Banking and Finance Law Commons^™

Recent Developments In European Bank Competition, Juliana Yu Sun

Research Collection School Of Economics

This paper investigates the degree of bank competition in the euro area, the U.S. and U.K. before and after the recent financial crisis, and revisits the issue whether the introduction of EMU and the euro have had any impact on bank competition. The results suggest that the level of bank competition converged across euro area countries in the wake of the EMU. The recent global financial crisis led to a fall in competition in several countries and especially where large credit and housing booms had preceded the crisis...

Legal Compliance And Korea's Financial Services Market: A Strategic Approach, Young-Cheol Jeong

Washington International Law Journal

The purpose of this paper is to improve the compliance level in the Korean financial services market by proposing a more systematic approach to economic crimes. As one of the most important capital markets in Asia, the Korean financial services market has weathered well both the hardship of the Asian financial crisis and the challenges of the Great Recession. Thus, its policy directions and experience are valuable to other burgeoning capital markets around the world. This paper contributes to a better understanding of the compliance system in the Korean financial services market. Based on a literature review, this paper analyzes …

From Gramm-Leach-Bliley To Dodd-Frank: The Unfulfilled Promise Of Section 23a Of The Federal Reserve Act, Saule T. Omarova

Cornell Law Faculty Publications

This Article examines the recent history and implementation of one of the central provisions in U.S. banking law, section 23A of the Federal Reserve Act. Enacted in 1933 in response to one of the perceived causes of the Great Depression, section 23A imposes quantitative limitations on certain extensions of credit and other transactions between a bank and its affiliates that expose a bank to an affiliate's credit or investment risk, prohibits banks from purchasing low-quality assets from their nonbank affiliates, and imposes strict collateral requirements with respect to extensions of credit to affiliates. The key purpose of these restrictions is …

Unjust Impoverishment: Using Restitution Reasoning In Today’S Mortgage Crisis, Peter Linzer, Donna L. Huffman

Washington and Lee Law Review

No abstract provided.

Toward Transatlantic Convergence In Financial Regulation, Hwa-Jin Kim

Law & Economics Working Papers

This Article reviews the historical background of the Glass-Steagall Act of 1933 along with the developments in the markets that led to the Gramm-Leach-Bliley Act of 1999. It analyzes the discussions on the Volcker Rule in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 from a comparative perspective. It shows how the reform in the United States may impact financial institutions and markets in other jurisdictions. Germany and Switzerland, where universal banking is the hallmark of the financial services industry, are the primary jurisdictions of interest. After taking a historical and political look at the regulation of …

The Ubs Case: The U.S. Attack On Swiss Banking Sovereignty, Beckett G. Cantley

Brigham Young University International Law & Management Review

No abstract provided.

Arima Models For Bank Failures: Prediction And Comparison, Fangjin Cui

UNLV Theses, Dissertations, Professional Papers, and Capstones

The number of bank failures has increased dramatically over the last twenty-two years. A common notion in economics is that some banks can become "too big to fail." Is this still a true statement? What is the relationship, if any, between bank sizes and bank failures? In this thesis, the proposed modeling techniques are applied to real bank failure data from the FDIC. In particular, quarterly data from 1989:Q1 to 2010:Q4 are used in the data analysis, which includes three major parts: 1) pairwise bank failure rate comparisons using the conditional test (Przyborowski and Wilenski, 1940); 2) development of the …

Preferences For Banking And Payment Services Among Low- And Moderate-Income Households, Michael S. Barr, Jane Dokko, Eleanor Feit

Law & Economics Working Papers

This paper characterizes the features of an account-based payment card – including bank debit cards, prepaid debit cards, and payroll cards – that elicit a high take-rate among low- and moderate-income (LMI) households, particularly those without bank accounts. We apply marketing research techniques, specifically choice modeling, to identify the design of a specific financial services product for LMI households, who often face difficulties maintaining standard bank accounts but need banking services. After monthly cost, we find that, on average, non-monetary features of a payment card, such as the availability of federal protection and the type of card, are factors LMI …

Separation Of Bank And State: Consolidating Bailed-Out Companies Into The U.S. Debt Ceiling And Government Financial Statements, J. W. Verret

BYU Law Review

No abstract provided.

