Banking and Finance Law Commons^™

Private Equity In Brazil: Industry Overview And Regulatory Environment, Shannon Guy

Michigan Business & Entrepreneurial Law Review

The overall goal of this note is to paint a picture of the current state of the private equity industry in Brazil and the existing regulations which must be obeyed to participate as a private equity investor. Part II of this note provides a brief history of the private equity industry in Brazil, discusses recent investor interest in the growing area, and introduces the main regulatory bodies in Brazil. Part III explains several specific rules that govern a private equity investment by breaking down the “life” of a private equity investment into four stages: (1) setting up the private equity …

Behaviorally Informed Regulation, Michael S. Barr, Sendhil Mullainathan, Eldar Shafir

Book Chapters

Policy makers typically approach human behavior from the perspective of the rational agent model, which relics on normativc, a priori analyses. The model assumes people make insightful, well-planned, highly controlled, and calculated decisions guided by considerations of personal utility. This perspective is promoted in the social sciences and in professional schools and has come to dominate much of the formulation and conduct of policy. An alternative view, developed mostly through empirical behavioral research, and the one we will articulate here, provides a substantially difierent perspective on individual behavior and its policy and regulatory implications. According to the empirical perspective, behavior …

Lessons From The Flash Crash For The Regulation Of High-Frequency Traders, Edgar Ortega Barrales

Fordham Journal of Corporate & Financial Law

Are equity markets vulnerable to a sudden collapse if the traders who account for about half of the volume have no regulatory obligations to stabilize prices? After the “Flash Crash” of May 6, 2010, policymakers have resoundingly answered this question in the affirmative. During the worst of the crash, some of the so-called high-frequency trading firms that dominate equity markets stopped trading and prices collapsed, momentarily wiping out almost $1 trillion in market value. In response, the U.S. Securities and Exchange Commission is considering whether high-frequency trading firms should be required to act as the traders of last resort. This …

Identification Requirements And Policy In Alternative Remittance : A Measure Of Legislative Adherence, Timothy J. Smith

Theses : Honours

Money laundering is a persistent threat to the economic viability of every nation. However the intent behind this behaviour does not always converge with the criminality of the act. A study of 395 international university students in Australia demonstrated a prominent cultural and regional norm in South Asia to use untraceable ‘informal’ remittance systems. Under Australian legislation, the use of a non-compliant alternative or informal value transfer system (IVTS) is an act that predicates the laundering of money regardless of intent. Yet in line with a clear cultural proclivity and trust in money transfer businesses, it is evident that many …

Regulating On The Fringe: Reexamining The Link Between Fringe Banking And Financial Distress, Jim Hawkins

Indiana Law Journal

Critics of fringe banking—products like payday loans, pawn loans, and rent-toown leases—frequently argue that these products cause borrowers to experience financial distress. This argument has enormous intuitive appeal: Fringe credit is very costly, and usually the borrowers who use it are already in a serious financial bind. Taking on additional debt and paying high prices for it, the reasoning goes, drive them over the brink. Surprisingly, however, linking financial distress to fringe banking is extremely difficult to do. This Article represents the first attempt to uncover the relationship between fringe banking and financial distress by systematically analyzing the structure of …

Dodd-Frank Sampler: How Congress Codified An Article 1 Financial Takeover, Anthony Hearn

University of Miami Business Law Review

No abstract provided.

Things Fall Apart: Regulating The Credit Default Swap Commons, Kristen N. Johnson

University of Colorado Law Review

Financial markets are an important national and international infrastructure resource that reflect attributes similar to the those that characterize commons, as described in property law literature. Through a case study examining the credit default swap market, this Article illustrates the analogy between financial markets and a traditional commons. After exploring the attributes of a commons, this Article examines the costs and benefits of the credit default swap market. Similar to a traditional commons, tragedy in financial markets occurs when market participants capture benefits while imposing the costs or negative externalities from their activities on other members of society. Commons scholars' …

Ability To Pay, John A. E. Pottow

Articles

The landmark Dodd-Frank Act of 2010 ("Dodd-Frank") transforms the regulation of consumer credit in the United States. Many of its changes have been high-profile, attracting considerable media and scholarly attention, most notably the establishment of the Consumer Financial Protection Bureau ("CFPB"). Even specific consumer reforms, such as a so-called "plain vanilla" proposal, drew hot debate and lobbying firepower. But when the dust settled, one profoundly transformative innovation that did not garner the same outrage as plain vanilla or the CFPB did get into the law: imposing upon lenders a duty to assure a borrower's ability to repay. Ensuring a borrower's …

Money Market Fund Reform Viewed Through A Systemic Risk Lens, Hilary J. Allen

Scholarly Articles in Law Reviews & Journals

I. INTRODUCTION

Money market funds ("MMFs") were first developed in the 1970s, and since that time, they have become increasingly popular as an alternative to deposit accounts. Since the financial crisis of September 2008, there has been much discussion about the systemic risks posed by alternatives to commercial banking products. One of the key themes of this discussion is whether the systemic importance of these alternative banking products justifies the imposition of heightened regulation and supervision. This article takes the view, after a comparison of deposit accounts and MMFs, that MMFs are systemically important. It then goes on to consider, …

