Banking and Finance Law Commons^™

Can Parallel Lines Ever Meet? The Strange Case Of The International Standards On Sovereign Debt And Business And Human Rights, Daniel D. Bradlow

Scholarly Articles in Law Reviews & Journals

This special issue is a cooperation of the Yale Journal of International Law and the United Nations Conference on Trade and Development (UNCTAD). It emerged from UNCTAD’s work on sovereign debt workouts, specifically from its Working Group on a Sovereign Debt Workout Mechanism (2013 to 2015). The working group developed a Roadmap and Guide for Sovereign Debt Workouts, published in 2015. It proposes an incremental approach to sovereign debt workouts that relies on the continuous, progressive development of sovereign debt restructuring practice. This work has inspired the adoption of Basic Principles for Sovereign Debt Restructuring by the United Nations General …

Fathoming Potential In China—How Ship Lease Financing Arrangements And Free Trade Zones May Open Markets To Non-Bank Investent, Rick Beaumont

American University Business Law Review

No abstract provided.

Understanding The Global In Global Finance And Regulation, Lawrence G. Baxter

Faculty Scholarship

No abstract provided.

25 Years, Where Are We Now? Global Trade & Sovereign Debt, Steven L. Schwarcz

Faculty Scholarship

No abstract provided.

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 …

Bank Frauds And Tracking The Hidden Assets, Albert F. Tellechea, Michael J. Cortes

Florida A & M University Law Review

Each year banks are the targets of insider and outsider fraudulent activity. Borrowers overstate their assets and holdings in order to obtain loans for which they would never otherwise qualify. Employees embezzle, steal, or conspire with crooked clients for a kickback, and billions are lost. Law enforcement agencies around the world are reporting increased instances of corporate, mortgage, and bank fraud. For example, the United States Federal Bureau of Investigations ("FBI") in its FY2007 Financial Crimes Report states that its corporate fraud cases doubled from five years earlier. Through FY2007, U.S. Grand Juries returned 183 indictments resulting in 173 convictions. …

Corporate Wrongdoing: Interactions Of Legal Mandates And Corporate Culture, Vincent Dilorenzo

Faculty Publications

In recent years, enforcement officials have imposed billions of dollars in sanctions on all major U.S. financial institutions and many major financial institutions abroad. Similar sanctions have been imposed on nonfinancial institutions. The sanctions are the result of findings of recurrent violations of law, as well as recidivism. Why have existing regulatory standards and enforcement policies led to repeated violations of law? Will the recent billion dollar sanctions deter future wrongdoing?

This article explores these issues by examining the philosophy motivating regulatory policy and action in the United States and United Kingdom, using financial regulators as a case study. This …

Why China Established The Asia Infrastructure Investment Bank, Daniel C.K. Chow

Vanderbilt Journal of Transnational Law

On January 16, 2016, China officially opened the Asia Infrastructure Investment Bank (AIIB) for business, representing what might be a seismic shift in economic power from the United States to China. The AIIB creates a challenge to the U.S.-dominated World Bank and International Monetary Fund (IMF), two venerable international financial institutions created at the end of World War II. The World Bank lends money to developing countries to promote economic development, but these loans come with conditions called the Washington Consensus--a set of policies designed to promote the use of private markets, protect the environment, protect human and workers' rights, …

Treating The New European Disease Of Consumer Debt In A Post-Communist State: The Groundbreaking New Russian Personal Insolvency Law, Jason J. Kilborn

Brooklyn Journal of International Law

This article examines the tumultuous transition from restrictive Communism to the debt-fueled consumer economy of modern Russia. In particular, it surveys Russia’s legal response to severe debt distress, situating it in the context of nearly one thousand years of historical development. Effective 1 October 2015, Russia finally joined most of its European neighbors in adopting a personal bankruptcy law, with characteristics that reflect both evolving international best practices and a series of lessons not learned. This article offers the first detailed exposition in English of the two steps forward represented by this new law, as well as an evaluation of …

Regulatory Incentive Realignment And The Eu Legal Framework Of Bank Resolution, Andromachi Georgosouli

Brooklyn Journal of Corporate, Financial & Commercial Law

Risks associated with incentive misalignment are liable to seriously jeopardize the effectiveness of bank resolution, when not properly contained. This Article considers the management of misaligned incentives between regulators that are found in a vertical relationship of public governance. Using the EU legal framework of bank resolution as its case study, this Article explores the effectiveness of the quasi-enforcement powers of the Single Resolution Board (SRB) and, where relevant, of the European Banking Authority (EBA) as an incentive realignment legal technique. Two principal difficulties are identified: on the one hand, the problematic interinstitutional dynamic of the SRB and the EBA …

Free Trade, The Washington Consensus, And Bilateral Investment Treaties The South African Journey: A Rethink On The Rules On Foreign Investment By Developing Countries, Ziyad Motala

American University Business Law Review

No abstract provided.