A Uniform Test For The Equitable Subrogation Of Mortgages, Sang Jun Yoo

Cardozo Law Review

No abstract provided.

Patent, Technology, And The Role Of University, Agus Sardjono

Indonesia Law Review

University has significant contribution to the development of nanotechnology. The role of university can be implemented through the TTLO, particularly in an effort to build a bridge for bottom-up nanotechnology for commercial purposes. There will be an increasingly significant link between the patent system and the university role in the development of nanotechnology.

Fannie Mae, Freddie Mac, And The Future Of Federal Housing Finance Policy: A Study Of Regulatory Privilege, David J. Reiss

Cornell Law Faculty Publications

The federal government recently placed Fannie Mae and Freddie Mac, the government-chartered, privately owned mortgage finance companies, in conservatorship. These two massive companies are profit-driven, but as government-sponsored enterprises they also have a government-mandated mission to provide liquidity and stability to the United States mortgage market and to achieve certain affordable housing goals. How the two companies should exit their conservatorship has implications that reach throughout the global financial markets and are of key importance to the future of American housing finance policy.

While the American taxpayer will be required to fund a bailout of the two companies that will …

Implementing Dodd-Frank: A Review Of The Cftc‟S Rulemaking Process: Testimony, Michael Greenberger

Congressional Testimony

The Relationship of Unregulated OTC Derivatives to the Meltdown. It is now accepted wisdom that it was the non-transparent, poorly capitalized, and almost wholly unregulated over-the-counter (“OTC”) derivatives market that lit the fuse that exploded the highly vulnerable worldwide economy in the fall of 2008. Because tens of trillions of dollars of these financial products were pegged to the economic performance of an overheated and highly inflated housing market, the sudden collapse of that market triggered under-capitalized or non-capitalized OTC derivative guarantees of the subprime housing investments. Moreover, the many undercapitalized insurers of that collapsing market had other multi-trillion dollar …

New Financial Regulation Reform: A Good Measure For African Americans, Alexander J. Chenault

North Carolina Central Law Review

No abstract provided.

Complex Financial Institutions And Systemic Risk, Manuel A. Utset

Scholarly Publications

No abstract provided.

Shifting Title And Risk: Islamic Project Finance With Western Partners, Alan J. Alexander

Michigan Journal of International Law

Project finance exemplifies modern globalized business transactions in that a single project can bring together numerous participants from across the world, and in that sense it is a truly international undertaking. A general definition of project finance is "the financing of an economic unit in which the lenders look initially to the cash flows from operation of that economic unit for repayment of the project loan and to those cash flows and other assets comprising the economic unit as collateral for the loan." The "economic unit" is often referred to as a Special Project Vehicle (SPV). Project finance is commonly …

Unclaimed Financial Assets And The Promotion Of Microfinance, Andrew W. Hartlage

Michigan Law Review First Impressions

State governments can effectively promote domestic entrepreneurship in low-income communities and simultaneously fulfill their duties as conservator s of unclaimed property, by lending unclai med financial assets-in-trust at preferential interest rates to in-state microfinance providers. This plan presents an alternative to charitable contributions, though it does not resolve the tension between for-profit and not-for-profit microfinance providers. Such a scheme could be a significant funding source for many microfinance operations in the United States today. Even a small portion of the yearly intake of unclaimed assets would be substantial enough to support fully most microfinance loan portfolios. Also, reinvestment of unclaimed …

Turning The Watchdog Into A Lapdog: Why The Proposed Newspaper Bailout Is The Wrong Solution For A Failing Industry, Andrea Priest