On Regulating Conflicts Of Interest In The Credit Rating Industry, Lin (Lynn) Bai

Faculty Articles and Other Publications

This paper discusses issues giving rise to conflict of interest concerns in the credit rating industry and examines whether and how those issues are addressed in the current regulation that builds on the guidelines of the Credit Rating Agency Reform Act of 2006, the SEC rules that were initially adopted in 2007 and recently amended in 2009, and the internal code of conducts of rating agencies. The examination leads to a conclusion that conflict of interest at the individual rating analyst level and some concerns of conflict of interest at the agency level have been largely addressed in the current …

Populist Retribution And International Competition In Financial Services Regulation, Adam C. Pritchard

Articles

The pattern of regulatory reform in financial services regulation follows a predictable pattern in democratic states. A hyperactive market generates a bubble, the bubble deflates, and much financial pain ensues for those individuals who bought at the top of the market. The financial mess brings the scrutiny of politicians, who vow "Never again!" A political battle ensues, with representatives of the financial services industry fighting a rearguard action to preserve its prerogatives amidst cries for the bankers' scalps. Regulations, carefully crafted to win the last war, are promulgated. Memories fade of the foolish enthusiasm that fed the last bubble. Slowly, …

Microfranchising: A Business Approach To Fighting Poverty, Deborah Burand, David W. Koch

Articles

Imagine a franchise network that trains, guides, and supports hundreds of poor women with little or no business experience to become successful business owners. Such "microfranchise" efforts, though relatively small in number, have been gathering steam in the development community and, recently, attracting the attention of the mainstream franchising indus- Deborah Burand try. Advocates have seized on microfranchising as a natural complement or follow-on to the widely acclaimed successes of the "microfinance" sector, which provides small-scale finance services to over 150 million of the world's poor. Microfranchising today is where microfinance was a decade or more ago. It is appropriate …

Simultaneous Distress Of Residential Developers And Their Secured Lenders An Analysis Of Bankruptcy & Bank Regulation , Sarah Pei Woo

Fordham Journal of Corporate & Financial Law

No abstract provided.

The Tenth Annual A. A. Sommer, Jr. Lecture On Corporate, Securities, & Financial Law, Elisse B. Walter

Fordham Journal of Corporate & Financial Law

No abstract provided.

Short Selling And The News: A Preliminary Report On An Empirical Study, Merritt B. Fox, Lawrence R. Glosten, Paul C. Tetlock

NYLS Law Review

No abstract provided.

The Ilc And The Reconstruction Of U.S. Banking, Mehrsa Baradaran

Scholarly Works

Since the Great Depression, bank regulators in the United States have endeavored to separate banking institutions from commercial firms, believing such separation was necessary for stability and growth. The recent collapse of our financial system indicates that this premise may be false, as Industrial Loan Companies ("ILCs") – the only institutions where commercial firms are permitted to own banks – remain sound. ILCs have persisted throughout U.S. banking history through exceptions and omissions in banking legislation, but the strength and resilience they have exhibited in the current financial collapse are worth investigating and even emulating. This article examines recent controversy …

Systemic Regulation Of Global Trade And Finance: A Tale Of Two Systems, R. Michael Gadbaw

Georgetown Law Faculty Publications and Other Works

The recent financial crisis has put enormous strains on the global systems governing international finance and trade. These two important international regulatory systems, created after World War II to promote growth and stability in the global economy, were put to the test in ways unprecedented since the 1930s. This article seeks to analyze and compare their performance as systemic regulators in the course of the crisis and concludes that the trading system performed quite well while the financial system virtually collapsed. This article seeks to account for this difference by looking at the nature of the rules and the institutions …

Lincoln's Populist Sovereignty: Public Finance Of, By, And For The People, Timothy A. Canova

Faculty Scholarship

No abstract provided.

Principles, Prescriptions, And Polemics: Regulating Conflicts Of Interest In The Canadian Investment Fund Industry, Dan Awrey

Dalhousie Law Journal

Conflicts ofinterest permeate the Canadian investment fund industry. In response, securities regulators have promulgated National Instrument 81-107 Independent Review Committee for Investment Funds. In the view of securities regulators, NI 81-107 reflects a "principles-based" approach toward the regulation of conflicts of interest. This Article articulates a theoretical conception of principles-based securities regulation, one which transcends the formalism of the traditional "rules" versus "principles" debate to reveal a new regulatory paradigm. Thereafter, the author explores whether and to what extent NI 81-107 truly reflects this principlesbased paradigm, manifesting the potential to tap into its inherent wisdom while at the same time …

