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2016

Banking and Finance Law

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Full-Text Articles in Law

Embedded Contracts And A Continuum Of Sovereign Debt, Odette Lienau Dec 2016

Embedded Contracts And A Continuum Of Sovereign Debt, Odette Lienau

Cornell Law Faculty Publications

What is the relationship of a government to its population as it pertains to sovereign debt? And how does this fit into the larger web of relationships and obligations that make up the international financial arena? These questions are incredibly difficult to think through – beyond the capacity of one author alone. I am therefore grateful to have the company of Yuri Biondi, Barry Herman, Tomoko Ishikawa, and Kunibert Raffer in beginning to consider them. In addressing their thoughtful and thought-provoking comments, I see this response less as an opportunity to answer every potential challenge or differential emphasis. Indeed, the …


Intrapreneurship, Darian M. Ibrahim Dec 2016

Intrapreneurship, Darian M. Ibrahim

Faculty Publications

This Article on “intrapreneurship” has several goals. First, it points out that while much of the legal literature on innovation is concerned with startups (entrepreneurship), the innovation that takes place inside our largest corporations (intrapreneurship) is substantial, important, and understudied. Second, the Article observes that while large technology corporations that used to be startups may remain intrapreneurial in culture, intrapreneurship is less common in the aggregate than we might expect. Reasons include organizational bureaucracy, laws favoring entrepreneurship, and what Clayton Christensen (Harvard Business School) calls “the innovator’s dilemma.” The innovator’s dilemma is, put simply, that good management causes large corporations …


Crowdfunding Without The Crowd, Darian M. Ibrahim Nov 2016

Crowdfunding Without The Crowd, Darian M. Ibrahim

Popular Media

No abstract provided.


Gcc Vat: The Intra-Gulf Trade Problem, Richard Thompson Ainsworth, Musaad Alwohaibi Nov 2016

Gcc Vat: The Intra-Gulf Trade Problem, Richard Thompson Ainsworth, Musaad Alwohaibi

Faculty Scholarship

It seems reasonably clear that by January 1, 2018 events will be set in motion for the adoption of a community-wide 5% value added tax (VAT) in the six Member States of the Gulf Cooperation Council (GCC).

The GCC’s Framework VAT document is expected to be published by the end of October 2016. One of the clearest, consistently placed observations is that the Arabian VATs will be destination-based and modeled on a European credit-invoice design. Intra-Gulf business-to-business (B2B) transactions will be effectively zero-rated by the supplier, and the buyer’s VAT will be directed to the destination jurisdiction. It is not …


The Mechanisms Of Derivatives Market Efficiency, Dan Awrey Nov 2016

The Mechanisms Of Derivatives Market Efficiency, Dan Awrey

Cornell Law Faculty Publications

These are not your parents' financial markets. A generation ago, the image of Wall Street was one of floor traders and stockbrokers, of opening bells and ticker symbols, of titans of industry and barbarians at the gate. These images reflected the prevailing view in which stock markets stood at the center of the financial universe. The high point of this equity-centric view coincided with the development of a significant body of empirical literature examining the efficient market hypothesis (EMH): the prediction that prices within an efficient stock market will fully incorporate all available information. Over time, this equity-centric view became …


Don't End Or Audit The Fed: Central Bank Independence In An Age Of Austerity, Neil H. Buchanan, Michael C. Dorf Nov 2016

Don't End Or Audit The Fed: Central Bank Independence In An Age Of Austerity, Neil H. Buchanan, Michael C. Dorf

Cornell Law Faculty Publications

The Federal Reserve (the Fed) is the central bank of the United States. Because of its power and importance in guiding the economy, the Fed's independence from direct political influence has made it a target of ideologically motivated attacks throughout its history, with an especially aggressive round of attacks coming in the wake of the 2008 financial crisis and ongoing today. We defend Fed independence. We point to the Fed's exemplary performance during and after the 2008 crisis, and we offer the example of a potential future crisis in which Congress falls to increase the debt ceiling to show how …


Big Data In Finance, University Of Michigan Law School Oct 2016

Big Data In Finance, University Of Michigan Law School

Event Materials

Program for the Big Data in Finance conference.


