middle East whose standard of living and international power is largely tied to its economic condition. An important indicator, if not condition, of a state’s economic health is the level of foreign direct investment (FDI) received by the state. This inflow of money is essential for the growth and stability of a state’s economy. As one U.S. official once noted, the United States “need[s] a net inflow of capital of $3 billion …

Dodd-Frank Regulators, Cost-Benefit Analysis, And Agency Capture, Paul Rose, Christopher J. Walker

Christopher J. Walker

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) has raised the stakes for financial regulation by requiring more than twenty federal agencies to promulgate nearly 400 new rules. Scholars, regulated entities, Congress, courts, and the agencies themselves have all recognized — even before Dodd-Frank — the lack of rigorous cost-benefit analysis in the context of financial rulemaking. The D.C. Circuit has struck down several financial regulations because of inadequate cost-benefit analysis, with three more challenges to be decided this summer. Members of Congress have introduced legislation to address this problem, including a call for the President to intervene …

Will Law Firms Go Public?, Roberta S. Karmel

Roberta S. Karmel

Law in the United States is a big business and big law firms are a global business. Currently, under rules of the American Bar Association (ABA) and most states law, firms are not allowed either to include non-lawyers as partners or accept equity investments from non-lawyers. This Article will argue that (even if law firms retain the form of partnerships) they eventually will accept investments from third parties, and possibly even go public, but this development could lead to a loss of professionalism, as it has with other industries, and could also lead to the end of self-regulation. Among the …

The Importance Of Cost-Benefit Analysis In Financial Regulation, Paul Rose, Christopher J. Walker

Christopher J. Walker

This report reviews the role, history, and application of cost-benefit analysis in rulemaking by financial services regulators.

For more than three decades — under both Democratic and Republican administrations — cost-benefit analysis has been a fundamental tool of effective regulation. There has been strong bipartisan support for ensuring regulators maximize the benefits of proposed regulations while implementing them in the most cost-effective manner possible. In short, it is both the right thing to do and the required thing to do.

Through the use of cost-benefit analysis in financial services regulation, regulators can determine if their proposals will actually work to …

Rise Of The Intercontinentalexchange And Implications Of Its Merger With Nyse Euronext, Latoya C. Brown

Latoya C. Brown, Esq.

This paper examines the impending merger between the IntercontinentalExchange (ICE) and NYSE Euronext against the backdrop of the current structure of the global financial services industry. The paper concludes that the merger embodies what the financial services industry is becoming and captures the model that will allow exchanges to remain competitive in today’s marketplace: mega-exchanges with broader asset classes and electronic platforms. As technology and globalization threaten their vitality, exchanges will need to continue reinventing and adapting. Increasingly over the last decade they have done so by merging and by moving, at least a part of, their operations on screen. …

Caremark's Irrelevance, Mercer E. Bullard

Mercer E Bullard

In re Caremark Int’l Inc. Derivative Litig. is commonly held out as the iconic corporate law case on liability for a failure of legal compliance, but the true source of corporate law as to legal compliance is the higher standard established by other sources of law. The expected cost of liability, both criminal and civil, for violations of federal healthcare regulations, for example, is a far stronger determinant of corporate compliance systems than potential liability under Caremark. Other areas of industry-specific regulation, such as for financial services, telecommunications and energy, similarly play a greater role than state corporate law in …

Natural Justice And Its Applications In Administrative Law, Mubashshir Sarshar

Mubashshir Sarshar

No abstract provided.