A Practical Guide To Repo Agreements, Christian Johnson, Paul Harding
Sep 2004
A Practical Guide To Repo Agreements, Christian Johnson, Paul Harding
Christian A. Johnson
Your complete, line-by-line guide to the TBMA/ISMA Global Master Repo Agreement, the US Master Repo Agreement and the European Master Agreements.
This book also provides you with a detailed examination of
- the rapid expansion of the repo market,
- triparty repos and other products a review of legal issues.
The Failure Of Superior Bank Fsb: Regulatory Lessons Learned, Christian Johnson
Dec 2003
The Failure Of Superior Bank Fsb: Regulatory Lessons Learned, Christian Johnson
Christian A. Johnson
Superior Bank, FSB became insolvent when it was required to write off $450 million of assets related to its securitization of subprime mortgage loans. This article explores the securitization process that Superior Bank used and discusses the effect that this process had on the income and capital of Superior Bank.
Teaching Research Assistants, Christian Johnson
Dec 2003
Teaching Research Assistants, Christian Johnson
Christian A. Johnson
Research assistants, are, to borrow from Winston Churchill, "a riddle wrapped in a mystery inside an enigma."
U.S. Perspective, Christian Johnson
Nov 2003
U.S. Perspective, Christian Johnson
Christian A. Johnson
Mastering the ISDA Master Agreement 1992 and 2002, will provide a practical, clear and useful foundation for the fledgling negotiator as well as supporting them with a good overview of the legal, credit and operational issues inherent in the ISDA Master Agreement. Mastering the ISDA Master Agreement 1992 and 2002 is designed to build on the success of the first edition by extending coverage of to the new 2002 ISDA Master Agreement, and extends the coverage of the first edition. Once again this book will provide the many new entrants globally to derivatives documentation with a practical negotiation guide to …
Demystifying Fas 133 - Part 2, Christian Johnson, Mary Grossman
Nov 2003
Demystifying Fas 133 - Part 2, Christian Johnson, Mary Grossman
Christian A. Johnson
This is the second in a two-part series examining the U.S. accounting change. Last week's article gave a general overview, this week the authors focus on hedge accounting.
Demystifying Fas 133--Part 1, Christian Johnson, Mary Grossman
Nov 2003
Demystifying Fas 133--Part 1, Christian Johnson, Mary Grossman
Christian A. Johnson
FAS 133 has generated substantial confusion and expense, especially for end-users acquiring derivatives as hedges. This article will give a general overview, whilst next week's will focus on hedge accounting.
Close-Out Netting & Set-Off Under U.S. Banking Insolvency Law, Christian Johnson
Aug 2003
Close-Out Netting & Set-Off Under U.S. Banking Insolvency Law, Christian Johnson
Christian A. Johnson
The huge role of U.S. banks in the derivatives industry means counterparties must understand the treatment of close-out netting and set-off for an insolvent bank by the Federal Deposit Insurance Corporation (FDIC). Close-out netting and set-off, both of which are typically provided under the ISDA Master Agreement, provide the most effective and efficient way to minimize credit risk with respect to the insolvency of a counterparty.
The 2002 Isda Master Agreement Made Simple, Christian Johnson
Jan 2003
The 2002 Isda Master Agreement Made Simple, Christian Johnson
Christian A. Johnson
The International Swaps and Derivatives Association published a new Master Agreement in December to replace the 1992 agreement. The new agreement represents the work of ISDA's Documentation Committee, with over 100 different members reviewing earlier drafts and providing comments. The trade association has already arranged for netting opinions on the new agreement in 36 different jurisdictions.
