Banking and Finance Law Commons^™

Recent Cases, Linda A. Bunsey, David M. Thompson, Charles K. Campbell, Jr., Keith B. Simmons, Thomas C. Hundley

Vanderbilt Law Review

If the instant case, rather than Northway, is to become the accepted rule in the area of discounting, consumers and state lenders will be protected while the national bank-lenders will be burdened only slightly, if at all. National banks located in states that permit state lenders to discount loans at the maximum rate, with-out regard to the actual yield, will not be affected. National banks located in states that permit state lenders to discount only to the extent that the actual yield is within the statutory maximum will need to change their practices merely by charging the statutory rate only …

Legal Protection Of Loans To Developing Country Borrowers, Lajos Schmidt

Vanderbilt Journal of Transnational Law

At the Bretton Woods Conference in July 1944, in introducing the proposal for what is today the World Bank, John Maynard Keynes predicted: "In the dangerous and precarious days which lie ahead, the risks of the lender will be inevitably large and most difficult to calculate. The risk premium reckoned on strict commercial principles may be beyond the capacity of an impoverished borrower to meet, and may itself contribute to the risks of ultimate default." Three decades later this problem of the gap between the developed-country lender's required risk premium and the developing-country borrower's ability to generate an investment return …

Emerging Neo-Mercantilism In Canadian Policy Toward State Enterprises And Foreign Direct Investment, Douglas F. Lamont

Vanderbilt Journal of Transnational Law

Canadians have written many volumes about their relative inability to preserve their domestic economy from the deepening entanglements of American foreign investment. They cite such highly visible names as Exxon and General Motors for special notice since their Canadian subsidiaries dominate their respective local industries. Canadian nationalists fear that these firms as well as others from the United States will rejuvenate the now discredited continental thesis, which calls for the economic merger of Canada and the United States into one highly-integrated North American market. So uneasy are Canadians about potential American challenges to their sovereignty that they have resurrected mercantilistic …

International Lending: The Case For Developing Nations, Harold G. Maier

Vanderbilt Journal of Transnational Law

As is peculiarly appropriate for any conference dealing with a rapidly developing and constantly changing area of international economic activity, both the speakers and the participants at this meeting raised more questions than were answered. A principal theme, illustrated by the papers reproduced here, was the need for careful consideration of the problem--legal and commercial-- involved in international lending on the basis of specific information concerning its effect, its promise and the needs involved. Generalizations concerning activities in developing countries are increasingly ineffective as guides to government or business policy or academic inquiry. Recent events in the Middle East confirm …

Foreign Banking In The United States, James A. Johnson

Vanderbilt Journal of Transnational Law

Foreign banking in the United States is no longer a nominal activity. The assets of foreign bank agencies and branches tripled from 1965 to 1972, increasing to approximately 13 billion dollars. During this same time, assets of United States banks abroad rose to 75 billion dollars-an eight-fold increase.

Yet, despite this dramatic growth--which surely will continue--the United States remains the only major country in which foreign banking is not supervised at the national level. No valid constitutional or practical reasons exist to support state control. Although New York and California, which share the major portion of foreign banking at the …

Securities Regulation In Switzerland, Roger Dagon

Vanderbilt Journal of Transnational Law

The Swiss system of securities regulation, to the extent that it exists at all, is primarily a system of self-regulation. The basic company law, the Code des obligations of 1911, as amended, which enumerates the minimum disclosure requirements for public offerings of foreign or domestic debt securities and for public offerings of new shares of domestic corporations, represents the only formal regulation of corporate issues. The Code exempts secondary offerings of outstanding shares as well as initial issues of foreign shares. Secondary offerings of outstanding shares and issues of new foreign shares, however, must comply with the prospectus requirements established …

Toward Greater Flexibility In The Exchange Rate Regime Of The International Monetary Fund: The Widening Of The Band, Swadesh S. Kalsi

