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Private And Public Ordering In Safe Asset Markets, Anna Gelpern, Erik F. Gerding
Private And Public Ordering In Safe Asset Markets, Anna Gelpern, Erik F. Gerding
Publications
An influential literature in economics explores the phenomenon of “safe assets” – when participants across financial markets act “as if” certain debt is risk free – as well as its role in the global financial crisis and its implications for post-crisis reform.
We highlight the role of private ordering in constructing safe assets. Private ordering, including contractual devices and transaction structures, contributes to the creation of these debt contracts, to their collective treatment in financial markets as low risk investments, and to the making of deep and liquid markets in them. These contracts and transaction structures also provide a template …
The Next Epidemic: Bubbles And The Growth And Decay Of Securities Regulation, Erik F. Gerding
The Next Epidemic: Bubbles And The Growth And Decay Of Securities Regulation, Erik F. Gerding
Publications
This article explores how speculative bubbles undermine the effectiveness of securities regulations and spawn epidemics of securities fraud. A brief historical survey demonstrates that stock market bubbles almost invariably coincide with epidemics of securities fraud, and provides a compelling argument that the outbreak of fraud in the Enron era did not stem merely from factors unique to the 1990s, but from the dynamics of an asset price bubble as well.
Drawing on perspectives from securities law practice and economic theory, the article argues that bubbles dilute the deterrent effect of antifraud rules and promote deregulation. Both effects alter the calculus …