Banking and Finance Law Commons^™

Rethinking Regulatory Democracy, Mariano-Florentino Cuellar

ExpressO

This article empirically examines democratic participation in three different regulatory proceedings, involving financial privacy, nuclear regulation, and campaign finance. It then uses that analysis to critique -- and suggest alternatives to -- existing mechanisms to achieve public participation in the regulatory state. The current mechanism for structuring public participation in regulatory decisions (or “regulatory democracy”) relies on demand-driven procedures like the Administrative Procedure Act’s notice and comment process. Organized interests and others who decide they have sufficient resources and interest to do so comment on regulations. While some observers consider this process close to ideal, others instead seem to accept …

Islamic Financial Structures As Alternatives To International Loan Agreements: Challenges For American Financial Institutions, Babback Sabahi

ExpressO

In the past few decades, the Muslim countries have witnessed considerable economic growth. The markets of these countries spanning from North Africa to South East Asia, are expanding at a fast pace, and gradually are turning into important international economic centers. The expansion and sophistication of the Islamic markets, as well as increasing demand for Islamic financial products by borrowers, have spurred a movement toward Islamization of different aspects of economic activities in these markets. This movement has resulted in the creation of an Islamic financial market alongside the conventional financial markets. The data on the size of the Islamic …

Banking The Poor: Policies To Bring Low-Income Americans Into The Financial Mainstream, Michael S. Barr

Law & Economics Working Papers Archive: 2003-2009

Low-income households in the United States often lack access to bank accounts and face high costs for conducting basic financial transactions through check cashers and other alternative financial service providers. These families find it more difficult to save and plan financially for the future. Living paycheck to paycheck leaves them vulnerable to medical or job emergencies that may endanger their financial stability, and lack of longer-term savings undermines their ability to improve skills, purchase a home, or send their children to college. High-cost financial services and inadequate access to bank accounts may undermine widely-shared societal goals of reducing poverty, moving …

Credit Where It Counts: The Community Reinvestment Act And Its Critics, Michael S. Barr

ExpressO

Despite the depth and breadth of U.S. credit markets, low- and moderate-income communities and minority borrowers have not historically enjoyed full access to credit. The Community Reinvestment Act (CRA) was enacted to help overcome barriers to credit for low- and moderate-income communities, and minority borrowers. Scholars have long leveled numerous critiques against CRA as unnecessary, ineffectual, costly, and lawless. But I argue, using recent empirical evidence, that CRA has enhanced access to credit for low-income, moderate-income, and minority borrowers at relatively low cost. I contend that market failures and discrimination exacerbate credit problems in low-income and minority communities and justify …

Good Faith In The Cisg: Interpretation Problems In Article 7, Benedict C. Sheehy

ExpressO

ABSTRACT: This article examines the dispute concerning the meaning of Good Faith in the CISG. Although there are good reasons for arguing a more limited interpretation or more limited application of Good Faith, there are also good reasons for a broader approach. Regardless of the correct interpretation, however, practitioners and academics need to have a sense of where the actual jurisprudence is going. This article reviews every published case on Article 7 since its inception and concludes that while there is little to suggest a strong pattern is developing, a guided pattern while incorrect doctrinally is preferable to the current …

Do Patents Facilitate Financing In The Software Industry?, Ronald J. Mann

ExpressO

This paper is the first part of a wide-ranging study of the role of intellectual property in the software industry. Unlike previous papers, which focus primarily on software patents – which generally are held by firms that are not software firms – this paper provides a thorough and contextually grounded description of the role that patents actually play in the software industry itself.

