Open Access. Powered by Scholars. Published by Universities.®
Articles 1 - 1 of 1
Full-Text Articles in Law
The Regulation Of Structured Debts: Why? What? And How?, Cyrus C. Y. Chu
The Regulation Of Structured Debts: Why? What? And How?, Cyrus C. Y. Chu
Cyrus C. Y. Chu
This article contributes to the legal theoretical foundation of the regulation of structured notes. We shall first anatomize the most typical kind of structured note, the collateralized debt obligation (CDO). We analyze the similarity between a CDO and a constructed pledged mortgage, point out the embedded fuzzy information behind this structured mortgage, and then identify the implicit externality of this mortgage construction. We argue that CDOs can be treated as properties instead of contracts, and the usual notion of numerus clausus does support more severe regulations on such properties. Most existing literature has emphasized the moral hazard problem of investment …