Law Commons^™

Rating The Regulation Of Rating Agencies: Credit Rating Agency Reform In The Aftermath Of The Global Financial Crisis, Nan S. Ellis

Nan S Ellis

In this article, we identify five issues related to performance of credit rating agencies and consider the Dodd-Frank Act in light of these five interrelated issues. Others have commented on credit rating agency performance and offered proposed solutions. Our article is unique, however, in that it offers a comprehensive examination of these interrelated issues. We recognize that any regulatory reform must consider all aspects of the issue rather than to deal with isolated, incremental reform. Moreover, we offer an interdisciplinary approach which considers the relevant finance literature as well as legal commentary.

The End Of The Internal Compliance World As We Know It, Or An Enhancement Of The Effectiveness Of Securities Law Enforcement? Bounty Hunting Under The Dodd-Frank Act's Whistleblower Provisions, Justin R. Blount

Justin R Blount

No abstract provided.

Information Failures In Structured Finance And Dodd'frank's "Improvements To The Regulation Of Credit Rating Agencies", Steven R. Mcnamara

Steven R. McNamara

This article analyzes the credit rating agency reform provisions of the Dodd-Frank Act’s “Improvements to the Regulation of Credit Rating Agencies” in light of the massive failures in the ratings of structured finance securities leading up to the 2008 credit crisis. The primary cause of ratings failure was the flawed quantitative ratings models used by the rating agencies; conflicted behavior on the part of the rating agencies was also an important but secondary cause. The key mechanical flaw in the ratings models was the method used to determination correlation, a measure of the likelihood that one borrower would default in …

Orderly Liquidation Authority: A New Insolvency Regime To Address Systemic Risk, Hollace T. Cohen

University of Richmond Law Review

No abstract provided.

Complex Financial Institutions And Systemic Risk, Manuel A. Utset

Scholarly Publications

No abstract provided.

Consumer Financial Protection: It's A Smaller World After All.Pdf, Hilary Allen

Articles in Law Reviews & Other Academic Journals

Few of the reforms of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) havebeen as controversial as the creation of the Consumer Financial Protection Bureau. On the one hand,proponents envisioned the Bureau as “a single, highly motivated federal regulator, [that would apply] the sameregulation … to all similar products, regardless of the identity of the lender.” On the other hand, critics havecalled the Bureau “fatally flawed” and suggested that it has the potential to “stifle innovation and leave somemarket participants worse off.”

Finding Shelter In A Time Of Crisis: A Process-Oriented Approach To Risk Management, Kristin Johnson

Kristin N Johnson

Success in financial markets rests on the effectiveness of a business’s risk management strategy: manage risks well and profits follow; fail to manage risks and a crisis ensues. It has long been evident that inadequate enterprise risk management policies, or internal risk-reducing strategies, create perilous consequences for a business. The recent financial crisis illustrates that the often disparate regulatory guidance and multiplicity of regulators who influence enterprise risk management policies were ill-suited to address conflicts and weaknesses in risk management accountability and enforcement mechanisms. During the crisis, a chorus of commentators demanded a federal solution to address the devastating economic …

Executive Compensation Consultants And Ceo Pay, Martin J. Conyon

Vanderbilt Law Review

This Article surveys recent empirical studies on the relation between compensation consultants and CEO pay. The economic rationale for using executive compensation consultants is that they supply valuable data, information, and professional expertise to client firms. However, critics argue that the consultant's independence might be compromised because of conflicts of interest arising from the cross selling of business services or because of the consultant's desire to obtain repeat business. The emergent empirical evidence suggests that pay consultants are important in explaining executive compensation, although the findings are sometimes mixed and the precise effects of consultants on pay are yet to …

Know Your Customer - Or Not, Genci Bilali

Genci Bilali

“Know Your Customer” (KYC) is the due diligence and bank regulation that banks and other financial institutions perform in order to identify their clients and ascertain relevant information pertinent to doing financial business with them. The KYC policies are largely applied from banks and other financial institutions not only to prevent identity theft fraud, money laundering and terrorist financing but also to regulate the risk in business of lending and investment banking activities between banks and their customers.

Commercial and investment banks failed to comply and implement fully the KYC policies in lending monies and selling financial products to their …

The Dodd-Frank Wall Street Reform And Consumer Protection Act: What Caused The Financial Crisis And Will Dodd-Frank Succeed In Preventing Future Crises?, Charles W. Murdock

Charles W. Murdock

Summary: The Dodd-Frank Wall Street Reform and Consumer Protection Act: What Caused the Financial Crisis and Will Dodd-Frank Succeed in Preventing Future Crises?

We are still experiencing the devastating impact of the financial crisis which came to a head on September 18, 2008 when Secretary Paulson told Congressional leaders that “[u]nless you act, the financial system of this country and the world will melt down in a matter of days.”

