Banking and Finance Law Commons^™

The Federal Reserve As Last Resort, Colleen Baker

University of Michigan Journal of Law Reform

The Federal Reserve, the central bank of the United States, is one of the most important and powerful institutions in the world. Surprisingly, legal scholarship hardly pays any attention to the Federal Reserve or to the law structuring and governing its legal authority. This is especially curious given the amount of legal scholarship focused on administrative agencies that do not have anywhere near as critical a domestic and international role as that of the Federal Reserve. At the core of what the Federal Reserve does and should do is to conduct monetary policy so as to safeguard pricing, including that …

Once A Failed Remic, Never A Remic, Bradley T. Borden, David J. Reiss

Cornell Law Faculty Working Papers

Investors in mortgage-backed securities, built on the shoulders of the tax-advantaged Real Estate Mortgage Investment Conduit (“REMIC”), may be facing extraordinary tax losses because of how bankers and lawyers structured (or failed to structure) these securities. This calamity is compounded by the fact that those professional advisors should have known that the REMICs they created were flawed from the start.

Wall Street Rules, Bradley T. Borden, David J. Reiss

Cornell Law Faculty Working Papers

Investors in mortgage-backed securities, built on the shoulders of the tax-advantaged Real Estate Mortgage Investment Conduit (“REMIC”), may be facing extraordinary tax losses because of how bankers and lawyers structured these securities. This calamity is compounded by the fact that those professional advisors should have known that the REMICs they created were flawed from the start. If these losses are realized, those professionals will face suits for damages so large that they could put them out of business.

Mad Money: Wall Street's Bonus Obsession, Jeanne L. Schroeder

Cardozo Law Review

No abstract provided.

Laughing Out Loud: Art, Culture, And Fantasy, Henrietta L. Moore

Cardozo Law Review

What makes art valuable? Why in times of crisis do people buy contemporary art? This Paper discusses whether or not investment in art can ever be seen as rational, and explores how the contemporary art market is expanding to include not just works of art, but art as a form of cultural practice. Audiences are no longer content simply to visit museums, galleries, and other cultural institutions. They want to participate, but why are art fairs, biennials, and museum events so popular? The contemporary art market has always been segmented, and reputation and display have been important motivators for rich …

Vat Fraud In The Customer Chain - The German Perfect Storm Cases, Richard Thompson Ainsworth

Faculty Scholarship

German civil and criminal courts have not always agreed over whether to allow a taxpayer to zero-rate intra-Community supplies when the taxpayer making the supply knew (or should have known) that his buyer in the other Member State intended to fraudulently evade VAT as a missing trader. This is no longer the case. Zero-rating of intra-community supplies is now being denied in German civil and criminal courts.

This paper considers how far Germany appears to be extending the law in this area. In 2011 six cases were heard by the Bundesfinanzhof (German Supreme Tax Court) that demonstrate both (a) the …

Medical Devices Excise Tax (Mdet) — A Market-Specific Vat?, Richard Thompson Ainsworth, Andrew Shact, Gail Wasylyshyn

Faculty Scholarship

VATs flourish in complex, clearly defined markets. New York discovered this when it converted its single-stage retail sales tax on hotel rooms, the Hotel Room Occupancy Tax (HROT), into a multi-stage European-style VAT. The HROT VAT-conversion demonstrates that (a) in a clearly defined market where (b) a single stage tax is imposed on (c) only part of a complex supply chain that (d) losses attributable to supply-chain-fragmentation can be remedied by moving to a multi-stage VAT.

The Medical Devices Excise Tax (MDET) imposes as 2.3% excise tax on the sale by manufacturers, producers or importers of clearly identified medical devises …

Developing The Framework For Safe And Efficient Mobile Payments, Hearing Before Senate Committee On Banking, Housing, And Urban Affairs, 112th Congress, Sarah Jane Hughes

Public Testimony by Maurer Faculty

No abstract provided.

