Banking and Finance Law Commons^™

Italy: Banco Ambrosiano Emergency Liquidity Program, 1982, Kopal Ardimento

Journal of Financial Crises

On June 14, 1982, prompted by the disappearance of Banco Ambrosiano (BA) CEO Roberto Calvi, the Bank of Italy opened an investigation into BA, which revealed to the market BA’s 1.9 trillion–2.2 trillion Italian lire (ITL; USD 1.4 billion–USD 1.6 billion) in questionable foreign loans. The Treasury Ministry deemed intervention necessary because BA’s collapse would compromise the credibility of the Italian banking system abroad. Attempts to appeal to the Vatican Bank to honor guarantees it had made against these foreign loans failed. The Bank of Italy worried that runs on deposits would further impair BA while authorities explored alternatives to …

Indonesia: Bank Century Emergency Liquidity Program, 2008, Vincient Arnold

Journal of Financial Crises

By the autumn of 2008, the effects of the Global Financial Crisis of 2007–2009 had struck Indonesia, as liquidity in interbank markets dried up, capital flows reversed, and economic growth slowed. On October 30, 2008, Bank Indonesia—the central bank of Indonesia—passed Regulation No. 10/26/PBI/2008, establishing a Short-Term Funding Facility for Commercial Banks (SFF). On October 31, 2008, the capital adequacy ratio of Bank Century, a relatively small Indonesian bank, was –3.35%. On November 14, 2008, after Bank Century failed to conduct payment clearing the day before, Bank Indonesia approved Bank Century for access to the SFF and began disbursements of …

Iceland: Kaupthing Emergency Liquidity Program, 2008, Sophia Alden, Léo Brougher

Journal of Financial Crises

Following the privatization of Iceland’s state-owned banks between 1998 and 2003, the three largest banks in Iceland—Glitnir, Landsbanki, and Kaupthing—grew rapidly, with consolidated assets increasing from 100% of Iceland’s GDP in 2004 to nearly 900% by the end of 2007. Initially, this growth was funded by debt issuances in the European medium-term note market; however, as cracks in the international financial system appeared in 2006, the banks turned to offering high-interest savings accounts through their foreign subsidiaries. Beginning in October 2006, Kaupthing launched “Kaupthing Edge,” an online savings and deposit platform operating in markets outside Iceland. When the United States …

Germany: Ikb Deutsche Industriebank Emergency Liquidity Program, 2008, Ayodeji George, Sophia Alden

Journal of Financial Crises

In the summer of 2007, IKB Deutsche Industriebank (IKB) faced heavy losses owing to the liquidity support it had provided on commercial paper issued by Rhineland Funding Capital Corporation, its off-balance-sheet vehicle, which held distressed collateralized debt obligations backed by US subprime mortgages. In July 2007, authorities became aware that IKB itself had lost access to liquidity from Deutsche Bank and other funding partners. Publicly owned development bank Kreditanstalt für Wiederaufbau (KfW) held a 38% stake in IKB, exposing it to potentially heavy losses in the event of an IKB failure. KfW, German financial authorities, and German banks pursued a …

Cyprus: Laiki Bank Ad Hoc Emergency Liquidity Assistance, 2011, Stella Schaefer-Brown

Journal of Financial Crises

Following the European Union’s decision to restructure Greek debt in October 2011, Laiki Bank’s depositors began to withdraw their funds from the bank in growing numbers after it reported that its portfolio of Greek government bonds had lost EUR 2.3 billion in value. Beginning October 2011 and lasting until the bank’s resolution in 2013, Laiki Bank requested and received emergency liquidity assistance (ELA) from the Central Bank of Cyprus (CBC) so that the bank could continue to fund itself as depositors withdrew their funds. In June 2012, Cypriot authorities recapitalized Laiki Bank, and the government became an 84% shareholder. From …