Netting, Financial Contracts, And Banks: The Economic Implications, William Bergman, Christian Johnson, Robert Bliss, George Kaufman
Dec 2002
Netting, Financial Contracts, And Banks: The Economic Implications, William Bergman, Christian Johnson, Robert Bliss, George Kaufman
Christian A. Johnson
Derivatives and certain other off-balance sheet contracts enjoy special legal protection on insolvent counterparties through a process referred to as close-out netting. This paper explores the legal status and economic implications of this protection. While this protection benefits major derivatives dealers and derivatives markets, it is less clear that other market participants or markets in general are better or worse off. While we are not able to conclude whether or not these protections are socially optimal, we outline the wide range of issues that a general consideration of the pros and cons of netting protection should take into cognizance, and …
Random Walks Down The Aisle And Class Participation, Christian Johnson, Linnie Wheeless
Dec 2002
Random Walks Down The Aisle And Class Participation, Christian Johnson, Linnie Wheeless
Christian A. Johnson
After attending a mock class discussion at the AALS Workshop for New Teachers, I developed a strong dislike for randomly calling on students.
"Hidden" Costs: A Case Study Of Bank And Borrowing And Interest Rate Swaps, Christian Johnson
Oct 2002
"Hidden" Costs: A Case Study Of Bank And Borrowing And Interest Rate Swaps, Christian Johnson
Christian A. Johnson
Large money center and regional banks actively target and market interest rate swaps to middle market borrowers. Because these customers borrow at a variable rate, their bankers encourage them to hedge interest rate risk by concurrently entering into interest rate swaps.
The Otc Derivative Lawyer's Bookshelf: A Selected Biography, Christian Johnson
Aug 2002
The Otc Derivative Lawyer's Bookshelf: A Selected Biography, Christian Johnson
Christian A. Johnson
The first popular publications about over-the-counter derivatives appear to have been written about the currency rate swap between the World Bank and IBM in 1981.
Preview Of The 2002 Isda Master Agreement, Christian Johnson
Aug 2002
Preview Of The 2002 Isda Master Agreement, Christian Johnson
Christian A. Johnson
The International Swaps and Derivatives Association is working on a revised version of the 1992 Master Agreement. Parties should carefully consider the proposed changes because these agreements have become the market standard for documenting over-the-counter derivatives. The 2002 ISDA Master Agreement is the result of several years of work by various ISDA documentation committees and reflects some of the best thinking in the area. The following column is based upon the July 2002 draft circulated by ISDA. There will only be one or two more drafts to be circulated prior to its anticipated publication in December. Although there will probably …
Seven Deadly Sins Of Isda Negotiations, Christian Johnson
Mar 2002
Seven Deadly Sins Of Isda Negotiations, Christian Johnson
Christian A. Johnson
ISDA master agreement negotiations are often never-ending, expensive and tedious. Negotiations can take months as parties battle over legal, business and credit terms. Although much has been done to standardize the documentation process, there are still numerous issues that parties must negotiate prior to executing the ISDA master agreement. In addition, parties often insist on making additional amendments to the ISDA master agreement that they believe are necessary to minimize legal and credit risks. Although negotiations can still deadlock over important terms, much can still be done to speed up negotiations. In particular, there are seven deadly sins that can …
Mastering Collateral Management And Documentation: A Practical Guide For Negotiators, Christian Johnson, Paul Harding
Dec 2001
Mastering Collateral Management And Documentation: A Practical Guide For Negotiators, Christian Johnson, Paul Harding
Christian A. Johnson
A one stop shop for a detailed introduction to collateral management and documentation, giving the reader a thorough grounding in the subject.