The Global Architecture Of Financial Regulatory Taxes, Carlo Garbarino, Giulio Allevato

Michigan Journal of International Law

This Article endeavors to broaden the analysis of available policy tools to address the problems created by financial crises and discusses how, in addition to direct regulation, certain tax measures having a regulatory nature may operate to address the so-called “negative externalities” often associated with those crises. There is a negative externality when an economic agent making a decision does not pay the full cost of the decision’s consequences. In such cases, the cost to society as a whole is greater than the cost borne by the individuals creating the economic impact. In practice, negative externalities result in market inefficiencies …

A Framework For A Formal Sovereign Debt Restructuring Mechanism: The Kiss Principle (Keep It Simple, Stupid) And Other Guiding Principles, Charles W. Mooney Jr.

Michigan Journal of International Law

This paper explores the feasibility of a formal legal regime for the restructuring of sovereign state debt and outlines a framework for such a mechanism. More than a decade ago, senior officials at the International Monetary Fund (IMF) proposed the creation of a formal sovereign debt restructuring mechanism (SDRM). The proposal received support, but was eventually abandoned. One factor that contributed to its demise was the unwillingness of IMF members to submit to a tribunal that would encroach on a state’s sovereignty. Another determinative factor was the ultimate opposition of the United States. Likely related to that opposition, and perhaps …

On Territoriality And International Investment Law: Applying China's Investment Treaties To Hong Kong And Macao, Odysseas G. Repousis

Michigan Journal of International Law

To date, investor-state tribunals have been preoccupied with a range of issues revolving around the territorial application (territoriality) of international investment agreements (IIAs). The importance, as well as the various forms such issues take, has recently been highlighted in the decision of the Singapore High Court (SGHC) in Laos v. Sanum. In this case, the SGHC was asked by Laos to set aside an earlier arbitral award (in Sanum v. Laos), filed by a Macanese legal entity and rendered under the China-Laos bilateral investment treaty (BIT). In approaching the matter, the SGHC set aside the award on the grounds that …

The Development Of Credit Co-Operatives Within The State Of Victoria, Australia, Peter Gilchrist Lumb, Kevin John Thompson

Akron Law Review

This article is intended to be of an informative rather than academic nature. As the reader will appreciate the co-operative movement in Victoria is still in its infancy and in consequence there has been little case law development in Victoria or throughout Australia.

The Role Of Central Banks In Global Austerity, Timothy A. Canova

Indiana Journal of Global Legal Studies

The literature on austerity, by scholars and policymakers alike, has largely downplayed the important role of central banks in designing and implementing global austerity both before and since the 2008 financial crisis. This article considers how and why the world's leading central banks display an inherent bias toward austerity. As central banks have become increasingly influenced and even captured by large private banks and financial institutions, they have pursued policy agendas that favor those same private interests. The structure of the U.S. Federal Reserve suggests a central bank that has been captured by design and is rife with inherent conflicts …

Can Banks Be Liable For Aiding And Abetting Terrorism?: A Closer Look Into The Split On Secondary Liability Under The Antiterrorism Act, Alison Bitterly

Fordham Law Review

    The Antiterrorism Act of 1990 (ATA) explicitly authorizes a private cause of action for U.S. nationals who suffer an injury “by reason of an act of international terrorism.” ATA civil litigation has increased dramatically following September 11, 2001—and banks, because of their deep pockets, have emerged as an increasingly popular target. Courts are divided concerning the scope of liability under the statute, specifically over whether the ATA authorizes a cause of action premised on secondary liability. Under a secondary liability theory, a plaintiff could argue that a bank, through providing financial services to a terrorist client, aided and abetted an …

Current Legal Matters Affecting Central Banks, Robert C. Effros

Georgia Journal of International & Comparative Law

No abstract provided.

Plaintiffs Carry Heavy Burden In Terror Suits Against Banks, Jimmy Gurulé

Journal Articles

Plaintiffs have a heavy burden to prove that the provision of routine financial services to suspected terrorists violated the ATA. While plaintiffs clearly met their burden in the Arab Bank case, that case did not involve the provision of routine banking services. Further, in the Palestinian Authority case several of the individuals who committed the terrorist attacks worked for the authority and were monetarily rewarded for their acts of terrorism.

Plaintiffs' lawyers in pending bank cases filed under the ATA therefore should be hesitant to read too much into the Arab Bank and Palestinian Authority verdicts.

Restructuring A Sovereign Bond Pari Passu Work-Around: Can Holdout Creditors Ever Have Equal Treatment?, Natalie A. Turchi

Fordham Law Review

    The rise of vulture fund investing in sovereign bonds has created additional hurdles to successful restructuring in an already fragile ad hoc process. Recent litigation in NML Capital, Ltd. v. Argentina has proven courts’ willingness to utilize powers of equity to enforce a ratable payment interpretation of the pari passu clause—the equal treatment provision commonly found in sovereign bond contracts—creating much uncertainty on how the ruling will affect future restructuring efforts. By looking to the tension in interpretations of the pari passu clause, discrepancies in remedial relief awarded, and international institutions’ proposed solutions, this Note analyzes the role of the …

The Hedge Fund Regulation Dilemma: Direct Vs. Indirect Regulation, Hossein Nabilou, Alessio M. Pacces