The Law And Economics Of Subprime Lending, Todd J. Zywicki, Joseph D. Adamson

University of Colorado Law Review

The collapse of the subprime mortgage market has led to calls for greater regulation to protect homeowners from unwittingly trapping themselves in high-cost loans that lead to foreclosure, bankruptcy, or other financial problems. Weighed against the losses of the widespread foreclosure crisis are the benefits of financial modernization that have accrued to many American families who have been able to become homeowners who otherwise would not have access to mortgage credit. The bust of the subprime mortgage market has resulted in high levels of foreclosures and unparalleled problems on Wall Street. However, the boom generated unprecedented levels of homeownership, especially …

Merging The Sec And Cftc - A Clash Of Cultures, Jerry W. Markham

Faculty Publications

The massive subprime losses at Citigroup, UBS, Bank of America, Wachovia, Washington Mutual, and other banks astounded the financial world. Equally shocking were the failures of Lehman Brothers, Merrill Lynch, and Bear Stearns. The conversion of Goldman Sachs and Morgan Stanley into bank holding companies left no large independent investment banks standing. If all that was not enough, Bernard Madoff's incredible $50 billion Ponzi scheme was a new milestone in the nation's financial history. Those failures and Madoff's fraud were unforeseen and undetected by the regulator, the Securities and Exchange Commission (SEC), which was responsible for overseeing the broker-dealers that …

The Case For Behaviorally Informed Regulation, Michael S. Barr, Sendhil Mullainathan, Eldar Shafir

Book Chapters

Policymakers approach human behavior largely through the perspective of the “rational agent” model, which relies on normative, a priori analyses of the making of rational decisions. This perspective is promoted in the social sciences and in professional schools, and has come to dominate much of the formulation and conduct of policy. An alternative view, developed mostly through empirical behavioral research, provides a substantially different perspective on individual behavior and its policy implications. Behavior, according to the empirical perspective, is the outcome of perceptions, impulses, and other processes that characterize the impressive machinery that we carry behind the eyes and between …

Responding To The Subprime Mess: The New Regulatory Landscape, David Schmudde

Fordham Journal of Corporate & Financial Law

No abstract provided.

States, Markets, And Gatekeepers: Public-Private Regulatory Regimes In An Era Of Economic Globalization, Christopher M. Bruner

Michigan Journal of International Law

This Article illuminates the spectrum of international economic regimes through discussion of an under-theorized regulatory structure in which traditional distinctions between State and market, public and private power, hard and soft law, and international and domestic policy realms, essentially collapse-the "public-private gatekeeper."

Issue Brief: Overcoming Legal Barriers To The Bulk Sale Of At-Risk Mortgages, Michael S. Barr, James A. Feldman

Other Publications

This memorandum argues that the sale of loans and loan pools to new owners would help to stabilize housing prices, and that such a modification to the REMIC rules would be desirable and well within Congress’ constitutional authority. Furthermore, it would not lead to successful legal claims by investors in securitized loan pools under the Just Compensation or Due Process clauses, which provide the primary constitutional protections for property interests.

An Opt-Out Home Mortgage System, Michael S. Barr, Sendhil Mullainathan, Eldar Shafir

Other Publications

The current housing and financial crisis has led to significant congressional and executive action to manage the crisis and stem the harms from it, but the fundamental problems that caused the crisis remain largely unaddressed. The central features of the industrial organization of the mortgage market with its misaligned incentives, and the core psychological and behavioral phenomena that drive household financial decisionmaking remain. While the causes of the mortgage meltdown are myriad and the solutions likely to be multifaceted, a central problem that led to the crisis was that brokers and lenders offered loans that looked much less expensive and …

Behaviorally Informed Financial Services Regulation, Michael S. Barr, Sendhil Mullainathan, Eldar Shafir

Other Publications

Financial services decisions can have enourmous consequences for household well-being. Households need a range of financial services - to conduct basic transactions, such as receiving their income, storing it, and paying bills; to save for emergency needs and long-term goals; to access credit; and to insure against life's key risks. But the financial services system is exceedingly complicated and often not well-designed to optimize house-hold behavior. In response to the complexity of out financial system, there has been a long running debate about the appropriate role and form of regulation. Regulation is largely stuck in two competing models - disclosure, …

Policies To Expand Minority Entrepreneurship: Closing Comments, Michael S. Barr

Book Chapters

This essay is based on comments delivered at the Conference on on Entrepreneurship in Low- and Moderate-Income Communities, November 3-4, 2005. This has been a productive conversation. In my closing comments, I want to shift our focus somewhat, from entrepreneurship in low-income communities to minority entrepreneurship generally. I want to do so because many minority entrepreneurs are connected to or hire from low-income communities, and because minority entrepreneurs face critical barriers even when they attempt to create and grow firms outside of distressed communities. In this comment, I want to highlight key barriers and suggest five steps for Congress, the …

Securities Regulation In Low-Tier Listing Venues: The Rise Of The Alternative Investment Market, Jose M. Mendoza

Fordham Journal of Corporate & Financial Law

No abstract provided.

Attorneys As Debt Relief Agencies: Constitutional Considerations, Marisa Terranova

Fordham Journal of Corporate & Financial Law

No abstract provided.