Legitimacy And Impartiality As Basic Principles For Sovereign Debt Restructuring, Odette Lienau Oct 2016

Legitimacy And Impartiality As Basic Principles For Sovereign Debt Restructuring, Odette Lienau

Cornell Law Faculty Publications

This essay suggests that attentiveness to the principles of legitimacy and impartiality may contribute to the instrumental success of any sovereign debt restructuring, and highlights institutional elements or practices often associated with these goals. An additional question can be raised as to whether these principles might have a further claim to special consideration, as part of emerging customary international law or general principles of law. Any determination along these lines is made difficult by the fact that legitimacy is a composite principle, constituted of multiple procedural and substantive norms, and perhaps lacks the necessary specificity to be a legal rule …


Modifying Merger Consent Decrees To Improve Merger Enforcement Policy, Steven C. Salop Oct 2016

Modifying Merger Consent Decrees To Improve Merger Enforcement Policy, Steven C. Salop

Georgetown Law Faculty Publications and Other Works

This article analyzes my short proposal for reviewing and modifying merger consent decrees to permit additional relief if the provisions of the initial consent merger are found to fail to preserve or restore competition in a reasonable period of time after the merger was consummated. My proposal also would involve more frequent reviews of consummated mergers that have been cleared without challenge, particularly those that were close calls. While “Don't Look Back” might be the best anthem for artists, economic decision theory would not support that approach to merger policy.

Predicting the impact of proposed mergers and remedies on consumers …


Informational Cronyism, Donald C. Langevoort Oct 2016

Informational Cronyism, Donald C. Langevoort

Georgetown Law Faculty Publications and Other Works

If Maher Kara, the Citigroup analyst at the center of the Salman case now before the Supreme Court, was forbidden under SEC Rule 10b-5 from trading securities for his own account while in possession of the valuable secrets to which his job gave him access, should he instead be able to give that information to family members simply in order to enrich them? I suspect that to anyone unfamiliar with the fine line drawing of federal insider trading law, the answer is clearly no. There is probably no more common form of corruption than generously shoveling the fruits of power …


Zappers - Technological Tax Fraud In New Hampshire, Richard Thompson Ainsworth Oct 2016

Zappers - Technological Tax Fraud In New Hampshire, Richard Thompson Ainsworth

Faculty Scholarship

No other State is as vulnerable to Zappers as is the State of New Hampshire. Zappers and related software programming, Phantom-ware, facilitate an old tax fraud – skimming cash receipts. In this instance skimming is performed with modern electronic cash registers (ECRs). Zappers are a global revenue problem, but to the best of this author’s knowledge they have not been uncovered in New Hampshire. Seen from a global perspective however, it seems unlikely that they are not here.

New Hampshire’s fiscal vulnerability to Zappers comes from its heavy reliance on precisely the industry segment that has been found to be …


Sales Suppression: The International Dimension, Richard Thompson Ainsworth Oct 2016

Sales Suppression: The International Dimension, Richard Thompson Ainsworth

Faculty Scholarship

Sales transaction taxes are highly susceptible to technology fraud, which is an inevitable result of today’s widespread reliance on technology to document taxed transactions. Technology can be (and is) manipulated to defeat the collection of these taxes. Both the U.S. retail sales tax (RST) and the European value added tax (VAT) are vulnerable to technology-based fraud. This Article concerns sales suppression — intentionally not recording sales — in the RST, and at the final stage of the VAT, the retail stage, when tax is collected from final consumers.

The modern electronic cash register (ECR)/point of sale (POS) system is vulnerable …


Johnson V. Wells Fargo Bank Nat’L Ass’N, 132 Nev. Adv. Op. 70 (September 29, 2016), Brittni Griffith Sep 2016

Johnson V. Wells Fargo Bank Nat’L Ass’N, 132 Nev. Adv. Op. 70 (September 29, 2016), Brittni Griffith

Nevada Supreme Court Summaries

The Court considered whether the Bank Secrecy Act prevents financial institutions from disclosing all investigative information in discovery to an adverse party. The Court held that the Bank Secrecy Act only precludes the disclosure of information relating to the existence of a suspicious activity report or the procedural nature of the suspicious activity report’s generation.


Inside Safe Assets, Anna Gelpern, Erik F. Gerding Sep 2016

Inside Safe Assets, Anna Gelpern, Erik F. Gerding

Georgetown Law Faculty Publications and Other Works

“Safe assets” is a catch-all term for financial contracts that market participants treat as if they were risk-free. These may include government debt, AAA corporate debt, bank debt, and asset-backed securities, among others. The International Monetary Fund estimated potential safe assets at more than $114 trillion worldwide in 2011, over seven times the U.S. economic output that year.

