Banking and Finance Law Commons^™

The Logic And Limits Of Liens, Edward Janger

Faculty Scholarship

No abstract provided.

Brief Of Prof. Steven L. Schwarcz As Amicus Curiae, Steven L. Schwarcz

Faculty Scholarship

No abstract provided.

The Volcker Rule: A Brief Political History, Kimberly D. Krawiec, Guangya Liu

Faculty Scholarship

Today, more than five years after Dodd-Frank was first signed into law, uncertainty surrounds many aspects of the Volcker Rule’s application and ultimate impact on financial markets and bank stability. Many more years will likely pass before that uncertainty is resolved. We demonstrate through a quantitative and qualitative analysis that these difficulties were presaged by the Volcker Rule’s political history. The Volcker Rule -- originally rejected by Congressional lawmakers and economists within the Obama administration as unworkable -- arose as a political concession designed to quiet critics who contended that Dodd-Frank did not do enough to control risky bank activity. …

Evaluating The 2013 Euro Cac Experiment, Elena Carletti, Paolo Colla, Mitu Gulati

Faculty Scholarship

On January 1, 2013, it became mandatory that every new sovereign bond issued by a member of the European Monetary Union include a new contract clause called a Collective Action Clause or CAC. This, we believe, constituted the biggest one-time change to the terms of sovereign debt contracts in history, impacting a market of many trillions of euros. And it was not just that the change was big in terms of the size of the market it impacted; it was big in terms of its impact on the documentation of each individual Euro area sovereign bond contract. To illustrate, prior …

Bank Regulation And Securitization: How The Law Improved Transmission Lines Between Real Estate And Banking Crises, Erik F. Gerding

Georgia Law Review

Financial crises take many forms. Real estate crises can devastate economies.' So too can bank crises. Stock market crashes can precipitate crises of their own. The "subprime crisis" represents the confluence and worst of all three; like three cyclones merging together in warm offshore waters, these three kinds of crises generated even more destructive force when conjoined. The panic that took shape in U.S. real estate and capital markets in 2007 represents another example in a long historical line of intertwined banking and real estate crises. Securitization served as a new coupling rod joining cycles in real estate and banking …

Regulating Angels, Heidi M. Schooner

Georgia Law Review

Since the Financial Crisis, a common narrative casts the largest, too-big-to-fail (TBTF) banks as villains1 and community banks as darlings. On the one hand is the image of the infamous mega banks that brought the economy to its knees and continue to profit while the rest of society sputters, and on the other hand is the angelic community banker (think Jimmy Stewart in It's a Wonderful Life) working tirelessly to provide the last bastion of hope for small, job-creating, businesses and other worthy borrowers. Advocates for these innocent small banks point to the crushing regulatory burden imposed on institutions that …

The Risks Of Shadow Insurance, Daniel Schwarcz

Georgia Law Review

Shadow banking - often defined as financial intermediation that provides maturity transformation outside of the formal confines of a bank'-played a central role in causing the 2008 financial crisis. For this reason, a 2013 report of the New York Department of Financial Services generated substantial controversy when it labeled some life insurers' practices of reinsuring insurance policies with affiliated captive insurers as "shadow insurance." Yet the moniker of shadow insurance was not without at least some justification. Like shadow banking, life insurers' reinsurance of policies with affiliated captives is a form of regulatory arbitrage that moves traditional insurance risks from …

Taming The Wild West Of Wall Street: Regulating Credit Default Swaps After Dodd-Frank, 48 J. Marshall L. Rev. 565 (2015), Benjamin O’Connor

UIC Law Review

No abstract provided.

Arbitrage For Property Rights: How Foreign Investors Create Substitutes For Property Institutions In China, Weitseng Chen

Washington International Law Journal

This article revisits the prevailing wisdom regarding property rights based on empirical research on the behavior of foreign investors in China. The Property Law did not exist in China until 2007—four years after China replaced the United States as the most popular foreign direct investment destination worldwide. This seems to contradict the conventional wisdom about the indispensable role of property rights in economic growth. This article argues that China’s experiences in fact do not overrule the orthodox view, but rather shed light on the evolution of the regulatory property regime. Property rights still matter in China, but the structure of …

The Value Of Uncertainty, Cathy Hwang, Benjamin P. Edwards

Faculty Scholarship

No abstract provided.

Closed-End Fund Ipo Considerations, Benjamin P. Edwards

Faculty Scholarship

No abstract provided.

Data Breach (Regulatory) Effects, David Thaw

Cardozo Law Review de•novo

Breach notification laws have been a major driver of data protection efforts in U.S. organizations for more than a decade. This form of disclosure-based regulation exists in 47 of 50 U.S. states, as well as four other U.S. jurisdictions, but has yet to be adopted as a law of general applicability at the federal level.

