Law Commons^™

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 …

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

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 …

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 …

Systemically Significant Prices, Robert C. Hockett, Saule T. Omarova

Cornell Law Faculty Publications

Some prices and indices in national or transnational markets take on particular market-wide importance, either because (a) they are associated with ubiquitous inputs to production, (b) they are associated with highly popular asset classes, (c) they tend by convention to be used as benchmarks in determining other prices, or (d) some combination of the above. Examples include prevailing wage and salary rates, certain energy and commodity prices, and such indices and borrowing rates as the Standard & Poor’s 500, the Federal Funds Rate, and the Libor and Euribor interbank lending rate benchmarks.

We call such prices and indices 'systemically important' …

"Special," Vestigial, Or Visionary? What Bank Regulation Tells Us About The Corporation - And Vice Versa, Robert C. Hockett, Saule T. Omarova

Cornell Law Faculty Publications

A remarkable yet seldom noted set of parallels exists between modern U.S. bank regulation, on the one hand, and what used to be garden-variety American corporate law, on the other hand. For example, just as bank charters are matters not of right but of conditional privilege even today, so were all corporate charters not long ago. Just as chartered banks are authorized to engage only in limited, enumerated activities even to- day, so were all corporations restricted not long ago. And just as banks are subject to strict capital regulation even today, so were all corporations not long ago.

In …

The Challenge Of Legitimacy In Sovereign Debt Restructuring, Odette Lienau

Cornell Law Faculty Publications

Since the emergence of the post-World War II international economic system, policymakers have lamented the absence of a global sovereign debt restructuring mechanism. This disappointment has only intensified in recent years, as the failure to provide prompt, comprehensive, and lasting debt relief becomes even more apparent. As a result, scholars and key international actors have argued for the development of a more coherent global approach to debt workouts. But to date this discussion lacks a sustained focus on questions of legitimacy—a fact that is exceptionally puzzling in light of the voluminous scholarship on the legitimacy deficits of international economic institutions …