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Full-Text Articles in Law
Compensating Market Value Losses: Rethinking The Theory Of Damages In A Market Economy, Steven L. Schwarcz
Compensating Market Value Losses: Rethinking The Theory Of Damages In A Market Economy, Steven L. Schwarcz
Steven L Schwarcz
The BP Gulf oil spill and the Toyota car recalls have highlighted an important legal anomaly that has been overlooked by scholars—judicial inconsistency and confusion in ruling whether to compensate for the loss in market value of wrongfully affected property. This article seeks to understand the anomaly and, in the process, build a stronger foundation for enabling courts to decide when—and in what amounts—to award damages for market value losses. To that end, the article analyzes the normative rationales for generally awarding damages, adapting those rationales to derive a theory of damages that not only covers market value losses of …
The Conundrum Of Covered Bonds, Steven L. Schwarcz
The Conundrum Of Covered Bonds, Steven L. Schwarcz
Steven L Schwarcz
Covered bonds, which have been part of European finance since the time of Frederick the Great, are now being widely touted as the answer to securitization’s imperfections. There is great confusion, though, about the nature of covered bonds and their relationship to secured bond financing and securitization. This article attempts to demystify covered bonds, examining how they fit within a larger financing framework, analyzing their legal rights and obligations, and comparing their costs and benefits. The benefits of covered bonds are similar to those of securitization; both can access low-cost capital market funding with low risk to their investors, and …
Complexity As A Catalyst Of Market Failure, Steven L. Schwarcz
Complexity As A Catalyst Of Market Failure, Steven L. Schwarcz
Steven L Schwarcz
This article examines how the complexities of modern financial markets and investment securities can trigger market failure. The article also analyzes what steps, including possible regulation, should be taken to reduce the potential for failure. Because market complexities and failures are characteristic of complexities and failures in engineering systems with nonlinear feedback, the analysis draws on the literature analyzing those systems.
Complexity As A Catalyst Of Market Failure: A Law And Engineering Inquiry, Steven L. Schwarcz
Complexity As A Catalyst Of Market Failure: A Law And Engineering Inquiry, Steven L. Schwarcz
Steven L Schwarcz
This article examines how the complexities of modern investment securities and the assets underlying them can trigger a breakdown of financial markets and also analyzes what should be done to mitigate the potential for market failure. Because these complexities are characteristic of complexities in nonlinear engineering systems, the article’s analysis draws on the literature analyzing these systems.
Bond Defaults And The Dilemma Of The Indenture Trustee , Steven L. Schwarcz, Gregory M. Sergi
Bond Defaults And The Dilemma Of The Indenture Trustee , Steven L. Schwarcz, Gregory M. Sergi
Steven L Schwarcz
This article, attached for your review, rethinks the standard of care for trustees of public bonds. The present standard is intolerably vague, generating cost and inefficiency in the public bond markets. Yet bondholder governance is increasingly recognized as a critical component of the larger realm of corporate governance, and indeed more than eighty percent of capital market financing raised by U.S. corporations now occurs through public bond offerings. This article examines how that standard of care should be modified to make indenture trustees more effective.