To prevent future crises of this magnitude, last year Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act. However, this year, legislation has already been introduced to repeal …

Credit Ratings In Insurance Regulation: The Missing Piece Of Financial Reform, John P. Hunt

John P Hunt

Many commentators, including the Financial Crisis Inquiry Commission, have identified the poor quality of credit ratings as an important cause of the recent financial crisis. The leading agencies all have acknowledged poor performance in some areas. One popular explanation for agencies’ poor performance is the incorporation of ratings into regulations. Rating-dependent regulation arguably reduces agencies’ incentives to do a good job (by creating artificial demand for ratings) and amplifies the negative effects of their doing a bad job (by creating regulatory consequences for rating downgrades).

Last year’s Dodd-Frank Wall Street Reform and Consumer Protection Act apparently embraced this explanation wholeheartedly: …

Title Xi Of Dodd-Frank And Its Effort To End “Too Big To Fail”, Herbert C. Shelton Ii

Herbert C Shelton II

This article reviews Title XI of Dodd-Frank and its stated goal of ending “too big to fail.” The article examines the meaning of “too big to fail,” explains Title XI and some of its modifications to prior law, and analyzes whether Title XI achieves its stated goal. The article concludes that because federal money may be used to rescue financial institutions, “too big to fail” and “bailouts” will continue beyond this legislation.

Financial Crises In The United States And The European Union: Policy Responses, Successes And Failures And The Need For Further, Cross-National Reform, Jason Rudderman

Jason Rudderman

This paper examines the causes of the global financial crisis of 2008-2009 and explores the major financial reforms in the United States and the EU, offers comparisons of the legislation and recommends changes to the legislations that are aimed at minimizing the burden on taxpayers, and balancing the necessary intervention of governments in financial markets and the economy with capitalistic ideals. The lack of government oversight, predatory lending practices, and an overall environment of deregulation leading up to the financial crisis ultimately led to its collapse in late 2008. In response to the collapse of the global financial system, the …

Know Your Customer - Or Not, Genci Bilali

Genci Bilali

“Know Your Customer” (KYC) is the due diligence and bank regulation that banks and other financial institutions perform in order to identify their clients and ascertain relevant information pertinent to doing financial business with them. The KYC policies are largely applied from banks and other financial institutions not only to prevent identity theft fraud, money laundering and terrorist financing but also to regulate the risk in business of lending and investment banking activities between banks and their customers.

Commercial and investment banks failed to comply and implement fully the KYC policies in lending monies and selling financial products to their …

Morrison V. National Australia Bank: Life After Dodd-Frank, Meny Elgadeh

Fordham Journal of Corporate & Financial Law

This Note examines the background of foreign-cubed litigation,1 including its development over the past four decades, its abrogation by the Supreme Court, and its potential future under recently enacted legislation. The Note examines the tests developed by the Court of Appeals in order to determine whether a United States court could adjudicate foreign-cubed litigation. Additionally, it reviews the Supreme Court opinion in Morrison v. National Australia Bank and its ultimate rejection of the predominant Second Circuit test for applicability. Finally, the Note discusses “The Dodd–Frank Wall Street Reform and Consumer Protection Act,” a provision of which was specifically included to …

Living Wills And Pre-Commitment, Adam Feibelman

American University Business Law Review

No abstract provided.

Of The Conditional Fee As A Response To Lawyers, Bankers And Loopholes, Claire Hill, Richard Painter

American University Business Law Review

No abstract provided.

Consumer Casualties, Amy J. Schmitz

Faculty Publications

On July 21, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank),' which among other things calls for creation of the Consumer Financial Protection Bureau (CFPB) to serve as a centralized agency charged with protecting consumers from lending abuses and improper practices. The question is when and whether this agency will come to fruition-or suffer as a casualty of political warfare.

The Dodd-Frank Act's Specialized Corporate Disclosure: Using The Securities Laws To Address Public Policy Issues, David M. Lynn

Journal of Business & Technology Law

No abstract provided.

Regulating Information Flows, Regulating Conflict: An Analysis Of United States Conflict Minerals Legislation, Christiana Ochoa, Patrick J. Keenan

Articles by Maurer Faculty

The connection between conflict and commercial activity is the focus of this paper. In particular, it focuses on the ongoing conflict in the Eastern Democratic Republic of Congo (DRC) that is funded, in large part, by the sale of conflict commodities – minerals, metals and petroleum that fund violent groups at their source and then enters legitimate markets and products around the world. Recently, attention has turned to how to regulate conflict commerce as a tool for divesting from violent conflict. In the United States, for example, the recently-adopted Dodd-Frank Wall Street Reform and Consumer Protection Act include a provision …

A Simple Approach To Preventing The Next Housing Crisis-Why We Need One, What One Would Look Like, And Why Dodd-Frank Isn't It, David A. Dana

Fordham Urban Law Journal

This article considers the adequacy of The Dodd-Frank Act in terms of its potential ability to prevent another crisis in the housing market. The author argues that Dodd-Frank, even if implemented broadly, will not address the key problem of excess complexity in the housing and financial markets. The author then suggests additional reform focusing on simplicity, exemplified by the existing regulatory framework in Denmark. Lastly, the author addresses the current political economy, which is blamed for making the passage of effective regulation too difficult.

