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Articles 1 - 3 of 3
Full-Text Articles in Law
Why We Need A Superfund For Hedge Funds, Dale B. Thompson
Why We Need A Superfund For Hedge Funds, Dale B. Thompson
Dale Thompson
The current financial crisis has led to numerous calls for regulation of hedge funds. This article argues that the appropriate response is a combination of mechanisms: establishment of a Superfund financed by a tax on hedge funds, whose revenues are then used to conduct market purchases of “toxic” financial assets, along with supporting regulations. This article develops this solution by focusing on the market failures caused by hedge funds, namely the externalities posed by liquidity risks, and the inability of market prices to provide information about the valuation of financial securities. It then considers possible solutions through the prism of …
Why We Need A Superfund For Hedge Funds, Dale B. Thompson
Why We Need A Superfund For Hedge Funds, Dale B. Thompson
Dale Thompson
The current financial crisis has led to numerous calls for regulation of hedge funds. This article argues that the appropriate response is a combination of mechanisms: establishment of a Superfund financed by a tax on hedge funds, whose revenues are then used to conduct market purchases of “toxic” financial assets, along with supporting regulations. This article develops this solution by focusing on the market failures caused by hedge funds, namely the externalities posed by liquidity risks, and the inability of market prices to provide information about the valuation of financial securities. It then considers possible solutions through the prism of …
Is The Bankruptcy Code An Adequate Mechanism For Resolving The Distress Of Systemically Important Institutions?, Edward R. Morrison
Is The Bankruptcy Code An Adequate Mechanism For Resolving The Distress Of Systemically Important Institutions?, Edward R. Morrison
Faculty Scholarship
The President and members of Congress are considering proposals that would give the government broad authority to rescue financial institutions whose failure might threaten market stability. These systemically important institutions include bank and insurance holding companies, investment banks, and other "large, highly leveraged, and interconnected" entities that are not currently subject to federal resolution authority. Interest in these proposals stems from the credit crisis, particularly the bankruptcy of Lehman Brothers. That bankruptcy, according to some observers, caused massive destabilization in credit markets for two reasons. First, market participants were surprised that the government would permit a massive market player to …