Vanderbilt Journal of Transnational Law

It is a commendable achievement that, in the atmosphere of a war shattered world, it was at all possible to fashion an international currency system at the Bretton Woods Conference in 1944. Indeed, the International Monetary Fund represents a historic milestone in international cooperation. Since its inception at Bretton Woods, however, the international monetary system has been plagued by two major problems. First, the expanded use of trade constraints by countries following policies of full employment and internal price stability tends to foster a balance of payments disequilibrium; consequently, the present mechanism for adjustment is not satisfactory. Events after May …

The One-Bank Holding Company Conglomerate, Franklin R. Edwards

Vanderbilt Law Review

In response to strong opposition, the political tide is slowly moving towards restrictive legislation that may well spell the demise of the one-bank holding company movement. But regardless of its form,the legislation ultimately adopted is certain to have an important influence on the future of our financial structure since many of the basic structural aspects are at issue. It therefore provides Congress with a golden opportunity to make fundamental changes. In effect, Congress's task is to reappraise our financial system with a view towards determining whether its underlying structure is still compatible with present goals and contemporary needs and, if …

Recent Cases, Law Review Staff

Vanderbilt Law Review

Constitutional Law--Armed Forces--Courts-Martial Jurisdiction over Military Personnel Limited to Service--Connected Offenses

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Constitutional Law--Desegregation--Public Housing Authority Required to Build Most Units in White Neighborhoods

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Constitutional Law--Double Jeopardy--Fifth Amendment's Guarantee against Double Jeopardy is Applicable to the States through the Fourteenth Amendment

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Constitutional Law--Garnishment--Prejudgment Wage Garnishment, in Absence of Conditions Requiring the Special Protection of a State or Creditor Interest, Violates the Due Process Clause of the Fourteenth Amendment

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Constitutional Law--State Taxation--State Use Tax Invalidly Applied to Fuel Gas Used as an Integral Part of Interstate Commerce

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Corporations--Corporate Director Accountable to Corporation Under State Law for Profits …

Bank Merger Policy And The Third National Bank Decision, Benjamin J. Klebaner

Vanderbilt Law Review

As measured by regional standards, banking in Tennessee's capital for years centered around three very large institutions and one of middle size. The latter, Nashville Bank and Trust Company(hereinafter Nashville Bank), merged into Third National Bank (the second largest bank in the area) in August, 1964, after the Justice Department failed to secure a preliminary injunction blocking the merger. This left Davidson County (the county in which Nashville is located) with seven banks, four of which were quite small. Nashville Bank was less than one-fourth the size of third-ranking Commerce Union Bank, but almost seven times as large as the …

International Agencies And The Capital Formation Process, Lester Nurick

Vanderbilt Journal of Transnational Law

The theme of my address will be (a) the principal means by which the international public lending institutions (principally the International Bank for Reconstruction and Development--the World Bank), the International Development Association (IDA), the International Finance Corporation (IFC), and the Inter-American Development Bank (IADB)) join with others in the channeling of funds from private, governmental and other international sources for development projects, and (b) some of the main legal problems which arise.

An operation of this kind is usually called a joint financing operation. However, it should be noted that in a sense every loan by an international organization for …

Book Reviews, Herman L. Trautman, W. Harold Bigham

Vanderbilt Law Review

THE BEST OF TRUSTS AND ESTATES-ESTATE PLANNING

There are one hundred and four articles arranged in eight chapters entitled, "Estate Planning-A Panoramic View," "Using the Marital Deduction, "Income Tax Planning, " "Making the Most of Gifts,""Minimizing Administration Problems," "How to Handle Business Interests," "Arranging Life Insurance," and "Drafting Wills and Trusts." The citation and date of the original publication of each article is stated, and in many instances there is an addendum by the author which brings the article up to the date of the book. In addition there are excellent introductory commentaries by the editors at the beginning of …