Holding Credit Hostage For Underwriting Ransom: Rethinking Bank Antitying Rules, Christian Johnson
Dec 2001
Holding Credit Hostage For Underwriting Ransom: Rethinking Bank Antitying Rules, Christian Johnson
Christian A. Johnson
This article considers the importance of Congress's and the courts' consideration regarding the role antitying provisions have in light of the battle that exists between commercial banks and investment banks in the underwriting arena. Part I of this article discusses the history of commercial banks' powers to both lend and underwrite securities, focusing particularly on the enactment of the Glass-Steagall restrictions and their repeal by the Gramm-Leach-Bliley Act of 1999. Part I also focuses on the recent rise of commercial banks (or their affiliates) as securities underwriters. Part II examines the growing convergence of commercial banks and investment banks both …
Payee Tax Representations & The Isda Master Agreement, Christian Johnson
Jul 2001
Payee Tax Representations & The Isda Master Agreement, Christian Johnson
Christian A. Johnson
Negotiations over the payee tax representations to be made in an ISDA Master Agreement are often confusing, acrimonious and slow. U.S. negotiators, at the urging of expensive tax counsel, often insist that their foreign counterparties make comprehensive tax representations for U.S. tax purposes and deliver certain IRS tax forms to them. Typically, foreign counterparties resist making these representations because they don't understand the purposes behind them. However, these payee tax representations, and the related delivery of tax forms, serve important purposes.
Liquidity & The Isda Master Agreement, Christian Johnson
Apr 2001
Liquidity & The Isda Master Agreement, Christian Johnson
Christian A. Johnson
Ensuring liquidity should be the primary goal in negotiating an ISDA Master Agreement (the "Agreement") for smaller, non-rated customers, such as a hedge fund or a middle-market corporation. Often highly leveraged and with little room for error, these customers should focus their efforts when negotiating the Agreement with a dealer on limiting the dealer's opportunity to terminate the Agreement. Unfortunately, however, customers (typically through expensive outside counsel), often instead use up valuable negotiating capital on esoteric legal issues that may only remotely affect a customer's situation.
Rehypothecation Risk, Christian Johnson
Apr 2001
Rehypothecation Risk, Christian Johnson
Christian A. Johnson
Granting rehypothecation or "use rights" with respect to pledged collateral is common in the over-the-counter derivative market. In fact, subject to the pledgor's consent, the credit support annex to the International Swaps and Derivatives Association master agreement provides the secured party with the right to rehypothecate, or use for its own purposes, collateral pledged to it---subject only to the obligation to return the collateral once the pledgor has satisfied its obligations. Customers, however, are often alarmed to learn that the dealer requires such an unrestricted right to use and sell the pledged collateral.
Banking, Antitrust And Derivatives: Untying The Antitying Restrictions, Christian Johnson
Dec 2000
Banking, Antitrust And Derivatives: Untying The Antitying Restrictions, Christian Johnson
Christian A. Johnson
This article argues that expressly requiring a borrower to enter into an OTC derivative with a bank as a condition for receiving credit does not violate the antitying restrictions of the Bank Holding Company Act ("BHCA"). Part I of this article discusses the nature of OTC derivatives and demonstrates through examples how OTC derivatives can enable a borrower to minimize various business risks. Part II examines how banks are encouraging their borrowers to utilize various risk management techniques such as OTC derivatives and discusses the impact of BHCA on such efforts. Finally, Part III analyzes the elements of tying a …
The Tax Law Clinic: Loyola Chicago's Decade Of Experience, Christian Johnson, Mary Grossman
Aug 2000
The Tax Law Clinic: Loyola Chicago's Decade Of Experience, Christian Johnson, Mary Grossman
Christian A. Johnson
Since 1987 Loyola University Chicago School of Law has operated a tax clinic, educating students not only about the intricacies of tax law but also in basic legal skills, and helping hundreds of low-income taxpayers resolve tax matters with the Internal Revenue Service.
Over The Counter Derivatives Documentation: A Practical Guide For Executives, Christian Johnson
Dec 1999
Over The Counter Derivatives Documentation: A Practical Guide For Executives, Christian Johnson
Christian A. Johnson
This Practical Guid provides an informational overview of the complex transactions of the over-the-counter derivatives market including, the role of ISDA, CFTC regulatory environment, etc.
