Law Commons^™

Free Falling With A Parachute That May Not Open: Debtor-In-Possession Financing In The Wake Of The Great Recession, Jarrod B. Martin, Kristofor Nelson, Eric Rudenberg, Jonathan Squires

Jarrod B Martin

Debtor-in-possession (DIP) financing is one of the most important building blocks of a Chapter 11 bankruptcy case. The recent economic downturn, however, has frozen the DIP financing market. Absent the financing necessary to reorganize, many companies will be forced to liquidate. Who will fill the void in DIP financing as banks exit the market? This note seeks to explore alternative options—local banks, the government, and private equity or hedge funds—that may fill the vacuum left by the banks, and the risks and rewards associated with DIP financing. As these alternate institutions go forward, the landscape of DIP financing may forever …

Mortgage Market Regulation And Moral Hazard: Equity Stripping Under Sanction Of Law, Vincent Di Lorenzo

Vincent Di Lorenzo

No abstract provided.

The Milgram Universe Of Credit Derivatives: A Regulatory Proposal, Grace Chong

Grace Chong

Much work in social psychology suggests that in compressed and interactively complex systems, subjects surrender responsibility for their actions in full faith of the system. The leading experiment on obedience, the Milgram experiment, was originally devised by Stanley Milgram to test the willingness of subjects to comply with acts against their conscience under the instruction of authority. However, his later findings, and further research by other academics have expanded the scope of his previous conception of ‘authority’ to hospital studies , aviation , and business contexts. No research has yet been conducted as to the relation between Milgram’s theory and …

The Coming Demise Of Deregulation Ii, Richard D. Cudahy

Richard D. Cudahy

An article that I had written in 1993, which forecast the "coming demise of deregulation," might at last be vindicated by the fallout from the banking and credit crisis. This article discuses recent developments in the banking and financial services industry, and anticipates a resurgence of regulation.

Code, Crash, And Open Source: The Outsourcing Of Financial Regulation To Risk Models And The Global Financial Crisis, Erik F. Gerding

Erik F. Gerding

The widespread use computer-based risk models in the financial industry in the last two decades enabled the marketing of more complex financial products to consumers, the growth of securitization and derivatives, and the development of sophisticated risk management strategies by financial institutions. Over this same period, regulators increasingly delegated or outsourced vast responsibility for regulating risk in both consumer finance and financial markets to these private industry models. The proprietary risk models of financial institutions thus came to serve as a “new financial code” that regulated transfers of risk among consumers, financial institutions, and investors.

The spectacular failure of financial …

Testimony Before The U.S. House Committee On Agriculture On The “Discussion Draft: The Derivatives Market Transparency And Accountability Act Of 2009.”, Michael Greenberger

Congressional Testimony

Testimony before the U.S. House of Representatives, Committee on Agriculture. 111th Congress, 1st Session (2009).

Testimony Of Michael Greenberger Before The Commodity Futures Trading Commission On “Excessive Speculation: Position Limits And Exemptions.”, Michael Greenberger

Congressional Testimony

Testimony before the Commodity Futures Trading Commission (August 5, 2009).

Code, Crash, And Open Source: The Outsourcing Of Financial Regulation To Risk Models And The Global Financial Crisis, Erik F. Gerding

Publications

The widespread use of computer-based risk models in the financial industry during the last two decades enabled the marketing of more complex financial products to consumers, the growth of securitization and derivatives, and the development of sophisticated risk-management strategies by financial institutions. Over this same period, regulators increasingly delegated or outsourced vast responsibility for regulating risk in both consumer finance and financial markets to these privately owned industry models. Proprietary risk models of financial institutions thus came to serve as a "new financial code" that regulated transfers of risk among consumers, financial institutions, and investors.

The spectacular failure of financial-industry …

Those Who Forget The Regulatory Successes Of The Past Are Condemned To Failure, William K. Black

Faculty Works

This paper shows that the reregulation of the savings & loan (S&L) industry was successful because the regulators correctly identified the primary cause of the second phase of the debacle as an epidemic of “accounting control fraud” and took effective measures to contain such frauds. Control frauds occur when the persons controlling a seemingly legitimate organization use it as a “weapon” to defraud. In the financial sector, accounting control fraud is the “weapon of choice.” The regulators’ primary insights were (1) that lenders optimize accounting fraud by engaging in a distinctive operational pattern that would be irrational for any honest …