Legislation, Law Review Staff

Vanderbilt Law Review

In United States v. Philadelphia Nat'l Bank,' the Supreme Court enjoined a proposed merger of the second and third largest commercial banks in Philadelphia. The Court held, inter alia, that section 7 of the Clayton Act 2 applied to bank mergers, and that the merger in question might substantially lessen competition. Central to the reasoning of the majority was the premise that an unchecked trend toward concentration of market power in commercial banking is contrary to the public interest in maintaining competition among existing commercial banks. Since commercial banking had traditionally been considered exempt from section 7 prosecution, the cry …

Credit Unions--Regulatory Control Development--Problems--Recommendations, Charles D. Matthews

Vanderbilt Law Review

An awareness of the credit union, its economic and social impact,has a special significance to the lawyer. Although such significance appears minimized by a dearth of litigation addressed to credit unions in the past, this is not a true reflection of fact; nor would a true history of credit union litigation be a guide to the future. The lack of identifiable credit union litigation is chiefly due to the lack of appreciation by the bench for the distinguishing features of savings and loan associations, commercial banks, and credit unions. Two prospective developments should cause increased attorney contact with credit unions. …

The Scope Of The Depositor's Duty To Prevent And Discover Alterations And Forgeries Of His Checks, J. Timothy White

Vanderbilt Law Review

With billions of dollars worth of commercial paper changing hands daily, the business world cannot afford uncertainty as to the duties of the various parties to the paper, for uncertainty hinders negotiability. This is especially true in the case of the relationship between the drawer-depositor of a check and the drawee bank. Clearly the drawee may not normally debit the drawer's account when it pays a forged or materially altered instrument. However, when the drawer carelessly executes a check or does not bother to examine his checks when they are cancelled and returned to him, different considerations arise, altering the …

Capital Gains Tax: Significance Of Changes In Holding Period And Long Term Rate, Harold M. Somers

Vanderbilt Law Review

The capital gains tax. in this country has been subject to a number of changes in holding period and long-term rate. Once again, revisions are under consideration. The Administration's tax proposals of 1963 contemplate a change in the holding period from six months to one year and a change in the long-term rate from 50 per cent of the ordinary income bracket, with a maximum tax rate of 25 percent, to a simple inclusion of 30 per cent of long-term gains. With the proposed reduction in ordinary income brackets from a range of 20-91 per cent to a range of …

Equity -- 1961 Tennessee Survey, T. A. Smedley

Vanderbilt Law Review

During the past year noteworthy decisions have been handed down by the Tennessee courts relating to the availability of injunctive relief to restrain the perpetration of a nuisance, the commission of a trespass, the violation of a non-competition covenant, and the prosecution of an action at law. A suit for specific performance required a determination on the issue of whether the written memorandum was sufficient to satisfy the statute of frauds; and a ruling on the application of the clean hands maxim was necessary in a suit to remove a cloud on title. Finally, a clarification was made regarding a …

Agency -- 1956 Tennessee Survey, F. Hodge O'Neal

Vanderbilt Law Review

The appellate courts of Tennessee and the United States Court of Appeals for the Sixth Circuit handed down during the survey period a considerable number of interesting and significant cases dealing with the Tennessee law of agency. This article groups the cases and arranges them under topic headings. In most instances, the discussion of the case or cases under a topic heading is preceded by brief background material designed to place the cases in their proper setting and aid the reader in evaluating them.

Replevin Of The Contents Of Safe Deposit Boxes, Beverly Douglas Jr.

Vanderbilt Law Review

It is often stated that a plaintiff cannot recover in replevin' or detinue unless the defendant is in possession of the disputed goods at the commence- ment of the action. This requirement is fundamentally one of practicality. Since possession of the chattel is the primary object of an action for specific recovery, replevin is inappropriate unless the defendant is in a position to restore this possession to the plaintiff. But one may sometimes be able to put another in possession and have a duty to do so without himself having that combination of physical control and intent which the law …

Negotiated Vs. Competitive Debt Financing, Ralph S. Peterson

Vanderbilt Law Review

The principle of competitive bidding for municipal, equipment trust, and terminal issues has been so thoroughly tested during war, boom and depression markets, that its advantages are no longer questioned. It was the extension of this principle, however, to public utility securities generally in 1941, and to additional classes of railroad debt securities in 1944 which again aroused organized opposition from the traditional utility and railroad bankers and gave rise to their solemn predictions of the dire consequences which would follow the adoption of competitive bidding for such securities.

