Banking and Finance Law Commons^™

Foreclosure Diversion And Mediation In The States, Alan M. White

Georgia State University Law Review

The recent mortgage foreclosure crisis, whose economic effects are well known, transformed state legal structures governing the mortgage foreclosure process. What had been a relatively routine system of default judgments and auction sales has evolved into a negotiation and workout practice in which homeowners contest foreclosures, demand loan modifications and short sales, and propose other alternatives to foreclosures.

A profusion of state laws and court orders were adopted between 2008 and 2014 with the aim of promoting negotiated foreclosure alternatives. These laws have produced a variety of experiments in the “laboratories of democracy.” The defaults—whether home loans are renegotiated, defaults …

Regulating Debt Collection, Christopher K. Odinet, Roederick C. White

Faculty Scholarship

Debt collection. It often starts as a late night call carrying threats of being thrown in prison, ruin at the workplace, and trouble for the family unless you pay up. While the law actually prohibits some of these tactics, most consumers do not know their legal rights, which leave much to be desired, or fail to exercise them when faced with the harassing practices of some debt collectors. Moreover, the debt collection industry as a whole — both massive and sophisticated — lacks the incentives to self-police or internally punish bad actors. In July 2016 the Consumer Financial Protection Bureau …

Dodd-Frank Repeal Unappealing For Homeowners, David J. Reiss

Cornell Law Faculty Working Papers

No abstract provided.

Consumer Credit In America: Past, Present, And Future, Pamela Foohey, Jim Hawkins, Creola Johnson, Nathalie Martin

Articles by Maurer Faculty

In September 2016, in conjunction with Law & Contemporary Problems at Duke University School of Law, we organized a symposium on Consumer Credit in America. We sought to assess the state of consumer credit in America — to review and examine its recent history, to consider arguments for and against regulation, and to discuss the potential for future innovation. This is the introduction to the volume of articles coming out of that symposium.

The Dark Side Of Self-Regulation, Benjamin P. Edwards

Scholarly Works

The financial services industry indirectly regulates itself through little discussed, scandal-prone, and structurally-entrenched self-regulatory organizations. FINRA, the most prominent of these self-regulatory organizations, makes regulations and sets enforcement policy that directly affect public welfare. As with other self-regulatory organizations, FINRA's structure poses a continual risk that industry members will subvert its processes to act like a cartel, promoting industry interests at the expense of the public and contributing to the excessive rents collected by financial intermediaries. Although this dark side to self-regulation poses a constant danger, structural reforms may increase the likelihood that FINRA and other self-regulatory organizations will take …

Mandatory Arbitration In Consumer Finance And Investor Contracts, Michael S. Barr

Book Chapters

This chapter focuses on the use of mandatory pre-dispute arbitration clauses in a subset of consumer contracts – those involving consumer finance and investor products and services. Arbitration clauses are pervasive in financial contracts – for credit cards, bank accounts, auto loans, broker-dealer services, and many others. In the wake of the recent financial crisis, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank). Dodd-Frank authorises the new Consumer Financial Protection Bureau (CFPB) and the Securities and Exchange Commission (SEC) to prohibit or condition the use of arbitration clauses in consumer finance and investment contracts, …

Financial Reform: Making The System Safer And Fairer, Michael S. Barr

Articles

In the fall of 2008, the financial crisis crushed the U.S. economy and plunged the country into the Great Recession. The crisis shuttered American businesses, cost millions of Americans their jobs, and wiped out home values and household savings. The macro effects hit hardest and were the longest lasting for those least able to bear the brunt of the crisis. It was devastating to middle-income families and perhaps even more so to low- and moderate-income households, who had little financial buffer (Barr 2012a). Financial stability, never robust for these families, dropped precipitously (Barr and Schaffa 2016). Both in the United …

Regulating A Revolution: From Regulatory Sandboxes To Smart Regulation, Dirk A. Zetzsche, Ross P. Buckley, Janos N. Barberis, Douglas W. Arner

Fordham Journal of Corporate & Financial Law

Prior to the global financial crisis, financial innovation was viewed very positively, resulting in a laissez-faire, deregulatory approach to financial regulation. Since the crisis the regulatory pendulum has swung to the other extreme. Post-crisis regulation, plus rapid technological change, have spurred the development of financial technology (FinTech). FinTech firms and data-driven financial service providers profoundly challenge the current regulatory paradigm. Financial regulators increasingly seek to balance the traditional regulatory objectives of financial stability and consumer protection with promoting growth and innovation. The resulting regulatory innovations include RegTech, regulatory sandboxes, and special charters. This Article analyzes possible new regulatory approaches, ranging …

From Systemic Risk To Financial Scandals: The Shortcomings Of U.S. Hedge Fund Regulation, Marco Bodellini