This Essay considers the effects the structure of existing disclosure-based cybersecurity regulation has on the efficacy of U.S. firms’ cybersecurity measures. Drawing on previous empirical work and analysis of firm incentives, it suggests two modest conclusions about the most efficacious legal structures: (1) that any …

Keynote Reflections: The Public Governance Duty, Steven L. Schwarcz

Faculty Scholarship

Firms must take ever greater risks to try to innovate and create value in our increasingly competitive and complex global economy. Corporate governance law generally delegates control over excessive risk-taking to the firm’s investors, principally its risk-seeking shareholders. But this does not cover the type of risk-taking that led to the global financial crisis and that is becoming ever more common - risk-taking that could have systemic consequences to the financial system. I argue for a “public governance duty,” requiring managers of systemically important firms to assess the impact of risk-taking on the public as well as on investors, and …

When Governments Write Contracts: Policy And Expertise In Sovereign Debt Markets, W. Mark C. Weidemaier, Mitu Gulati, Anna Gelpern

Faculty Scholarship

At least three times in the past two decades, national governments and institutions at the regional and international levels have tried to reform sovereign bond contracts to facilitate debt restructuring. Increasingly, these efforts have focused on promoting majority modifications clauses, a species of collective action clause (CAC) that facilitates a binding debt restructuring. Rather than legislate or regulate, governments have convened expert commissions, produced model CACs, and aggressively marketed these clauses to debtors and creditors. When events prove the existing CAC template inadequate or irrelevant, the process begins anew. This paper considers this mode of government intervention, which has a …

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.

Trusting Strangers: Dispute Resolution In The Crowd, Anjanette H. Raymond, Abbey Stemler

Cardozo Journal of Conflict Resolution

Hoping to be the next Pebble, entrepreneurs and businesses have flocked to various crowdfunding platforms to contribute dollars to fund initial launches of products and other investments. As readers are undoubtedly aware, Kickstarter was the first and bestknown crowdfunding website, having helped to launch more than 95,000 projects to date. On March 3, 2014, Kickstarter reported that it passed $1 billion in pledges with over 5.7 million people donating to creative projects. There are currently over 800 crowdfunding platforms, with the bulk of dollars contributed going to social campaigns. Of course, as donations grew and the number of backers surged, …

India, Kavita Mohan, Raj Barot, Aseem Chawla, Ashish Jerjurkar, Divya Ashta, Gagan Kumar, Niyati Chanana, Sharanya G. Ranga, Laxmi Joshi, Fatema Merchant, Priyanka Sharma Goswami, Poorvi Chothani

The International Lawyer

This article surveys significant legal developments in India during the year 2014.

Keynote Reflections: The Public Governance Duty, Steven L. Schwarcz

Georgia Law Review

There has been real frustration with the SEC and other government agencies for not holding individuals responsible for the excessive risk-taking that was a principal cause of the 2008 to 2009 global financial crisis (Financial Crisis) and its associated banking failures. Enforcement has focused instead on the financial firms themselves. But being managed by individuals, firms themselves are the second-best targets of deterrence. Targeting managers in their personal capacity is thus widely viewed as a greater, and perhaps a more optimal, deterrent than firm-level liability. Better deterrence is critical because insufficient deterrence could sow the seeds-as may already be occurring-for …

From Fedspeak To Forward Guidance: Regulatory Dimensions Of Central Bank Communications, Robert B. Ahdieh

Georgia Law Review

Let's pause here and note what this moment represented. For the first time, the [Federal Open Market] Committee was using communication-mere words-as its primary monetary policy tool. Until then, it was probably common to think of communication about future policy as something that supplemented the setting of the federal funds rate. In this case, communication was an independent and effective tool for influencing the economy. The FOMC had journeyed from "never explain" to a point where sometimes the explanation is the policy. - Janet L. Yellen'

In late 2008, as the full impact the Global Financial Crisis would have on …

The Evolving Role Of Economic Analysis In Sec Rulemaking, Joshua T. White

Georgia Law Review

Recently, the SEC has come under great scrutiny for how it conducts economic analysis around rulemakings, especially those associated with the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank or the Dodd-Frank Act) Dodd-Frank tasked the SEC with more than 100 rulemaking provisions. Perhaps no criticism had a more profound effect than the D.C. Circuit's decision in Business Roundtable v. SEC, which struck down the SEC's proxy access rule due to inadequate economic analysis.