It is not possible within the scope of this article to …

The International Bank For Reconstruction And Development--A New Departure In International Finance, Robert L. Garner

Vanderbilt Law Review

Early in World War II, financial and economic experts of the Allied Nations concluded that if economic health was to return with the peace, the family of nations would have to forego the bad economic manners which had become commonplace between the wars. The conviction that a new and better economic household for the world had to be planned resulted in the United Nations Monetary and Financial Conference at Bretton Woods, New Hampshire, in July, 1944, in which representatives of 44 nations participated.

The Conference met to solve two major problems. The first of these grew out of the chaotic …

The Significance Of Capital Surplus To The Investor, Charles E. Crouch

Vanderbilt Law Review

The examination of the net worth section of a balance sheet reveals two major parts, namely, (1) the capital stock account and (2) the surplus account. The surplus account is the balancing account which equalizes the difference between the assets, liabilities and capitalization. In this manner the surplus account becomes a reservoir into which are poured increases in net worth and out of which are dipped decreases. Although every transaction of a business either directly or indirectly bears upon the surplus account, corporate accountants and directors have not given enough attention to the proper treatment and handling of this important …

American Business And Risk Capital, Emil Schram

Vanderbilt Law Review

In the midst of a nation-wide business surge--in building, in steel, in automobiles and petroleum production and farming--our capital markets stand alone as the one "depressed area" in the national economy.

It is due to the failure of many of those who call the tune on our country's fiscal and credit policies to realize that they are sluicing off the top soil from a resource as definite and tangible as our farms; they are eroding something as measurable as our grazing lands; they are pumping off onto barren ground something as exhaustible as our oil wells.

I am speaking of …

Some Current Thoughts On Corporate Capitalization, Chester Rohrlich

Vanderbilt Law Review

There is nothing new in the basic legal problems connected with the need of each new business to somehow or other raise the necessary funds with which to launch the enterprise. It is primarily because of the flexibility which the corporate form of doing business affords in pooling together for a common business purpose the funds of many persons with diverse financial needs and objectives, that the corporation has achieved the preeminent position which it occupies. But while the fundamental questions are old, new times, new decisions and new statutes serve to emphasize different phases and different facets of the …

The Sec And The Broker-Dealer, Louis Loss

Vanderbilt Law Review

A couple of weeks ago the Commission handed down an opinion in a broker-dealer revocation proceeding which is the latest in a series of cases over the past few years that have gradually blocked out the duties of a broker-dealer to his customer. That case gives me my theme today.

It happens that most of what I am about to say relates primarily to the over-the-counter market. I was a little disturbed about the propriety of talking about over-the-counter problems under the auspices of this organization. However, we are all interested, I take it, in the problems of the securities …

Federal Regulation And State Gambling Laws, Walter H. Moses

Vanderbilt Law Review

The statement that the detailed regulation of security exchanges and transactions conducted thereon which is embodied in the Securities Exchange Act of 1934 and the Securities Act of 1933 and the regulations promulgated by the Securities and Exchange Commission thereunder constitutes an encouragement to gambling in securities, no doubt quite properly places a heavy burden of proof on the person making it. This article has as its purpose a demonstration of the truth of such statement.

Over-The-Counter Securities Markets, Guy L. Clinton

Vanderbilt Law Review

Following the 1929 collapse, much attention has been centered on the role of the security exchanges in our economy. Whether or not improper operation of the securities markets had caused the instability of the national economy was not clearly apparent. However, as many persons believed that such was the case, or that such operation was at least a major factor in the economic ills of the country, the "crash" and the resulting investigations provided the impetus for a reform program in the investment banking segment of our economy, and one phase of this program dealt with securities.