Denmark: Roskilde Bank Emergency Liquidity Program, 2008, Bailey Decker

Journal of Financial Crises

Roskilde Bank A/S (Roskilde) was the eighth-largest bank in Denmark at the time of the Global Financial Crisis, with approximately 43 billion Danish kroner (DKK; USD 9.1 billion) in consolidated assets as of March 2008. Roskilde had considerable exposure to real estate and construction firms, prompting ratings downgrades and larger write-downs than expected in July 2008. On July 10, 2008, Roskilde asked for liquidity assistance from the Danish central bank, Danmarks Nationalbank (DNB). Later that day, DNB and the banking sector’s self-insurance group, the Private Contingency Association (PCA), announced emergency liquidity assistance to Roskilde in the form of an unlimited …

Canada: Canadian Commercial Bank Emergency Liquidity Program, 1985, Adam Keanie, Léo Brougher

Journal of Financial Crises

In March 1985, the Canadian Commercial Bank (CCB)—Canada’s 10th largest bank, with CAD 2.9 billion in assets—reported to the Office of the Inspector General of Banks (OIGB) and the Bank of Canada (BoC) that CCB would not survive owing to large losses on its United States energy loans portfolio. In response, the BoC assembled an emergency CAD 255 million rescue package, secured through contributions from a consortium composed of the federal government, the provincial government of Alberta, the Canadian Deposit Insurance Corporation, and Canada’s six largest banks. Despite the BoC’s reassurances, including a public announcement promising virtually unlimited liquidity support, …

Ad Hoc Emergency Liquidity Programs In The 21st Century, Steven Kelly, Vincient Arnold, Greg Feldberg, Andrew Metrick

Journal of Financial Crises

This paper surveys 22 case studies of 21st century instances when financial crisis-fighters implemented ad hoc emergency liquidity (AHEL) interventions, interventions designed to provide liquidity to a troubled institution that the authorities believe is systemically important. While emergency liquidity support is often introduced with the real or communicated intention of preventing illiquidity from leading to insolvency, the liquidity crisis should instead be viewed as the manifestation of the market’s assessing the firm as nonviable as a going concern. For that reason, authorities should provide AHEL assistance only to institutions that they have deemed viable or that they have committed to …

Brazil: Banco Btg Pactual Emergency Liquidity Program, 2015, Vincient Arnold

Journal of Financial Crises

On November 25, 2015, André Esteves, then CEO of Banco BTG Pactual, a large Brazilian investment bank, was arrested by Brazilian authorities in connection with suspected involvement in a corruption scandal. Although the arrest did not involve BTG in any capacity and Esteves was later acquitted, the company’s stock quickly collapsed and depositors and other creditors rushed to reduce their exposures to the company. Depositors withdrew certificates of bank deposits, which BTG relied on to fund its daily operations. By November 27, BTG shares had fallen 26%. On December 2, the top seven shareholders of BTG took control of the …

Containing Runs On Solvent Banks: Prioritizing Recovery Over Resolution, Edoardo David Martino, Enrico C. Perotti

Journal of Financial Crises

The sudden banking defaults in the spring of 2023 proved current prudential norms insufficient to prevent bank distress. Capital and liquidity norms need to be adjusted. The experience also shows how a lack of credible supervisory tools led to forbearance and finally chaotic public bailouts. An intervention gap arises when viable but undercapitalized banks are at the mercy of runs. Once outflows start to escalate, all that is left is to prepare for resolution and assign losses. We call for new Pillar II – i.e. activated by the supervisor – stabilizing measures, as contingent capital and liquidity tools.

A timely …

Leveraging Benford’S Law And Machine Learning For Financial Fraud Detection, Benjamin R. Fu

Cybersecurity Undergraduate Research Showcase

Financial fraud, particularly credit card fraud, continues to pose substantial challenges to financial institutions due to its increasing frequency and impact on consumer trust. While traditional rule-based methods have provided foundational defenses, their limitations in scalability and adaptability have accelerated the adoption of machine learning (ML) techniques. Concurrently, Benford’s Law—a statistical principle often used in forensic accounting—has demonstrated efficacy in detecting anomalies within naturally occurring numerical datasets. This study explores a hybrid fraud detection approach that integrates Benford’s Law with supervised machine learning algorithms, including Logistic Regression, Random Forest, and k-Nearest Neighbors. Using the publicly available European credit card fraud …