William & Mary Business Law Review

Current economic conditions have hastened the decline of the American newspaper trade, creating an industry-wide crisis. Following decades of declining advertising revenue and circulation rates, the newspaper industry has plunged into a historic downturn. In search of salvation for the American newspaper, some legislators and scholars have called upon the government to bail out the newspaper industry. This Note will explore the decline of the American newspaper industry, and examine proposals for government intervention to revive America’s newspapers. Although the industry crisis will not abate without action, this Note will conclude that governmental support would ultimately harm newspapers. Instead of …

Bubbles, Busts, And Blame, Robert C. Hockett

Cornell Law Faculty Publications

I argue that financial asset price bubbles and busts, such as those we have recently experienced in the mortgage and securities markets, are compatible with market efficiency, individual rationality, and even ethically unobjectionable behavior. The reason is that they constitute classic recursively self-amplifying collective action problems, the hallmark of which is the efficient aggregation of individually rational behaviors into collectively calamitous outcomes. In the present case, individuals rationally "legged the spread" between cheap borrowing costs and credit-fueled capital gains rates, neither of which market actors could affect in their individual capacities even when knowing that credit would have eventually to …

The Volcker Rule And Evolving Financial Markets, Charles K. Whitehead

Cornell Law Faculty Publications

The Volcker Rule prohibits proprietary trading by banking entities - in effect, reintroducing to the financial markets a substantial portion of the Glass-Steagall Act’s static divide between banks and securities firms. This Article argues that the Glass-Steagall model is a fixture of the past - a financial Maginot Line within an evolving financial system. To be effective, new financial regulation must reflect new relationships in the marketplace. For the Volcker Rule, those relationships include a growing reliance by banks on new market participants to conduct traditional banking functions.

Proprietary trading has moved to less-regulated businesses, in many cases, to hedge …

Regulating Financial Innovation: A More Principles-Based Proposal?, Dan Awrey

Cornell Law Faculty Publications

Modem financial markets are characterized by complexity, seemingly perpetual innovation, chronic asymmetries of information and expertise, and pervasive agency costs. Perhaps nowhere are these characteristics-or their attendant regulatory challenges-more pronounced than within OTC derivatives markets. Mounting effective responses to these challenges must be considered amongst the most difficult and important tasks confronting financial regulators. Prescriptive, rules-based approaches toward financial regulation have thus far proven inadequate to this task. Through the utilization of outcome-oriented principles, enhanced dialogic relationships, intensive supervision, and targeted and proportional (yet vigorous) enforcement, "more principles-based" financial regulation (MPBR) manifests the potential to overcome these challenges and, in …

A Comparative Legal And Economic Approach To Third-Party Litigation Funding, Marco De Morpurgo

Cardozo Journal of International and Comparative Law

This article represents the first attempt to apply a comparative legal and economic approach to the study of third-party litigation funding (TPLF) - one of the most innovative trends in civil litigation financing today. TPLF consists of the practice where a third party offers financial support to a claimant in order to cover his litigation expenses, in return for a share of damages if the claim is successful. The third party receives no compensation if the claimant loses the suit. While such practice has been rapidly developing in the common law world (Australia, United States, and United Kingdom), in the …

Regulating Money Creation After The Crisis, Morgan Ricks

Vanderbilt Law School Faculty Publications

Like bank deposits, money market instruments function in important ways as "money." Yet our financial regulatory regime does not take this proposition seriously. The (non-government) issuers of money market instruments-almost all of which are financial firms, not commercial or industrial ones-perform an invaluable economic function. Like depository banks, they channel economic agents' transaction reserves into the capital markets. These firms thereby reduce borrowing costs and expand credit availability. However, this activity- "maturity transformation "-presents a problem. When these issuers default on their money market obligations, they generate adverse monetary consequences. This circumstance amounts to a market failure, creating a "prima …

Derivatives And The Legal Origin Of The 2008 Credit Crisis, Lynn A. Stout

Cornell Law Faculty Publications

Experts still debate what caused the credit crisis of 2008. This Article argues that dubious honor belongs, first and foremost, to a little-known statute called the Commodities Futures Modernization Act of 2000 (CFMA). Put simply, the credit crisis was not primarily due to changes in the markets; it was due to changes in the law. In particular, the crisis was the direct and foreseeable (and in fact foreseen by the author and others) consequence of the CFMA’s sudden and wholesale removal of centuries-old legal constraints on speculative trading in over-the-counter (OTC) derivatives.

