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Full-Text Articles in Law
When 'Good' Corporate Governance Makes 'Bad' (Financial) Firms: The Global Crisis And The Limits Of Private Law, Nicholas Howson
When 'Good' Corporate Governance Makes 'Bad' (Financial) Firms: The Global Crisis And The Limits Of Private Law, Nicholas Howson
Nicholas Howson
In the aftermath of the global financial crisis of 2008–2009, investors, analysts, legislators, and pundits have spotlighted “good” or “improved” corporate governance as a remedy for all that presently ails us. It is one remedy in a long wish list that includes tougher requirements for risk capital, liquidity, and leverage; compensation and bonus reform; reimposition ofthe Glass-Steagall-like separation of bank “utility” and “casino” functions; the downsizing or breakup of institutions deemed “too big to fail;” enhanced consumer protection; securities law liability for secondary violators (like credit rating agencies); direct taxation of proprietary trading; “macroprudential” regulation; and new transparency requirements for …
Bankruptcy Or Bailouts?, Kenneth Ayotte, David Skeel
Bankruptcy Or Bailouts?, Kenneth Ayotte, David Skeel
Kenneth Ayotte
The usual reaction if one mentions bankruptcy as a mechanism for addressing a financial institution’s default is incredulity. Those who favor the rescue of troubled financial institutions, and even those who prefer that their assets be promptly sold to a healthier institution, treat bankruptcy as anathema. Everyone seems to agree that nothing good can come from bankruptcy. Indeed, the Chapter 11 filing by Lehman Brothers has been singled out by many the primary cause of the severe economic and financial contraction that followed, and proof that bankruptcy is disorderly and ineffective. As a result, ad-hoc rescue lending to avoid bankruptcy …
License To Deal: Mandatory Approval Of Complex Financial Products, Saule Omarova
License To Deal: Mandatory Approval Of Complex Financial Products, Saule Omarova
Saule T. Omarova
“There is definitely going to be another financial crisis around the corner because we haven’t solved any of the things that caused the previous crisis,” said hedge fund legend Mark Mobius, speaking in Tokyo nearly a full year after the United States officially embarked upon the greatest reform of financial services regulation since the New Deal. Today, the world is still reeling from the recent financial crisis, which ravaged even the strongest economies and left them battling recession, budget deficits, soaring unemployment, and political discontent. Facing another financial crisis in this situation is a frightening prospect. National governments, individually or …
The Federal Reserve's Supporting Role Behind Dodd-Frank's Clearinghouse Reforms, Colleen Baker
The Federal Reserve's Supporting Role Behind Dodd-Frank's Clearinghouse Reforms, Colleen Baker
Colleen Baker
This Article analyzes the Federal Reserve’s expanded role in payment, clearing, and settlement systems, particularly in connection with certain clearinghouses that have been designated by the newly created Financial Stability Oversight Council as “systemically significant.” The Federal Reserve’s expanded role is a little understood, but critical supporting component of domestic and international regulatory reforms to the $639 trillion over-the-counter (OTC) derivative markets. These reforms mandate the increased use of clearinghouses in OTC derivative markets. Due to critical reforms in Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the Federal Reserve is now positioned to …
Barriers To Effective Risk Management, Michelle Harner
Barriers To Effective Risk Management, Michelle Harner
Michelle M. Harner
“As long as the music is playing, you’ve got to get up and dance. We’re still dancing.”** This now infamous quote by Charles Prince, Citigroup’s former Chief Executive Officer, captures the high-risk, high-reward mentality and overconfidence that permeates much of corporate America. These attributes in turn helped to facilitate a global recession and some of the largest economic losses ever experienced in the financial sector. They also represent certain cognitive biases and cultural norms in corporate boardrooms and management suites that make implementing a meaningful risk culture and thereby mitigating the impact of future economic downturns a challenging proposition. The …
The Madoff Scandal, Market Regulatory Failure And The Business Education Of Lawyers, Robert Rhee
The Madoff Scandal, Market Regulatory Failure And The Business Education Of Lawyers, Robert Rhee
Robert Rhee
This essay suggests that a deficiency in legal education is a contributing cause of the regulatory failure. The most scandalous malfeasance of this new era, the Madoff Ponzi scheme, evinces the failure of improperly trained lawyers and regulators. It also calls into question whether the prevailing regulatory philosophy of disclosure of disclosure is sufficient in a complex market. This essay answers an important question underlying these considerations: What can legal education do to better train business lawyers and regulators for a market that is becoming more complex? One answer, it suggests, is a simple one: law schools should teach a …