Against Monetary Primacy, Yair Listokin, Rory Van Loo

Northwestern University Law Review

To reduce inflation, the Federal Reserve (Fed) raises interest rates. But every month with high interest rates increases the risk of a devastating recession. Recessions impose not only short-term pain in the form of widespread unemployment but also lifelong harm for many, as vulnerable workers and those who start their careers during a downturn never fully recover. Yet hiking interest rates is the centerpiece of U.S. inflation-fighting policy. When inflation is high, the Fed raises interest rates until inflation is tamed, regardless of the consequent sacrifices. We call this inflation-fighting paradigm “monetary primacy.” Despite its great risks, monetary primacy has …

Between Attraction And Evasion: Legal Factors Shaping Fdi In Indonesia And Neighboring Countries, Richard C. Adam

Indonesia Law Review

This article examines the internal and external factors that influence foreign direct investment (FDI) in Indonesia, focusing specifically on the legal framework as a key determinant. Internal factors—also referred to as pull factors—include the quality of Indonesia’s Foreign Investment Law, legal certainty, bureaucratic efficiency, and the availability of fiscal and non-fiscal incentives. Meanwhile, push factors represent external elements, such as the attractiveness of neighboring countries’ investment laws, regional economic integration, and global investment trends that encourage capital relocation. Using a normative juridical approach and qualitative analysis of secondary data, this study compares Indonesia’s regulatory environment with that of several Southeast …

Improvident Credit Extension: A New Legal Concept Aborning?, Vern Countryman

Maine Law Review

The latest triumph of our modified free enterprise system is consumer credit which, including home mortgages, has burgeoned from $30 billion since the end of 1945 to more than $569 billion in March 1974. In 1946 the total cost to consumers for interest and debt retirement was $10 billion, or six percent of family income. By 1966 it was $110.6 billion, or twenty-two percent of family income. By 1971 installment debt charges accounted for from twenty to thirty-nine percent of disposable income for five percent of our families and for forty percent or more of disposable income for another two …

Changes In The Present Maine Law Created By The Maine State Consumer Credit Code, John A. Spanogle Jr.

Maine Law Review

The Maine Consumer Credit Code [M3C] was enacted by the Special Session of the 106th Legislature of the State of Maine, and will become effective on January 1, 1975. It will regulate almost all consumer credit transactions not secured by first mortgages on real estate. The statute also creates a new, self-financed Bureau of Consumer Protection under the Department of Business Regulation. This article will first discuss the legislative history of the M3C. Second, it will discuss the scope and jurisdiction of the M3C in comparison with the total scope of all the prior statutes. Third, the article will discuss …

Ordering The Judicial Process Lien And The Security Interest Under Article Nine: Meshing Two Different Worlds Part I—Secured Parties And Post-Judgment Process Creditors, Thomas M. Ward

Maine Law Review

The clash between a creditor with a consensual security interest in personal property and a general creditor with a judicially created lien in the same property generates fundamental problems for the commercial lawyer. The respective rights of these two parties hinge upon a determination of priority. Because the interests of the parties are governed by distinct bodies of state law whose interrelationship remains unclarified, the resolution of priority problems in this context is difficult. Article Nine of the Uniform Commercial Code, which purportedly contains a comprehensive priority system, regulates the consensual security transfer, and a variety of independent state statutory …

The Constitutionality Of Maine's Real Estate Mortgage Foreclosure Statutes, Kathleen Barry

Maine Law Review

In Maine, Fuentes v. Shevin caused understandable concern about the constitutionality of the state statutes governing real property mortgage foreclosures. Of the foreclosure procedures existing in 1972, only one provided for impartial determination by a court of the mortgagor's breach of condition. In response to Fuentes, the Maine Legislature in 1975 enacted a straightforward provision for foreclosure by civil action. Although the constitutionality of Maine's pre-1975 foreclosure statutes under the fourteenth amendment has not been litigated, lenders in Maine's largest city have recently abandoned all methods of foreclosure except foreclosure by civil action. Lenders, debtors, and legislators in Maine would …

Standard Search Logic Under Article 9: The Florida Debacle Revisited, Kenneth C. Kettering