Derivative contracts are probabilistic bets on future events. …

The Federal Home Loan Bank System: A Vehicle For Job Creation And Job Retention, Cornelius K. Hurley, Rebecca Hicks Gallup

Faculty Scholarship

This paper discusses three proposals aimed at reorienting the mission of the System and of the FHLBanks: (1) liberalizing the System's collateral requirements to make the use of small business and other job-creation loans a more viable source of collateral for advances; (2) expanding the membership requirements of the FHLBanks to allow those financial institutions that currently lend to small businesses to become members; and (3) creating a job creation program that uses some of the best practices of the System's Affordable Housing Program. Taken together or separately, these proposals utilize the unique structure of the FHLB System as described …

"On The Take": The Black Box Of Credit Scoring And Mortgage Discrimination, Cassandra Jones Havard

All Faculty Scholarship

Subprime credit, a relatively new method of risk-based pricing, has been hailed as a way to open up markets and provide access to credit to those who would otherwise be excluded. Evidence suggests that subprime mortgage segmentation increases rather than reduces exclusionary practices in lending. Furthermore, what is unclear is how lenders determine who qualifies as a subprime borrower. This concern became manifested when studies demonstrated that minority borrowers, regardless of creditworthiness, are more likely to receive expensive, sub-prime loans. The disparity is properly attributed to lenders’ credit pricing policies which included discretionary increases despite the objectively-determined risk-based interest rate …

Consumer Financial Protection: It's A Smaller World After All.Pdf, Hilary Allen

Scholarly Articles in Law Reviews & Journals

Few of the reforms of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) have been as controversial as the creation of the Consumer Financial Protection Bureau. On the one hand, proponents envisioned the Bureau as “a single, highly motivated federal regulator, [that would apply] the same regulation … to all similar products, regardless of the identity of the lender.” On the other hand, critics have called the Bureau “fatally flawed” and suggested that it has the potential to “stifle innovation and leave some market participants worse off.”

Dodd-Frank, International Remittances, And Mobile Banking: The Federal Reserve’S Role In Enabling International Economic Development, Colin C. Richard

NULR Online

International remittances—"cross-border person-to-person payments of relatively low value" sent primarily by international migrants to family members in developing countries—alleviate poverty, support entrepreneurship, and foster the development of financial systems. Until recently, aside from prohibitions on financial interactions with countries such as Cuba or Burma, U.S. regulators have only indirectly addressed these monetary transfers. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) changes this, providing direct, substantive regulation of the industry for the first time. Dodd-Frank calls on the Board of Governors of the Federal Reserve System (Board) to craft more than a dozen regulations to enforce Dodd-Frank's remittance …

Implementation Of Title Vii Of The Wall Street Reform And Consumer Protection Act. Hearing Before The United States Senate, Committee On Agriculture, Nutrition And Forestry - 112th Cong., 1st Sess., Michael Greenberger

Congressional Testimony

The Relationship of Unregulated OTC Derivatives to the Meltdown. It is now accepted wisdom that it was the non-transparent, poorly capitalized, and almost wholly unregulated over-the-counter (―OTC‖) derivatives market that lit the fuse that exploded the highly vulnerable worldwide economy in the fall of 2008. Because tens of trillions of dollars of these financial products were pegged to the economic performance of an overheated and highly inflated housing market, the sudden collapse of that market triggered under-capitalized or non-capitalized OTC derivative guarantees of the subprime housing investments. Moreover, the many undercapitalized insurers of that collapsing market had other multi-trillion …

The Impact Of Dodd-Frank On End-Users Hedging Commercial Risk In Over-The-Country Derivatives Markets, Laurin C. Ariail

North Carolina Banking Institute

No abstract provided.