To treat any contract as if it were risk-free seems delusional after apparently super-safe public and private debt markets collapsed overnight. Nonetheless, financial crises have only raised the policy and academic profile of safe assets, invoked to explain global imbalances, shadow banking, …


Newsroom: A Changing Landscape: Insider Trading Law 09/20/2016, Roger Williams University School Of Law Sep 2016

Newsroom: A Changing Landscape: Insider Trading Law 09/20/2016, Roger Williams University School Of Law

Life of the Law School (1993- )

No abstract provided.


The European Union’S Emerging Approach To Isds: A Review Of The Canada-Europe Ceta, Europe-Singapore Fta, And European-Vietnam Fta, Gus Van Harten Sep 2016

The European Union’S Emerging Approach To Isds: A Review Of The Canada-Europe Ceta, Europe-Singapore Fta, And European-Vietnam Fta, Gus Van Harten

Articles & Book Chapters

The European Union’s approach to ISDS is examined based on the available textual evidence in proposed or negotiated trade agreements. The evaluation focuses on three criteria: judicial independence, procedural fairness, and balance in the allocation of rights and responsibilities. Each criteria arises from concerns about the powerful and far-reaching arbitration mechanism at the core of ISDS and its role to decide the legality of sovereign conduct and allocate public funds to foreign investors. The main conclusions are that, in pursuing a massive expansion of ISDS in new trade agreements, the European Union has taken only partial steps on the issue …


Vatcoin: The Gcc's Cryptotaxcurrency, Richard Thompson Ainsworth, Musaad Alwohaibi, Mike Cheetham Aug 2016

Vatcoin: The Gcc's Cryptotaxcurrency, Richard Thompson Ainsworth, Musaad Alwohaibi, Mike Cheetham

Faculty Scholarship

Bitcoin is the world’s first peer-to-peer cryptocurrency. VATCoin is similar, but it is used in tax compliance. Both Bitcoin and VATCoin are distributive ledger applications built upon blockchain technology. Bitcoin’s ledger is public; VATCoin’s is private. If adopted, VATCoin could well become the world’s first government-mandated cryptotaxcurrency. Unlike Bitcoin, VATCoin will not be a speculative currency. It is always fixed to the home currency.

This paper proposes that the Gulf Cooperation Council (GCC) adopt VATCoin in its VAT Framework. The GCC is expected to have multiple 5% VATs in place by January 1, 2018. There is an ample amount of …


Vat In The Gcc - Missing Trader Frauds, Richard Thompson Ainsworth, Musaad Alwohaibi Aug 2016

Vat In The Gcc - Missing Trader Frauds, Richard Thompson Ainsworth, Musaad Alwohaibi

Faculty Scholarship

All VATs are susceptible to missing trader (MT) fraud. VATs adopted in an economic community are particularly more susceptible. The EU, for example, loses in excess of €100b annually to this fraud. Given the anticipated adoption of a European-style credit-invoice VAT in the GCC by January 1, 2018, this paper offers a technology-based solution involving the real-time tracking of taxable transactions with centrally collected (securely encrypted) data flows that are risk-analyzed by artificial intelligence (AI).


The Puzzle Of Pdvsa Bond Prices, Anna Gelpern, Paolo Colla, Mitu Gulati Aug 2016

The Puzzle Of Pdvsa Bond Prices, Anna Gelpern, Paolo Colla, Mitu Gulati

Georgetown Law Faculty Publications and Other Works

Market reports in the summer of 2016 suggest that Venezuela is on the brink of default on upwards of $65 billion in debt. That debt comprises of bonds issued directly by the sovereign and those issued by the state-owned oil company PDVSA. Based on the bond contracts and other legal factors, it is not clear which of these two categories of bonds would fare better in the event of a restructuring. However, market observers are convinced — and we agree — that legal and contractual differences would likely impact the payouts on the bonds if Venezuela defaults. Using a comparison …


Notes From The Border: Writing Across The Administrative Law/Financial Regulation Divide, Robert B. Ahdieh Aug 2016

Notes From The Border: Writing Across The Administrative Law/Financial Regulation Divide, Robert B. Ahdieh

Faculty Scholarship

A central feature – if not the central feature – of legal scholarship today is analysis across divides.

It is surprising, then, how little has been written across the divide that separates administrative law and financial regulation. That is perhaps especially so, given the modest nature of the relevant divide: one that is intra- rather than interdisciplinary, one that operates within rather than across geographic boundaries, and one that involves no temporal dimension but operates entirely within current-day law.