University of Miami Law Review

If a financing statement is filed in a filing office that does not have a search system that uses a standard search logic, Article 9 of the Uniform Commercial Code provides that there is no tolerance for any error, however slight, in the debtor’s name shown on that financing statement. Such an erroneous financing statement will not be effective to perfect a security interest. In 2012 the author warned that the search system used by Florida’s central filing office lacks a standard search logic, and in 2022 the Florida Supreme Court so held. This Article (i) details how Florida should …

The Choateness Doctrine And The Federal Loan Programs—A Plea For Federal Legislation, James A. Houle

Maine Law Review

During the Depression of the 1930's, Congress created a number of federal loan programs as part of Roosevelt's New Deal legislation aimed at stimulating economic growth. In the almost fifty years since then, Congress has expanded these programs to the point where today there are over one hundred and sixty of them, representing the nation's largest single source of direct and insured loans. From 1959 until the recent decision in United States v. Kimbell Foods, Inc., the Supreme Court applied the theory of the inchoate lien (now called the "choateness doctrine") to determine priority in suits involving federal consensual liens …

Life In Limbo: Cryptocurrency And Fosta As The Pillars Of Cyber-Trafficking, Rebecca Liu

Washington and Lee Journal of Civil Rights and Social Justice

As the internet continually advances into Web 3.0, human traffickers thrive in using online platforms to prey on their victims, creating a new form of human trafficking: cyber-trafficking. In 2018, Congress passed the Fight Online Sex Trafficking Act (“FOSTA”) to dampen the stringent protection that 47 U.S.C. § 230 (“Section 230”) offered to internet intermediaries in cyber-trafficking litigation. However, Congress’s intended effect in passing FOSTA failed, as courts continue to interpret FOSTA narrowly, upholding the stringent protection that Section 230 offers internet intermediaries. Beyond FOSTA’s indifferent impact, governmental bodies struggle adapting to Web 3.0’s landscape, neglecting to intervene with traffickers’ …

Digital Dollar: Privacy And Transparency Dilemma, Jiaying Jiang

UF Law Faculty Publications

Many have voiced concerns that the digital dollar, a digital form of central bank money, will facilitate government surveillance, thus depriving users of privacy. This article investigates critical technical designs proposed by leading think tanks, central banks, and scholars from interdisciplinary fields, reaching a surprising conclusion that contradicts popular belief: a digital dollar can offer better privacy protection than existing digital payment systems. The article argues that those expressing concerns have made two flawed assumptions: (1) that digital dollar data is fully transparent regarding personal information and transaction details and (2) that the government or Federal Reserve has unlimited access …

From Theory To Practice: A True-Crime Podcast, Lauren V. Peckham

Senior Honors Projects

The Criminal Element is an innovative, victim-centered podcast that bridges the gap between criminological theory and real-world criminal cases. The podcast is designed as an educational resource for undergraduate Criminology and Criminal Justice students, alongside general audience members interested in learning more about criminological theory. Through the lens of true crime, this podcast is an engaging exploration of foundational and advanced theories while avoiding sensationalism and exploitation, a prevalent problem among true crime media. Each episode connects criminological theoretical concepts – such as strain, social learning, and social disorganization – to contemporary and historical cases, providing listeners with accessible and …

Legal Market Decartelization, Milan Markovic, Nuno Garoupa

Faculty Scholarship

American lawyers’ grip on the legal market is receding. Scholars and policymakers increasingly agree that the public has little to lose and potentially much to gain from legal market decartelization - the weakening of the lawyers’ monopoly over the legal services market. Harkening to deregulatory initiatives abroad and in Arizona and Utah, reformers contend that removing restrictions on the corporate delivery of legal services and unauthorized practice of law will slash costs and expand access to justice.

Drawing on economic theory and recent market developments, this Article offers a cautionary rejoinder. Understandable concerns about cartelization and lawyer rent-seeking have led …

Debt Tokens, Andrea Tosato, Diane Lourdes Dick, Christopher K. Odinet

Faculty Scholarship

The worlds of crypto and bankruptcy have collided. Once-prominent, fast-growing, and even politically influential platforms for trading cryptocurrencies have imploded spectacularly. Gone are the glossy advertisements, celebrity endorsements, and proclamations that blockchain operates as a law unto itself. Instead, insolvent crypto businesses—including the crypto exchange giant FTX—find themselves in bankruptcy court, no different from any other failed enterprise. These bankruptcies reveal a startling reality: individual investors who placed their trust in these platforms have been stripped of their digital assets. In their stead, they hold hard-to-collect claims against these defunct platforms.