The bulk of the paper considers the pros and cons of patents in the software industry. On the positive side, the paper starts by emphasizing the difficulties that pre-revenue startups face in obtaining any value from patents. …

Expensing Isn't The Only Option: Alternatives To The Fasb's Stock Option Expensing Proposal, Benjamin A. Templin

ExpressO

This paper reviews the arguments for and against the Financial Accounting Standard Board's (FASB) proposal to require that corporations expense options. It identifies two major goals of the proposed rule -- 1) clarity in financial statements and 2) a reduction of corporate fraud by removing the incentive of options. To address these two goals, I adopt a framework of Information Reforms v. Rules of the Game Reforms. The article starts with a history of FASB Statement No. 123 Accounting for Stock-based Compensation and also analyzes the Congressional legislation that attempts to block the measure, the Stock Option Accounting Reform Act. …

Reconsidering The Prohibition Against General Solicitation During Section 3(C)(7) Offerings, Daniel P. Taub

ExpressO

This paper examines the seventy year history of the general solicitation prohibition during private offerings and then analyzes its continuing relevance as applied to Section 3(c)(7) offerings. The S.E.C. Staff recently issued a report questioning the continuing value of prohibiting general solicitation during private offerings made pursuant to Section 3(c)(7) of the Investment Company Act. If the S.E.C. were to follow the recommendation in the S.E.C. Staff Report, this would have tremendous implications for a growing number of hedge funds, and other investment companies utilizing the Section 3(c)(7) exemption. By allowing general solicitation, the S.E.C. would be reversing a policy …

How History Can Inform Practice In Modern U.S. Competition Policy, Timothy Muris

ExpressO

No abstract provided.

Book Review: Benjamin Geva, Bank Collections And Payment Transactions, Arnold S. Rosenberg

ExpressO

The author reviews Geva, Bank Collections and Payment Transactions (Oxford University Press, 2001). The book is the first comprehensive work on the comparative law of checks and electronic funds transfers, and attempts to identify a universal "law merchant" governing checks and electronic funds transfers in these bodies of law.

The Evolving Law On The Eurobank—Customer Relationship And The Common Law., Edmund M. Kwaw

ExpressO

The traditional common law rules respecting the banker-customer relationship are based on the notion that money on deposit is physical cash that has a location. Since eurocurrency deposits are book entries and not deposits of cash, this approach gives rise to problems when it is applied to the relationship between a eurobank and its customer. Thus far, decisions involving eurocurrency market deposits have been far from certain as to whether the traditional common law or a modified approach applies to the relatoinship between the eurobank and its customer. There is the need for Courts to introduce clarity and certainty into …

Banking The Poor, Michael S. Barr

Law & Economics Working Papers Archive: 2003-2009

Low-income households often lack access to banking accounts and face high costs for transacting basic financial services through check cashers and other alternative financial service providers. These families find it more difficult to save and plan financially for the future. Living paycheck to paycheck leaves them vulnerable to medical or job emergencies that may endanger their financial stability, and lack of longer-term savings undermines their ability to improve skills, purchase a home, or send their children to college. Additionally, high cost financial services and inadequate access to bank accounts may undermine widely-shared societal goals of reducing poverty, moving families from …

A Comparative Empirical Investigation Of Agency And Market Theories Of Insider Trading, Laura N. Beny

Law & Economics Working Papers Archive: 2003-2009

The paper summarizes various agency cost and market theories of insider trading propounded over the course of the perennial law and economics debate over insider trading. The paper then suggests three testable hypotheses regarding the relationship between insider trading laws and several measures of financial performance. Using international data and alternative regression specifications, the paper finds that more stringent insider trading laws and enforcement are generally associated with greater ownership dispersion, greater stock price accuracy and greater stock market liquidity. This set of findings provides empirical support to theoretical arguments in favor of more stringent insider trading legislation and enforcement.