For all the proximity in their interests, targets of study, and even analytical tools, however, scholars of administrative law and of …


Underwriting Sustainable Homeownership: The Federal Housing Administration And The Law Down Payment Loan, David Reiss Jul 2016

Underwriting Sustainable Homeownership: The Federal Housing Administration And The Law Down Payment Loan, David Reiss

Faculty Scholarship

No abstract provided.


Banks: A Broken Social Contract, Mehrsa Baradaran Jul 2016

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 Jun 2016

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.


The Insurability Of Claims For Restitution, Christopher French May 2016

The Insurability Of Claims For Restitution, Christopher French

Journal Articles

Does and should a wrongdoer’s liability insurance cover an aggrieved party’s claim for restitution (e.g., a claim for the disgorgement of ill-gotten gains)? This article answers those questions. It does so by first answering the question of whether claims for restitution are covered under the terms of liability insurance policies. Then, after concluding that they are, it addresses the question of whether claims for restitution should be insurable as a matter of public policy and insurance law theory. There are long-standing legal and equitable principles that, on the one hand, dictate that a wrongdoer should not be allowed to benefit …


“Settling The Question: Did Bank Settlement Agreements Subvert Congressional Appropriations Powers?” : Hearing Before The United States House Of Representatives Committee On Financial Services Subcommittee On Oversight And Investigations, 114th Congress, Nicholas Quinn Rosenkranz May 2016

“Settling The Question: Did Bank Settlement Agreements Subvert Congressional Appropriations Powers?” : Hearing Before The United States House Of Representatives Committee On Financial Services Subcommittee On Oversight And Investigations, 114th Congress, Nicholas Quinn Rosenkranz

Georgetown Law Faculty Publications and Other Works

The Constitution provides: ―No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law . . . ." This is not a mere technical provision but rather a fundamental element of constitutional structure.

It sounds, first, in democracy, reflecting the deep constitutional principle that the power of the purse should be vested in the most representative branch. Every dollar appropriated from the Treasury may represent a dollar of taxes, and so this principle applies to both taxing and spending.


The Balanced Scorecard Framework For Financial Advisers: A Pandora's Box, Kee Yang Low May 2016

The Balanced Scorecard Framework For Financial Advisers: A Pandora's Box, Kee Yang Low

Research Collection Yong Pung How School Of Law

The much-anticipated Balanced Scorecard Framework for determining the remuneration of representatives and supervisors in the financial advisory industry came into force on 1 January 2016. The framework is a major development and is likely to transform the industry. This article seeks to explain the framework and its challenges.


Credit Is A Double Edge Sword, Mehrsa Baradaran Apr 2016

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.


Courts And Sovereigns In The Pari Passu Goldmines, Anna Gelpern Apr 2016

Courts And Sovereigns In The Pari Passu Goldmines, Anna Gelpern

Georgetown Law Faculty Publications and Other Works

U.S. federal court rulings against Argentina since 2012 have turned the pari passu clause in sovereign bond contracts into the most promising debt collection tool against immune governments since the days of gunboat diplomacy. The large literature on pari passu (“equal step” in Latin) assumes that the clause had not been used for enforcement before the late 1990s, and that it was first construed by a Belgian court in a case against Peru in the year 2000. The Belgian decision was criticized for wrongly concluding that pari passu promised ratable payment to all holders of Peru’s external debt. A decade …


Bitcoin And The Uniform Commercial Code, Jeanne L. Schroeder Apr 2016

Bitcoin And The Uniform Commercial Code, Jeanne L. Schroeder

Articles

Much of the discussion of bitcoin in the popular press has concentrated on its status as a currency. Putting aside a vocal minority of radical libertarians and anarchists, however, many bitcoin enthusiasts are concentrating on how its underlying technology – the blockchain – can be put to use for wide variety of uses. For example, economists at the Fed and other central banks have suggested that they should encourage the evolution of bitcoin’s blockchain protocol which might allow financial transactions to clear much efficiently than under our current systems. As such, it also holds out the possibility of becoming that …


The Order To Pay Money In Medieval Continental Europe, Benjamin Geva Apr 2016

The Order To Pay Money In Medieval Continental Europe, Benjamin Geva

Articles & Book Chapters

This chapter discusses the evolution of non-cash payment mechanisms in the course of the development of the medieval banking system in Europe. The chapter sets out three categories of a medieval continental financier. The first category, pawnbrokers, consisted of lenders who lent out of their capital primarily for consumption who played no role in the development of the payment system. The second category consisted of moneychangers who accepted deposits and whose practices were rooted in in the manual exchange of coins. The third category consisted of exchange bankers whose practices emerged from the exchange of money in long distance trade. …