An Apologia For The Use Of Over-The-Counter Derivatives, Christian Johnson
Nov 1999
An Apologia For The Use Of Over-The-Counter Derivatives, Christian Johnson
Christian A. Johnson
This article reviews Over-the-Counter Derivative Products: A Guide to Business and Legal Risk Management and Documentation, by Robert M. McLaughlin (McGraw-Hill 1999) Assuming the role of apologist, Robert McLaughlin's work provides a comprehensive justification for, and defense of, the over-the-counter (“OTC”) derivatives market.
Risky Business: Acting As A Lender And Otc Derivative Dealer With The Same Customer, Christian Johnson
Sep 1999
Risky Business: Acting As A Lender And Otc Derivative Dealer With The Same Customer, Christian Johnson
Christian A. Johnson
Here the Author looks at some of the potential legal risk factors for a lender in taking a dual role with the same customer with respect to loans and over the counter derivative transactions. The principal risk, says the author, is the rejection of a bank's claim for damages in bankruptcy upon the termination of over the counter derivative transactions entered into with the now bankrupt borrower. This is because the damages with respect to the derivative transactions may be characterized as unmatured interest which may be rejected by bankruptcy court. Although such a characterization was rejected by the courts …
Learning To Think About International Tax, Christian Johnson
Dec 1998
Learning To Think About International Tax, Christian Johnson
Christian A. Johnson
Review of "International Taxation" by Charles I. Kingson and Cynthia A. Blum.
Year 2000 Credit Risk And Derivatives: Insulating Banks From Counterparty Meltdown, Christian Johnson
Sep 1998
Year 2000 Credit Risk And Derivatives: Insulating Banks From Counterparty Meltdown, Christian Johnson
Christian A. Johnson
Year 2000 computer software problems are looming large for financial institutions because bank regulators are now requiring them to confront not only their own problems, but also those of their customers.
At The Intersection Of Bank Finance And Derivatives: Who Has The Right Of Way?, Christian Johnson
Dec 1997
At The Intersection Of Bank Finance And Derivatives: Who Has The Right Of Way?, Christian Johnson
Christian A. Johnson
The over-the-counter (“OTC”) derivatives industry has developed into one of the world's fastest growing financial markets.1Businesses of almost any description, size, and sophistication now engage in derivative transactions.
Minimizing The Risks Of Otc Derivatives Through Loan Documentation, Christian Johnson
Dec 1997
Minimizing The Risks Of Otc Derivatives Through Loan Documentation, Christian Johnson
Christian A. Johnson
Following an introduction to the two types of derivatives instruments (exchange and over-the-counter ("OTC")) this article focuses primarily on minimizing risk from OTC derivatives used to hedge variable interest rate risk. The author uses best practices observed in a loan documentation review of 200 institutions' transactions to demonstrate that the path to risk mitigation lies prudent loan documentation that includes definitions and controls. Controls may include restricting the amount of indebtedness, controlling the quality of the transaction, restricting the purposes for a transaction, pledging collateral, default provisions, application of proceeds, and the incorporation of loan covenants.
Derivatives And Rehypothecation Failure: It's 3:00 P.M., Do You Know Where Your Collateral Is?, Christian Johnson
Dec 1996
Derivatives And Rehypothecation Failure: It's 3:00 P.M., Do You Know Where Your Collateral Is?, Christian Johnson
Christian A. Johnson
A borrower would probably be alarmed to learn that its lender had an unrestricted right to use and sell the collateral that the borrower had pledged to secure its borrowings. Borrowers typically believe that a lender should safeguard and protect collateral pledged to it, not use the collateral for its own gain. Yet in the derivatives market, it has become increasingly common for secured parties to insist upon such unrestricted use of pledged collateral.
National Banks And Section 91: Protection From Judgment Creditors Pending Appeal, Christian Johnson, William Deitrick
Mar 1995
National Banks And Section 91: Protection From Judgment Creditors Pending Appeal, Christian Johnson, William Deitrick
Christian A. Johnson
Although the National Bank Act was enacted over 100 years ago, national banking associations (national banks) have only recently realized the full benefits of Section 91 of the Act.