After The Argentine Crisis: Can The Imf Prevent Corruption In Its Lending? A Model Approach, Juan Carlos Linares

ExpressO

This paper focuses on curtailing the corruption inherent in the lending practices of the IMF and, subsequently, preventing another economic disaster as has occurred in Argentina. In fact, if it is at all to succeed in future attempts to restore a state’s monetary and fiscal standing, the IMF should incorporate language of the Accounting and Record-keeping provisions of the U.S. Foreign Corrupt Practices Act into its loan agreement policies, thereby conditioning its loans upon transparency and good governance over borrowed funds. Part I of this article introduces corruption and its affect on international lending. Part II describes the IMF and …

Valuation Averaging: A New Procedure For Resolving Valuation Disputes, Keith Sharfman

Rutgers Law School (Newark) Faculty Papers

In this Article, Professor Sharfman addresses the problem of "discretionary valuation": that courts resolve valuation disputes arbitrarily and unpredictably, thus harming litigants and society. As a solution, he proposes the enactment of "valuation averaging," a new procedure for resolving valuation disputes modeled on the algorithmic valuation processes often agreed to by sophisticated private firms in advance of any dispute. He argues that by replacing the discretion of judges and juries with a mechanical valuation process, valuation averaging would cause litigants to introduce more plausible and conciliatory valuations into evidence and thereby reduce the cost of valuation litigation and increase the …

The Petrochina Syndrome: Regulating Capital Markets In The Anti-Globalization Era, Stephen F. Diamond

Cornell Law Faculty Working Papers

This article argues that the process of globalization has generated a legitimation deficit that can be the source of wasteful, even destructive, social and political conflict. I stylize this outcome as "the PetroChina Syndrome," after a leading example of the kind of activity generated in response to globalization, the PetroChina Campaign, where a coalition of labor, human rights, environmental, anti-slavery and religious groups worked together to oppose the initial public offering of a major Chinese oil company led by Goldman Sachs. The article begins with a discussion of this important but largely unexplored dimension of the anti-globalization era triggered by …

New Jersey’S Model Response To Predatory Lending, David J. Reiss

ExpressO

As widespread media coverage has documented, predatory home lending practices have become rampant throughout the country and, notably, among low-and moderate-income and African American communities in New Jersey. Our article analyzes this emerging problem as a sometimes devastating side effect of the rapid increase in American home ownership, an otherwise almost completely desirable phenomenon.

Because predatory lending has been so difficult to define, states have struggled to regulate it. New Jersey, building on the work of a few other leading states, has drafted what many consider to be the new standard for predatory lending legislation, the Home Ownership Security Act. …

The Rational Exuberance Of Structuring Venture Capital Startups, Victor Fleischer

ExpressO

This Article takes the bursting of the dot com bubble as an opportunity to reevaluate the tax structure of venture capital startups. By organizing startups as corporations rather than as partnerships, investors and entrepreneurs seem to leave money on the table by failing to fully use tax losses -- especially since the vast majority of startups fail. Conventional wisdom attributes the lack of attention paid to losses to a "gambler's mentality" or optimism bias. I argue here that the use of the corporate form is, in fact, rational, or at least that there is a method to the madness.

I …

Financing Chinese Capitalism: Principal Banks, Economic Crisis, And Chinese Family Firms In Singapore, Henry W. Yeung

Cultural Approaches to Asian Financial Markets

It is a widely circulated myth that Chinese family firms rely exclusively on kinship ties and network capital to finance their domestic and international operations. In this empirical paper, I argue that large Chinese family firms are increasingly engaging with financial markets on a global scale. In order to finance their transnational business activities, these firms require financial services from banks beyond their domestic economies, resulting in a growing number and geographical spread of their principal banks. Second, I contend that as these Chinese family firms are diversifying their principal banks beyond a narrow confinement to other Chinese family-owned banks …

State Regulation Of Branch Banking, Philip N. Hablutzel

All Faculty Scholarship

No abstract provided.

The Foreign Direct Investment Regulations: Constitutional Questions And Operational Aspects Examined, Jeffrey G. Miller

Elisabeth Haub School of Law Faculty Publications

This article examines the constitutionality of the FDIR and similar regulations issued pursuant to section 5 (b), and comments upon the basic propriety and desireability of delegations of broad emergency powers to the President. The development of executive powers under section 5(b) will first be discussed with an eye toward determining, through the legislative history, congressional intent underlying the section. The role of judicial review of the exercise of executive emergency powers will be examined, followed by an analysis of the theory underlying the delegation of such powers to the President. Finally, the constitutional limitations on the emergency powers of …