Reforming Regulation In The Markets For Home Loans, Susan Block-Lieb, Edward J. Janger

Fordham Urban Law Journal

This article explores the content and institutional context for recently revised regulation of the markets for residential mortgages. The authors compare and contrast the House and Senate bills relating to the market for home loans proposed and/or passed in the wake of the 2008 financial crisis and examines how the Dodd-Frank Act reconciled the various proposals. The article also focuses on the creation and role of the Bureau of Consumer Financial Protection. Lastly, this article examines the portion of the Dodd-Frank Act intended to regulate predatory mortgages.

Charting A Course In Clearing, Colleen M. Baker

Journal Articles

Memorable tales of financial collapse, such as that of Lehman Brothers (Lehman), Bear Stearns, and American Financial Group (AIG), frequently drive narratives of financial market crises and future preventative regulatory solutions. Much U.S. financial regulation, such as the monumental and historic “Dodd-Frank Wall Street Reform and Consumer Protection Act,” (Dodd-Frank) can be understood from this perspective. Aspects of such responses, however, are sometimes puzzling. An example is the reforms surrounding certain financial market utilities in Dodd-Frank’s Title VIII, “Payment, Clearing, and Settlement Supervision Act of 2010” (Title VIII). Financial market utilities often play a vital role in a process known …

Things Fall Apart: Regulating The Credit Default Swap Commons, Kristen N. Johnson

University of Colorado Law Review

Financial markets are an important national and international infrastructure resource that reflect attributes similar to the those that characterize commons, as described in property law literature. Through a case study examining the credit default swap market, this Article illustrates the analogy between financial markets and a traditional commons. After exploring the attributes of a commons, this Article examines the costs and benefits of the credit default swap market. Similar to a traditional commons, tragedy in financial markets occurs when market participants capture benefits while imposing the costs or negative externalities from their activities on other members of society. Commons scholars' …

Dodd-Frank For Bankruptcy Lawyers, Douglas G. Baird, Edward R. Morrison

Faculty Scholarship

The Dodd-Frank financial reform legislation creates an “Orderly Liquidation Authority” (OLA) that shares many features in common with the Bankruptcy Code. This is easy to overlook because the legislation uses a language and employs a decision-maker (both borrowed from bank regulation) that will seem foreign to bankruptcy lawyers. Our task in this essay is to identify the core congruities between OLA and the Code. In doing so, we highlight important differences and assess both their constitutionality and policy objectives. We conclude with a few thoughts on the likelihood that OLA will contribute to market stability.

Sustaining Reform Efforts At The Sec: A Progress Report, Joan Macleod Heminway

Scholarly Works

Many recent articles written by U.S. legal practitioners and law scholars in the wake of the financial crisis address regulatory reforms included in or omitted from the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and related agency initiatives. In contrast, this article focuses on institutional reforms - specifically those instituted at the U.S. Securities and Exchange Commission (SEC) since President Barack Obama took office in January 2009.

In an article published in the Villanova Law Review last year, I assessed the early reform efforts at the SEC in the Obama era from the vantage point of change …

Overwhelming A Financial Regulatory Black Hole With Legislative Sunlight: Dodd-Frank's Attack On Systemic Economic Destabilization Caused By An Unregulated Multi-Trillion Dollar Derivatives Market, Michael Greenberger

Journal of Business & Technology Law

No abstract provided.

Outsourcing Fraud Detection: The Analyst As Dodd-Frank Whistleblower, Luke Roosevelt Hornblower

Journal of Business & Technology Law

No abstract provided.

Investment Adviser Regulation Post-Madoff: A Brave New World, Kevin A. Zambrowicz

Journal of Business & Technology Law

No abstract provided.

A Summary Of The Sec Study On Investment Advisors And Broker-Dealers, Christine Lazaro

Faculty Publications

(Excerpt)

For some time, there has been a debate over what the appropriate standards of care are and should be for both broker-dealers and investment advisers. The standards vary based on where the investment professional is, where the customer is, what types of services are being offered and what responsibilities are assumed. Across the country, there is a complete lack of uniformity. Congress considered this when drafting the Dodd-Frank Wall Street Reform and Consumer Protection Act. Accordingly, pursuant to Dodd-Frank, Congress required the SEC (the “Commission”) to conduct a study to examine the current standards of care for both brokers …