Mahagében Kft & Péter Dávid: Re-Directing The Eu Vat's Perfect Storm, Richard Thompson Ainsworth

Faculty Scholarship

On June 21, 2012 the Court of Justice of the European Union (CJEU) rendered judgment on two Hungarian references, Mahagében kft v. Nemzeti Adó-és Vámhivatal Dél-dunántúli Regionális Adó Fölgazgatósága and Péter Dávid v. Nemzeti Adó-és Vámhivatal Dél-dunántúli Regionális Adó Fölgazgatósága (Mahagében/Dávid). The Mahagében/Dávid decisions clarify the CJEU’s earlier holdings in the joined cases of Alex Kittel v. Belgium and Belgium v. Recolta Recycling SPRL (Kittel/Recolta).

Kittel/Recolta is a critically important decision. It is central to the EU’s anti-fraud effort. It is one of three legal imperatives that earlier this year appeared to be coalescing into a Perfect (enforcement) Storm.

After …

The Goldilocks Approach: Financial Risk And Staged Regulation, Charles K. Whitehead

Cornell Law Faculty Publications

Financial firms engage in a wide range of private conduct. New rules that address financial risk can regulate elements of that conduct but not all conduct or all the factors that affect conduct. There is, therefore, a real concern that new regulation will have unanticipated consequences, particularly in a system as complex as the financial markets. The result may be new risks or a shift in risk taking away from regulated conduct — responses that regulators can anticipate but may not be able to accurately predict or control.

This Article cautions against the rush to adopt new financial risk regulation …

Taking Interdependence Seriously: The Need For A Reassessment Of The Precautionary Principle In International Trade Law, Markus Wagner

Cardozo Journal of International and Comparative Law

The article advocates for a more prominent role of the precautionary principle in international trade law, particularly within the World Trade Organization (WTO) framework. It argues that this principle, which allows for preventive measures to avoid potential harm even in the absence of scientific certainty, is essential for addressing complex, high-risk issues such as climate change and endocrine-disrupting chemicals (EDCs). The article contends that the WTO's current reliance on robust scientific evidence for trade-restrictive measures may not be feasible or sufficient for such challenges, and it explores how the precautionary principle can be integrated into WTO law to balance trade …

The Challenge Of Optimism And Complexity: Inadequately Addressed By The Fcic's Report, Timothy E. Lynch

Faculty Works

No abstract provided.

Assessing The Legislative Politics In The Making Of The Foreign Bank Liberalization Act, Bing Baltazar C. Brillo

Journal of Public Affairs and Development

The study is about the dynamics among the actors in the making of the Foreign Bank Liberalization Act or Republic Act 7721. The central issue in the legislation was whether to have a restricted or extensive liberalization of the banking sector. The policy divide was between the Senate-BSO-BAP-resident foreign banks' bloc, which was advocating for a single-mode of entry for foreign banks, and the House-FCCP-the rural-development banks-the academic-business-consumer groups' bloc, which was endorsing a multiple-mode of entry for foreign banks. The Senate-BSP-BAP-resident foreign banks' bloc prevailed since this bloc benefited from three intertwined factors in the legislation process. First, the …

Baltimore After The War Of 1812: Where Robert Mills Met His Waterloo And When James A. Buchanan Broke The Bank, Garrett Power

Faculty Scholarship

In 1815 Baltimore City was boom town. Its militiamen had repulsed the British sea invasion and presaged an end to the War of 1812. Napoleon’s defeat at Waterloo in 1815 signaled an end to European wars. Freedom of the seas had been restored. The Baltimore “Clipper” was the best sailing ship on the ocean. Baltimore looked to become the country’s leading exporter of grain, flour, and tobacco. Merchant James A. Buchanan, a partner in one of the country’s greatest shipping firms, had been named President of the Baltimore Branch of the Second National Bank of the United States. Civic leaders …