Amid the chill of the crypto winter, bankruptcy has …

Exporting Equity: Lessons From The Equal Credit Opportunity Act, Shanthi Elizabeth Senthe

William & Mary Journal of Race, Gender, and Social Justice

Credit functions as a fundamental gateway to economic mobility; however, questions arise regarding the legal and societal implications when an individual is denied access to such credit. In theory, fair lending principles dictate that equal access to credit is a legal right. The premise is reasonable but becomes convoluted when consumer credit is clouded by lender bias, resulting in credit discrimination. This Article presents a comparative perspective revealing a jurisdictional difference in legislation affecting equal access to credit between the United States and Canada. Specifically, this Article will focus on the American Equal Credit Opportunity Act (hereinafter ECOA) and …

Big Business As Gun Control, David B. Kopel, George A. Mocsary, Bhav Ninder Singh

Dickinson Law Review (2017-Present)

Gun control increasingly bypasses direct legislative enactments by co-opting the commercial marketplace. Financial institutions and insurers often face regulatory pressures, frequently articulated through vague notions of “reputational risk,” to terminate or restrict services for lawful firearms businesses and advocacy groups. The debanking tactic, seen in initiatives such as Operation Choke Point, can deny essential financial products to firearm owners, merchants, and organizations, curtailing the practical exercise of constitutionally protected rights. Simultaneously, government agencies sometimes pursue warrantless data collection from bank records and merchant category codes, building profiles of lawful purchasers and eroding privacy and due-process norms.

Social media platforms compound …

Ghosting The Crowd, Andrew A. Schwartz

Washington and Lee Law Review

Crowdfunded companies are legally bound to provide investors with an annual report—but most don’t. This “ghosting of the crowd” violates federal securities laws and raises the risk of opportunism by entrepreneurs, who are more prone to misbehave if no one is watching. Most ominously, it threatens the very viability of the investment crowdfunding market, as investors who are ghosted by one company are less likely to invest in another.

This Article reports on the embarrassing record of noncompliance with the annual report rule imposed by the Jumpstart Our Business Startups (“JOBS”) Act of 2012 and Regulation Crowdfunding, and proposes a …

We The People... Deserve Fair Taxes, Doron Narotzki, Tamir Shanan

Cardozo Journal of Equal Rights & Social Justice

In a world where economic inequality is deepening, tax law has emerged as one of the most powerful tools for shaping social justice. This Article explores how progressive taxation serves not only as a fiscal mechanism but as a reflection of societal values and the moral obligations of wealth. With legal methodologies such as Purposivism, Originalism, and Living Constitutionalism providing different interpretative lenses, this Article delves into the crucial discourse surrounding income, tax avoidance, deductions, and wealth taxation.

Through an analysis of real-world tax policies and legal precedents, the Article examines how these methodologies either perpetuate or challenge the current …

Pay Transparency Laws Clear As Mud: A Discussion Of And Proposal For The Pay Transparency Legislation In Colorado And New York, Emily Hall

Cardozo Journal of Equal Rights & Social Justice

The note argues that while pay transparency laws in Colorado and New York represent progress, they fall short of achieving true pay equity because they do not require employers to disclose the factors influencing salary ranges. The author advocates for amendments to these laws, including mandatory annual pay audits and the disclosure of factors and their weights used in determining salary ranges, to enhance transparency and fairness in negotiations.

The Digitalization Of Insolvency Proceedings, Aurelio Gurrea-Martinez

Research Collection Yong Pung How School Of Law

Despite the international divergences existing in the design of insolvency law, there is a common feature of insolvency proceedings that, to a greater or lesser extent, is somehow universal: insolvency proceedings are generally costly and lengthy processes. For that reason, it is not surprising that a significant body of the literature on insolvency law deals with different mechanisms to make insolvency proceedings more efficient. This article examines how technology can contribute to that goal. To that end, it starts by reviewing how countries are deploying, or can deploy, technology in different aspects and stages of insolvency proceedings and how such …