Brooklyn Journal of Corporate, Financial & Commercial Law

In the recent past, hedge funds have demonstrated that they can pose and spread systemic risk across the financial markets, and that their managers can use them to commit fraud and misappropriation of fund assets. Even if the first issue now seems to be considered a serious one by the U.S. legislature, which in 2010, as a legislative response to the global financial crisis of 2007-2008, enacted the Dodd-Frank Act Wall Street Reform and Consumer Protection Act (Dodd-Frank), the current regulation still appears inconsistent and inappropriate to prevent and face it. By contrast, the second issue is not always considered …

Consumer Credit In America: Past, Present, And Future, Pamela Foohey, Jim Hawkins, Creola Johnson, Nathalie Martin

Faculty Scholarship

We began organizing this symposium at the start of 2016 with the recognition that consumer credit and financial services were in a state of flux prompted in significant part by the Great Recession. The Dodd-Frank Wall Street Reform and Consumer Protection Act brought with it the Consumer Financial Protection Bureau. The CFPB’s creation marked the most significant moment in modern American consumer law. Consumers gained an advocate charged with protecting them through researching, monitoring, and regulating the providers of consumer financial products and services, enforcing federal consumer financial protection laws, and, as importantly, empowering consumers.

Calling On The Cfpb For Help: Telling Stories And Consumer Protection, Pamela Foohey

Articles by Maurer Faculty

Since it began operating in 2011, the Consumer Financial Protection Bureau (CFPB) has handled more than a million complaints regarding consumer financial product and services. Beginning in June 2015, the CFPB began publishing consumers’ narratives submitted with their complaints. This Article analyses a random sample of 5,000 of these narratives to assess how people engage with the complaint mechanism in light of the CFPB’s role in processing complaints. I find that people predominately use the complaint function for two distinct purposes: to express their anger and frustration about companies’ practices, or to express sadness and fear about how companies’ practices …

The Skeleton Of A Data Breach: The Ethical And Legal Concerns, Hilary G. Buttrick, Jason Davidson, Richard J. Mcgowan

Richmond Journal of Law & Technology

After over thirty data breaches spanning the third and fourth quarter of 2012, Forbes magazine labeled the summer of 2012 as “The Summer of the Data Breach.” Four years later, businesses across multiple industries have suffered brand-image damage and paid millions of dollars in remedial expenses; we are living in the era of the mega breach. In 2014, companies such as Target, Home Depot, JP Morgan Chase, Anthem, Sony, UPS, Jimmy John’s, Kmart, Neiman Marcus, Community Health Systems, and the White House suffered data breaches. The Home Depot breach alone resulted in the loss of “56 million credit card accounts,” …

Expanding The Credit Box, David J. Reiss

Cornell Law Faculty Working Papers

The mortgage market of the early 2000s provided mortgage credit to too many people who could not make their monthly payments on the terms offered. The pendulum has now swung. Today’s market offers very few unsustainable mortgages, but it fails to provide credit to some who could afford them. That means that the credit box is not at its socially optimal size. The Consumer Financial Protection Bureau should make it a priority to review the regulatory regime for non-Qualified Mortgages in order to ensure that the functional credit box is expanded to more closely approximate the universe of borrowers who …

Johnson V. Wells Fargo Bank Nat’L Ass’N, 132 Nev. Adv. Op. 70 (September 29, 2016), Brittni Griffith

Nevada Supreme Court Summaries

The Court considered whether the Bank Secrecy Act prevents financial institutions from disclosing all investigative information in discovery to an adverse party. The Court held that the Bank Secrecy Act only precludes the disclosure of information relating to the existence of a suspicious activity report or the procedural nature of the suspicious activity report’s generation.

Ffiec Consumer Compliance Comment Letter, David J. Reiss

Cornell Law Faculty Working Papers

The Federal Financial Institutions Examination Council (FFIEC) issued a notice and request for comment regarding the Uniform Interagency Consumer Compliance Rating System (CC Rating System). The FFIEC is seeking to revise the CC Rating System “to reflect the regulatory, examination (supervisory), technological, and market changes that have occurred in the years since the current rating system was established.” 81 F.R. 26553. It is a positive development that the federal government is seeking to implement a consistent approach to consumer protection across a broad swath of the financial services industry. Nonetheless, the proposed CC Ratings System can be refined to further …

Underwriting Sustainable Homeownership: The Federal Housing Administration And The Low Down Payment Loan, David Reiss

Cornell Law Faculty Publications

The United States Federal Housing Administration (“FHA”) has been a versatile tool of government since it was created during the Great Depression. The FHA was created in large part to inject liquidity into a moribund mortgage market. It succeeded wonderfully, with rapid growth during the late 1930s. The federal government repositioned it a number of times over the following decades to achieve a variety of additional social goals. These goals included supporting civilian mobilization during World War II; helping veterans returning from the War; stabilizing urban housing markets during the 1960s; and expanding minority homeownership rates during the 1990s. It …

The Insurability Of Claims For Restitution, Christopher French

Faculty Scholarship

Does and should a wrongdoer’s liability insurance cover an aggrieved party’s claim for restitution (e.g., a claim for the disgorgement of ill-gotten gains)? This article answers those questions. It does so by first answering the question of whether claims for restitution are covered under the terms of liability insurance policies. Then, after concluding that they are, it addresses the question of whether claims for restitution should be insurable as a matter of public policy and insurance law theory. There are long-standing legal and equitable principles that, on the one hand, dictate that a wrongdoer should not be allowed to benefit …

Prostitution Policy: Legalization, Decriminalization And The Nordic Model, Ane Mathieson, Easton Branam, Anya Noble

Seattle Journal for Social Justice

No abstract provided.