Comment On The Federal Housing Finance Agency’S Strategic Plan: Fiscal Years 2013-2017, David J. Reiss

Cornell Law Faculty Working Papers

This is a comment upon Performance Goal 4.3 from the Federal Housing Finance Agency’s Strategic Plan: Fiscal Years 2013-2017. Performance Goal 4.3 addresses the future of Fannie Mae and Freddie Mac as well as the future of the infrastructure of the residential housing finance market. This comment will address the future of Fannie and Freddie after they exit conservatorship. Once analyzed in the context of regulatory theory, Fannie and Freddie’s future seems clear. They should be privatized so that they can compete on an even playing field with other financial institutions, and their public functions should be assumed by pure …

Administrative Justice: Using Agency Declaratory Orders In The Fight To Staunch The Financing Of Terrorism, J. David Pollock

Cardozo Law Review

No abstract provided.

Alternative Dispute Resolution Design In Financial Markets—Some More Equal Than Others: Hong Kong's Proposed Financial Dispute Resolution Center In The Context Of The Experience In The United Kingdom, United States, Australia, And Singapore, Shahla F. Ali, Antonio Da Roza

Washington International Law Journal

Systems of financial dispute resolution currently operate in most major financial centers throughout the world. As such systems expand and develop to address a growing number of finance-related disputes, they must inevitably address the question of their role and function in financial market regulation. Such questions are rooted in the larger socio-legal dispute processing debate examining how institutional dispute resolution mechanisms effectively regulate the repeat player knowledge/power gap through appropriate policies and procedures. Using the example of Hong Kong in comparison with financial dispute resolution models currently in existence in the United Kingdom, Australia, Singapore, and the United States, this …

The Card Act On Campus, Jim Hawkins

Washington and Lee Law Review

In February 2010, the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act intervened in student credit card markets in a dramatic way, attempting to prevent student over-indebtedness, to end aggressive marketing to college students, and to reveal and change avaricious agreements between credit card issuers and colleges. Yet, two years after it became effective, we still have little measurement of whether the Act has accomplished these goals. This Article offers the first empirical assessment of the rationales for the CARD Act and the Act’s effects. Over the two years since the CARD Act went into effect, I conducted surveys of …

Read Between The Lines: Why Recent Ilsa Litigation Is Bad For Business And Contravenes Congressional Intent, Joseph Einav

Cardozo Law Review

No abstract provided.

A Perfect Storm In The Eu Vat: Kittel, "R" And Marc, Richard Thompson Ainsworth

Faculty Scholarship

EU VAT authorities are close to turning the tables on missing traders. For many years organized fraudsters have been stealing huge amounts of VAT on the domestic re-sale of exempt cross-border supplies. Losses have been enormous whether the transactions are in goods (notably cell phones and computer chips) or in tradable services (CO2 permits and VoIP). No market has been safe from the fraudsters.

Answers are developing, but these answers may look more like Armageddon than measured enforcement. Solutions are so draconian, and so all-encompassing that very few intra-community traders will feel safe from the gathering storm. The situation is …

Vat Experimentation — New York & Illinois, Richard Thompson Ainsworth

Faculty Scholarship

US States are experimenting with VATs to solve market-specific problems with tax compliance and revenue yields. Experimentation has been going on for years. Sometimes the experiment is a success; at other times it needs more work.

Although not called VATs either before, during or after adoption – that is what these experiments are. Market-specific VATs are producing benefits long promoted by VAT advocates, notably: an increase in revenue without an increase in tax rates; increased administrative efficiency without significant costs to business; more stable deposits from fractionated payments; and lower enforcement costs from the self-enforcing nature of the VAT.

There …

Real-Time Solution To Refund Fraud: Vat Lessons From Belgium, Brazil, And Quebec, Richard Thompson Ainsworth

Faculty Scholarship

This article provides support for a proposal to eliminate refund fraud in the U.S. by turning Forms W-2, and 1099 into self-certified/ self-authenticated tax documents. The proposal suggests that a “digital signature” of these documents should be taken after they are completed. The signature should then be made part of the final document.

