Law Commons^™

Personal Responsibility For Systemic Inequality, Martha T. Mccluskey

Contributions to Books

Published as Chapter 15 in Research Handbook on Political Economy and Law, Ugo Mattei & John D. Haskell, eds.

Equality has faded as a guiding ideal for legal theory and policy. An updated message of personal responsibility has helped rationalize economic policies fostering increased inequality and insecurity. In this revised message, economic “losers” should take personal responsibility not only for the harmful effects of their individual economic decisions, but also for the harmful effects of systemic failures beyond their individual control or action. In response to the 2008 financial crisis, this re-tooled message of personal responsibility promoted mass austerity in …

Recursive Collective Actions Problems: The Structure Of Procyclicality In Financial And Monetary Markets, Macroeconomies And Formally Similar Contexts, Robert C. Hockett

Cornell Law Faculty Publications

The hallmark of a collective action problem is its aggregating multiple individually rational decisions into a collectively irrational outcome. Arms races, “commons tragedies” and “prisoners’ dilemmas” are well-known, indeed well-worn examples. What seem to be less widely appreciated are two complementary propositions: first, that some collective action problems bear iterative, self-exacerbating structures that render them particularly destructive; and second, that some of the most formidable challenges faced by economies, societies, and polities are iteratively self-worsening problems of precisely this sort. Financial markets, monetary systems and macroeconomies in particular are rife with them – as are other complex systems subject to …

Reframing Financial Regulation, Charles K. Whitehead

Charles K Whitehead

Financial regulation today is largely framed by traditional business categories. The financial markets, however, have begun to bypass those categories, principally over the last thirty years. Chief among the changes has been convergence in the products and services offered by traditional intermediaries and new market entrants, as well as a shift in capital-raising and risk-bearing from traditional intermediation to the capital markets. The result has been the reintroduction of old problems addressed by (but now beyond the reach of) current regulation, and the rise of new problems that reflect change in how capital and financial risk can now be managed …

The Volcker Rule And Evolving Financial Markets, Charles K. Whitehead

Charles K Whitehead

The Volcker Rule prohibits proprietary trading by banking entities - in effect, reintroducing to the financial markets a substantial portion of the Glass-Steagall Act’s static divide between banks and securities firms. This Article argues that the Glass-Steagall model is a fixture of the past - a financial Maginot Line within an evolving financial system. To be effective, new financial regulation must reflect new relationships in the marketplace. For the Volcker Rule, those relationships include a growing reliance by banks on new market participants to conduct traditional banking functions. Proprietary trading has moved to less-regulated businesses, in many cases, to hedge …

An Fda For Financial Innovation: Applying The Insurable Interest Doctrine To Twenty-First-Century Financial Markets, Eric A. Posner, E. Glen Weyl

Northwestern University Law Review

The financial crisis of 2008 was caused in part by speculative investment in complex derivatives. In enacting the Dodd–Frank Act, Congress sought to address the problem of speculative investment, but it merely transferred that authority to various agencies, which have not yet found a solution. We propose that when firms invent new financial products, they be forbidden to sell them until they receive approval from a government agency designed along the lines of the FDA, which screens pharmaceutical innovations. The agency would approve financial products if they satisfy a test for social utility that focuses on whether the product will …

Limits On Exporting Corporate Social Responsibility Through Domestic Regulation, Kenneth M. Rosen

South Carolina Journal of International Law and Business

No abstract provided.

Reforming The Global Value Chain Through Transnational Private Regulation, Kishanthi Parella

South Carolina Journal of International Law and Business

No abstract provided.

Putting The 'Financial Stability' In Financial Stability Oversight Council, Hilary Allen

Articles in Law Reviews & Other Academic Journals

For all the ink that has been spilled on the topic of financial regulation since the financial crisis of 2007-2008, there has been little examination of the competing normative goals of financial regulation. Should the financial system be treated as an end in itself such that the efficiency of that system is the primary goal? Or should financial regulation instead treat the financial system as a means to the end of broader economic growth? This Article argues for the latter approach, and stakes out the controversial normative position that financial stability, rather than efficiency, should be the paramount focus of …

Through The Looking Glass To A Shared Reflection: The Evolving Relationship Between Administrative Law And Financial Regulation, Gillian E. Metzger

Faculty Scholarship

Administrative law and financial regulation have an uneasy relationship today. It was not always so. Indeed, the two were closely intertwined at the nation's birth. The Treasury Department was a major hub of early federal administration, with Alexander Hamilton crafting the first iterations of federal administrative law in his oversight of revenue generation and customs collection. One hundred and fifty years later, administrative law and financial regulation were conjoined in the New Deal's creation of the modern administrative state. This time it was James Landis, Chair of the newly formed Securities and Exchange Commission (SEC) and author of the leading …

The Financial Benefits Of Corporate Social Responsibility In The Azeri Oil Industry, Thomas Moran

South Carolina Journal of International Law and Business

No abstract provided.

International Financial Law: The Case Against Close-Out Netting, Vincent R. Johnson

Faculty Articles

In financial transactions today, a practice called “close-out netting” plays a key role in controlling and allocating risks. If anchored in the parties’ chosen contractual language and recognized by law, close-out netting can circumvent normal bankruptcy processes by providing for the acceleration of mutual obligations and the efficient calculations and settlement of the net balance. When correctly implemented, close-out netting can eliminate the risk that arises under ordinary bankruptcy principles.

Despite the support for close-out netting by lenders, scholars, regulators, and policy makers, a few attentive observers of financial law argue that close-out netting is unsound, and the argument against …