Don’T Risk It; Wait Until She’S Sober, Patrick John White

Seattle Journal for Social Justice

No abstract provided.

Let’S Talk About Sex: A Call For Guardianship Reform In Washington State, Sage Graves

Seattle Journal for Social Justice

No abstract provided.

Living Under The Boot: Militarization And Peaceful Protest, Charlotte Guerra

Seattle Journal for Social Justice

No abstract provided.

Let’S Invest In People, Not Prisons: How Washington State Should Address Its Ex-Offender Unemployment Rate, Sara Taboada

Seattle Journal for Social Justice

No abstract provided.

His Feminist Facade: The Neoliberal Co-Option Of The Feminist Movement, Anjilee Dodge, Myani Gilbert

Seattle Journal for Social Justice

No abstract provided.

In Her Words: Recognizing And Preventing Abusive Litigation Against Domestic Violence Survivors, David Ward

Seattle Journal for Social Justice

No abstract provided.

Mobile Banking: The Answer For The Unbanked In America?, Catherine Martin Christopher

Catholic University Law Review

In the United States, the poor often lack access to mainstream banking services. Instead, they rely on expensive, poorly regulated alternatives like check cashers, payday lenders, pawnshops, and auto title lenders. These financial products jeopardize poor people’s financial and physical security. In pushing adoption of traditional banking products, both government officials and private enterprise have attempted to craft solutions to the banking access problem, but so far these attempts have fallen short. This Article asserts that mobile banking may be a transformative technology that can significantly increase financial inclusion in the United States.

The Article discusses current statistics and demographics …

Newsroom: Freedman On Credit Reports 02-12-2016, Roger Williams University School Of Law

Life of the Law School (1993- )

No abstract provided.

Hurrah For The Consumer Financial Protection Bureau: Consumer Arbitration As A Poster Child For Regulation, Jean R. Sternlight

Scholarly Works

Drawing on economic, psychological and philosophical considerations, this Essay considers whether consumers should be "free" to "agree" to contractually trade their opportunity to litigate in a class action for the opportunity to bring an arbitration claim against a company. The Essay suggests that by looking at the CFPB's regulation through these three lenses, one sees that the regulation is desirable—even a poster child—for the potential value of regulation when market forces are not sufficient to protect individual or public interests.

The Challenge Of Fiduciary Regulation: The Investment Advisors Act After Seventy-Five Years, Roberta S. Karmel

Brooklyn Journal of Corporate, Financial & Commercial Law

Seventy-five years after its enactment the Investment Advisers Act of 1940 has advanced from a relatively weak statute merely registering advisers with the Securities and Exchange Commission (SEC) to a more robust law imposing fiduciary responsibilities on advisers. Over the years, the number of investment advisers and the number of their clients have increased greatly. The SEC therefore has been pressured by Congress to develop a harmonized fiduciary standard for broker-dealers and advisers and also to develop and enforce a greater degree of oversight over the advisory industry. These developments have raised the questions of how to fund such efforts …

The Customer's Nonwaivable Right To Choose Arbitration In The Securities Industry, Jill I. Gross

Brooklyn Journal of Corporate, Financial & Commercial Law

Arbitration has been the predominant form of dispute resolution in the securities industry since the 1980s. Virtually all brokerage firms include predispute arbitration agreements (PDAAs) in their retail customer contracts, and have successfully fought off challenges to their validity. Additionally, the industry has long mandated that firms submit to arbitration at the demand of a customer, even in the absence of a PDAA.

More recently, however, brokerage firms have been arguing that forum selection clauses in their agreements with sophisticated customers (such as institutional investors and issuers) supersede firms’ duty to arbitrate under FINRA Rule 12200. Circuit courts currently are …

The Sixth Pillar Of Anti-Money Laundering Compliance: Balancing Effective Enforcement With Financial Privacy, Maria A. De Dios

Brooklyn Journal of Corporate, Financial & Commercial Law

The U.S. government has responded to the increase of financial crimes, including money laundering and terrorist financing, by requiring that financial institutions implement anti-money laundering compliance programs within their institutions. Most recently, the Financial Crimes Enforcement Network exercised its regulatory powers, as authorized by the Treasury Department, by proposing regulations that now explicitly add customer due diligence to the preexisting anti-money laundering regime. The policy behind the government’s legislative and regulatory measures is clear—financial institutions must ensure that they are protected from and not aiding in the illegal efforts of criminals. The complexity and insidiousness of these financial crimes makes …