This proposal was initially advanced in Refund Fraud? Real-Time Solution! The underlying premise of that article was that the US could dramatically reduce, if not eliminate, refund fraud if it borrowing digital security techniques from the VAT. The article did not however, explain or expand upon these …

Regulating Short Selling In Europe After The Crisis, Rodolphe B. Elineau

Brigham Young University International Law & Management Review

No abstract provided.

Front Matter

Michigan Business & Entrepreneurial Law Review

No abstract provided.

Six Dimension Strategy As A Basis Of Banking Standard Contract, Wulanmas Frederik

Indonesia Law Review

Indonesia banking based on Article 4 of Act No.10, 1998, aims at supporting the implementation of national development in order to improve equity, economic growth and national stability in the direction of improving people’s welfare. Therefore, to show how important is banking role in supporting the implementation of development, the 6 (six) Strategic Dimensions as the foundation of Banking Standards Contract are: (1). Prudent Banking Supervision and Good Corporate Governance (GCG) in banking activities, (2). Refunctionalization the principle of Contract Law in Banking Standards Contract, (3). Ethics Value in Business, (4). The Act No. 8, 1999 on Consumer Protection, (5). …

Transfer Pricing: Case Studies Of The Cup Method, Richard Thompson Ainsworth, Andrew Shact

Faculty Scholarship

All transfer pricing regimes give priority to the comparable uncontrolled price (CUP) method. Despite declarations that transfer pricing is a search for the “best method” or “most appropriate method,” all systems concede that the search is over when an exact comparable is found because a CUP is preferred over all methods. The best CUP is an exact CUP because it provides an arm’s length price that is not calculated. The price emerges directly from the comparison.

CUPs have traditionally been the most commonly applied method for both taxpayers and the government. They are the judicial gold standard. They hold sway …

Were "It" To Happen: Contract Continuity Under Euro Regime Change, Robert C. Hockett

Cornell Law Faculty Working Papers

One way or another, the European Monetary Union (EMU) is apt to endure. The prospect of continuation under the precise contours of the regime as we presently find it, however, is anything but certain. Hence many investors and other actual or prospective contract parties are likely to remain skittish until matters grow clearer. This skittishness, importantly, can itself hamper the prospect of expeditious European recovery. Addressing particular sources of ongoing uncertainty about EMU prospects can itself therefore aid in the project of recovery.

This Essay accordingly aims to impose structure upon one particular, and indeed particularly complex, source of uncertainty …

Technology, Vat Compliance, And ‘Black Swan’ Blindness, Richard Thompson Ainsworth

Faculty Scholarship

There is fundamentally no difference between a value added tax (VAT), and a retail sales tax (RST) when it comes to collecting the tax on cross-border sales. If (under a VAT) a seller is allowed to “zero-rate” cross-border sales, or if (under a RST) a seller is exempt from collecting the tax on cross-border sales, the critical enforcement question is exactly the same – how does the system assure that the buyer will self-assess (and pay) the tax?

The simple answer is that the tax administration audits. The more complicated answer notes that the effectiveness of the audit (by the …

Business Law Bulletin, Spring 2012

Business Law Bulletin

No abstract provided.

The Regulation Of Online Gaming Across Jurisdictions: Success, Standards And Stability, Peter Nelson

Political Science Theses and Capstones

In 2005 the gaming market was worth an estimated six billion dollars, half of that represented by online gambling revenues. However not all jurisdictions (countries) regulate the industry the same. Some jurisdictions allow the industry to flourish while some go as far as banning the industry all together. I gather data on all 75 global jurisdictions that have some form of online gaming. I analyze which regulations allow the industry to prosper while maintaining quality standards, and which regulations do not work. Preliminary analysis shows that the amount of years a country has allowed online gambling, as well as the …