William & Mary Business Law Review

This Article studies regulatory strategies to address the potential systemic risk of hedge fund operation in financial markets. Due to the implications of the choice of regulatory strategies and instruments in terms of mitigating systemic risk, the Article focuses on one critical aspect of hedge fund regulation, namely the choice between direct regulation and indirect regulation. This Article defines the distinction between direct and indirect regulation, maps this distinction’s implications in terms of regulatory techniques and instruments, and analyzes the arguments for and against direct and indirect regulation of hedge funds. This Article argues that the indirect regulation of hedge …

Sustainability And Infrastructure Investment: National Development Banks In Africa, Daniel D. Bradlow, Christopher Strong Humphrey

Scholarly Articles in Law Reviews & Journals

The need for infrastructure finance in Africa is tremendous. A 2009 report by the World Bank suggests that the continent faces needs of US$93 billion per year. More recent studies, pointing to economic and population growth trends and using more sophisticated methods of assessing needs, indicate that infrastructure needs are actually much higher. Existing financing sources have not been able to keep pace.

In this context, the role of national development banks (NDBs) in the continent merits attention. As will be shown below, many African countries have NDBs, although the vast majority are quite small, with limited access to finance …

Variable Interest Entities: Alibaba's Regulatory Work-Around To China's Foreign Investment Restrictions, Kaitlyn Johnson

Loyola University Chicago International Law Review

No abstract provided.

The Greek Debt Crisis: The Need For "Heroic" Economic Policy Reforms In The European Economic And Monetary Union, Peter Robbins

Indiana Journal of Global Legal Studies

Greece is in the midst of a devastating economic and financial crisis that the European Union has been trying ardently to resolve since the default of Lehman Brothers in 2008. A significant number of other European Union (EU) Member States are also in crisis due to various state-level economic and monetary causes. Meanwhile, the European Union has consistently used the existing treaty articles and legislation within its competence to impose traditional and homogenized austerity measures on highly indebted Member States, most notably Greece. In sum, the European Union has zealously advocated for fiscal conservatism driven by the German "diber-fear" of …

The Relevance Of Law To Sovereign Debt, W. Mark C. Weidemaier, Mitu Gulati

Faculty Scholarship

The literature on sovereign debt treats law as of marginal significance, largely because the doctrine of sovereign immunity leaves creditors few potent legal remedies against sovereign borrowers. Although sovereign debts can indeed by hard to enforce, the goal of this Essay is to demonstrate that law plays a central, and constantly evolving, role in structuring sovereign debt markets. To list just a few examples, legal rules and institutions (i) decide when a borrower is sovereign, (ii) define the consequences of sovereignty by drawing (or refusing to draw) artificial boundaries between the sovereign and other legal entities, (iii) play some role …

The Macroprudential Turn: From Institutional 'Safety And Soundness' To Systematic 'Financial Stability' In Financial Supervision, Robert C. Hockett

Cornell Law Faculty Publications

Since the global financial dramas of 2008-09, authorities on financial regulation have come increasingly to counsel the inclusion of macroprudential policy instruments in the standard ‘toolkit’ of finance-regulatory measures employed by financial supervisors. The hallmark of this perspective is its focus not simply on the safety and soundness of individual financial institutions, as is characteristic of the traditional ‘microprudential’ perspective, but also on certain structural features of financial systems that can imperil such systems as wholes. Systemic ‘financial stability’ thus comes to supplement, though not to supplant, institutional ‘safety and soundness’ as a regulatory desideratum.

The move from primarily micro- …

Reforming The Global Value Chain Through Transnational Private Regulation, Kishanthi Parella

South Carolina Journal of International Law and Business

No abstract provided.

Breaking The Impasse: A Two-Pronged Approach For Resolving Sovereign Debt Holdout Disputes, Alexander Shapos

Cardozo Journal of Conflict Resolution

Sovereign debt holdout disputes implicate billions of dollars. For nearly a decade, one such dispute has led to a de facto embargo on Argentina as well as an inability for investment funds to enforce multibillion-dollar judgments. Thus, it is significantly in the interests of both future sovereign bond issuers and future creditors to preemptively avoid unproductive impasses. But with no existing formal bankruptcy regime, sovereigns are left to litigate, arbitrate, or negotiate their debt disputes. This Note proposes that litigation is an inappropriate remedy to resolve such disputes-and instead, it proposes a two-pronged approach for preventing and resolving disputes. The …

Bank Resolution In The European Banking Union: A Transatlantic Perspective On What It Would Take, Jeffrey N. Gordon, Wolf-Georg Ringe

Faculty Scholarship

The project of creating a Banking Union is designed to overcome the fatal link between sovereigns and their banks in the Eurozone. As part of this project, political agreement for a common supervision framework and a common resolution scheme has been reached with difficulty. However, the resolution framework is weak, underfunded and exhibits some serious flaws. Further, Member States' disagreements appear to rule out a federalized deposit insurance scheme, commonly regarded as the necessary third pillar of a successful Banking Union. This paper argues for an organizational and capital structure substitute for these two shortcomings that can minimize the systemic …

International Trade In Services From The Japanese Viewpoint, Masato Dogauchi

Georgia Journal of International & Comparative Law

No abstract provided.