Regulations are imperfect. They cannot be costlessly executed or enforced. Regulators also lack full information on the actual costs and benefits of proposed policies. For …

Foreign Investor Protection And Climate Action: A New Price Tag For Urgent Policies, Gus Van Harten

Osgoode Legal Studies Research Paper Series

From a climate perspective, not all investment is equal. Desirable investment in clean energy needs encouragement and protection, while undesirable investment in fossil fuels needs clear policy signals to avoid further investment in destructive activities and stranding more assets. In this paper, evidence is presented on how foreign investor protection provisions in trade and investment agreements tilt the playing field in favor of entrenched incumbents and against urgent action on climate; on the potential for a massive expansion of investor-state litigation and risks to climate policy in proposed trade deals; and on key flaws in recent European Commission proposals to …

Banking, Payments And Negotiable Instruments, Benjamin Geva

Osgoode Course Casebooks

Course number: 2420.04

Going Green: Legal Considerations For Marijuana Investors And Entrepreneurs, Frank Robison

American University Business 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 …

Regulating For The First Time The Decision To Grant Consumer Credit: A Look At The First Steps Taken By The United States And Australia, Jeffrey Davis

UF Law Faculty Publications

In this Article, I discuss the changes in three consumer-credit realms. First, I compare the Australian regime applicable to all forms of consumer credit granting, including mortgage lending, to the American regulation of the consumer mortgage-granting decision. Second, I compare the Australian and American approaches to the decision to authorize use of, or increase the credit limit on, individual credit cards. Third, I compare the two approaches to regulating small short-term loans, usually called payday loans. Finally, I compare the enforcement regimes of both countries — perhaps the key to it all.

The Comprehensive Capital Analysis And Review And The New Contingency Of Bank Dividends, Robert F. Weber

Faculty Publications By Year

Historically, bank regulators have restricted bank dividends as part of a larger effort to preserve banks’ capital and make them more able to withstand losses. In today’s dynamic banking markets, the formulaic and rigid ways by which regulators have traditionally policed dividends have become anachronistic. Against this background, the Federal Reserve Board has attempted to update and reinvigorate dividend regulation through two regulatory reforms: (1) the Comprehensive Capital Analysis and Review (CCAR) program and (2) the Dodd-Frank Act stress testing program.

This Article explores the important practical and theoretical implications that result from these regulatory reforms. As a practical matter, …

Post-Crisis Reform Of The Supervisory System And High Reliability Theory, Robert F. Weber

Georgia Law Review

Post-crisis reforms of the financial supervisory system have focused on improving the resilience of individual firms and promoting containment of problems in the event that an individual firm does fail. Both resilience and containment are hallmarks of "high reliability organizations" (HROs), a class of organizations distinguished by their ability to maintain reliable performance in dynamic operating conditions.' In the organizational context, resilience is about making organizations more robust to unexpected problems and stresses, and able to maintain performance across a wide range of unanticipated stressed outcomes. Containment is about isolating organizational failures so that when they occur, they do not …

Reforming The Regulation Of Community, Tanya D. Marsh

Indiana Law Journal

The regulatory framework for financial institutions in the United States imposes significant costs on community banks without providing benefits to consumers or the economy that justify those costs. The Dodd-Frank Wall Street Reform and Consumer Protection Act builds on decades of “one-size-fits-all” regulation of financial institutions, an ill-conceived regulatory strategy that puts community banks at a competitive disadvantage as compared with their larger, more complex competitors. The imposition of regulatory burdens on community banks without attendant benefits ultimately harms both consumers and the economy by (1) forcing community banks to consolidate or go out of business, furthering the concentration of …

Dollar Unilateralism: The New Frontline Of National Security, Suzanne Katzenstein

Indiana Law Journal

This Article makes three points. First, it draws attention to a profound shift toward “dollar unilateralism” by the U.S. government as it advances core national security goals. Relying on the special status of the U.S. dollar, the government has enlisted foreign banks to isolate targeted entities and track illicit financial flows. Second, drawing on examples such as Iran’s nuclear program, the Article identifies three formal and informal legal tactics the government has used to implement dollar unilateralism: financial sticks, high-profile blacklists, and direct diplomacy. Finally, the Article discusses the efficacy of dollar unilateralism and its implications for U.S. accountability. Dollar …

Industry Career Guide: Banking And Finance, Tereso S. Tullao Jr, Roberto Raymundo

Angelo King Institute for Economic and Business Studies (AKI)

The banking and finance sector performs a critical function in the Philippine economy as it is primarily responsible for the mobilization of domestic savings and the conversion of these funds into directly productive investments. Financing the needs of firms which desire to raise productive capacity by purchasing additional capital equipment, acquiring or leasing idle property, building and expanding factories, and increasing inventory are responsible for sustaining economic growth in the long term, alongside the creation of new jobs. It is very important for the banking and finance sector to continue finding ways to encourage households to save their unspent income …