Banking and Finance Law Commons^™

The End Of The Internal Compliance World As We Know It, Or An Enhancement Of The Effectiveness Of Securities Law Enforcement? Bounty Hunting Under The Dodd-Frank Act's Whistleblower Provision, Justin Blount, Spencer Markel

Fordham Journal of Corporate & Financial Law

In the wake of Bernard Madoff’s $65 billion Ponzi scheme and the recent economic crisis stemming largely from loosely regulated subprime lending and mortgage-backed securities, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act on July 21, 2010, signaling loudly and clearly that change is coming to Wall Street. But Wall Street is not the only one receiving a message. Buried deep within the 2,319 pages of the Dodd-Frank Act, companies can find Section 922, the whistleblower provision, which provides a bounty for whistleblowers who report securities violations to the Securities and Exchange Commission.These bounty provisions and …

Application Of The Concept Of Project Finance In Iraq- A Comparative And Analytical Study, Faris K. Nesheiwat

Fordham Journal of Corporate & Financial Law

Many scholars and experts have addressed the issue of project finance, but one area that remains without detailed examination is its legal treatment under the legal systems of developing countries. The legal concepts applied under project finance are Western and are not necessarily identical to or compatible with legal concepts in Middle Eastern countries in general or Iraq in particular. In that sense, project finance is a transplanted legal concept when examined in the Middle Eastern legal framework. Although this Paper tackles the legal and strategic issues arising from the use of project finance in Iraq, its analysis and comparative …

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 …

Burning Down The House Or Simply Rolling The Dice: A Comment On Section 621 Of The Dodd-Frank Act And Recommendation For Its Implementation, Joshua R. Rosenthal

Fordham Journal of Corporate & Financial Law

Section 621 of the Dodd-Frank Wall Street Reform and Consumer Protection Act modifies the Securities Act of 1933 to prohibit the underwriter, placement agent, initial purchaser, or sponsor, or any affiliate or subsidiary of any such entity of an asset-backed financial product from betting against that very product for one year after the product’s initial sale. The rule prohibits anyone who structures or sells an asset-backed security or a product composed of asset-backed securities from going short, in the specified timeframe, on what they have sold, and labels such transactions as presenting material conflicts of interest. This Comment discusses traces …

In Defense Of The Gses, Steven A. Ramirez

Faculty Publications & Other Works

No abstract provided.

The Eleventh Annual Albert A. Destefano Lecture On Corporate, Securities & Financial Law At The Fordham Corporate Law Center: Are Federal Judges Competent? Dilettantes In An Age Of Economic Expertise, The Honorable Jed Rakoff

Fordham Journal of Corporate & Financial Law

The title of my little talk here tonight is “Are

Federal Judges Competent?” This naturally raises the question of whether I am competent to answer that question. I put this question to myself, and, after careful consideration of both sides of the argument, concluded that I am competent to determine whether I am competent. As H. L. Mencken once said, “A judge is a law student who grades his own exams.”

Taming The Hydra Of Derivatives Regulation: Examining New Regulatory Approaches To Otc Derivatives In The United States And Europe, Daria S. Latysheva

Cardozo Journal of International and Comparative Law

The note examines the regulatory responses to the 2008 financial crisis, focusing on derivatives markets in the US and EU. It argues that while both the Dodd-Frank Act and the EU Proposal aim to enhance oversight and transparency, the EU's structured and centralized approach is more effective in achieving comprehensive regulation. The US framework, relying heavily on agency rulemaking and fragmented jurisdiction between the CFTC and SEC, risks inefficiencies and regulatory gaps, whereas the EU Proposal’s detailed provisions and centralized decision-making provide a more cohesive framework for reducing systemic risk.

Impacts And Implementation Of The Basel Accords: Contrasting Argentina, Brazil, And Chile, Kristina Bergess

CMC Senior Theses

This thesis explores the impacts of implementing the Basel Accords on the stability of the banking sector and greater economy, and will particularly focus on Basel II. This study contrasts three Latin American governments that have implemented the Basel Accords. Because Chile's and Brazil's banking sectors have been more successful in implementing the Basel Accords, they will be used as model cases to provide the context to analyze Argentina’s banking sector. The results of this thesis reveal that in order for Argentina to stabilize its banking sector and become a stronger international financial player, it must not only improve the …

The Financial Crisis Inquiry Commission And The Politics Of Governmental Investigations, Michael A. Perino

Faculty Publications

In May 2009, Congress passed the Fraud Enforcement and Recovery Act which created the Financial Crisis Inquiry Commission, an independent, bipartisan panel tasked to examine the causes of the current financial and economic crisis in the United States.

Franklin Roosevelt never created an independent commission to investigate Wall Street, but the Pecora hearings, the eponymous investigation of Wall Street wrongdoing run by a former New York prosecutor, captivated the country. For sixteen months in the worst depths of the Great Depression, Ferdinand Pecora paraded a series of elite financiers before the Senate Banking and Currency Committee. In one hearing after …

Comments: The Credit Card Act Of 2009 Was Not Enough: A National Usury Rate Would Provide Consumers With The Protection They Need, Eliot C. Schaefer

University of Baltimore Law Review

No abstract provided.

Is Canada The New Shangri-La Of Global Securities Class Actions?, Tanya Monestier

Law Faculty Scholarship

There has been significant academic buzz about Silver v. Imax, an Ontario case certifying a global class of shareholders alleging statutory and common law misrepresentation in connection with a secondary market distribution of shares. Although global class actions on a more limited scale have been certified in Canada prior to Imax, it can now be said that global classes have "officially" arrived in Canada. Many predict that the Imax decision means that Ontario will become the new center for the resolution of global securities disputes. This is particularly so after the United States largely relinquished this role in Morrison v. …

On The Edge Of The 'Fiscal Cliff': How The American Middle Class And Gobal Economy Bear Risk, Steven A. Montalto

Public Interest Law Reporter

No abstract provided.

Message In Mortgage: What Dodd-Frank's 'Qualified Mortgage' Tells Us About Ourselves, David Reiss

Faculty Scholarship

No abstract provided.

The New Exit In Venture Capital, Darian M. Ibrahim

Faculty Publications

No abstract provided.

Shadow Banking, Financial Markets, And The Real Estate Sector, Steven L. Schwarcz

Faculty Scholarship

This is a relatively brief “firestarter” talk prepared by the author for the World Economic Forum’s Industry Partnership Strategists Meeting 2012 (held on October 3, 2012) on transformation of the real estate sector in light of ongoing shifts in the financial markets and broader global trends.

Do We Have A Debt Collection Crisis? Some Cautionary Tales Of Debt Collection In Indiana, Judith Fox

Journal Articles

The Federal Trade Commission, in 2009, raised issues about debt collection practices and called on jurisdictions to investigate local practices that may be abusive to consumers. This article is the beginning of a larger study of debt collection practices in Indiana. It examines debt collection cases filed in Indiana courts in a three month period of 2009 and 2011 While most research on this issues has been in small claims court systems, this article suggests that the same, if not greater, consumer abuses exist in other courts. The research shows a pattern of large, national debt collection firms moving away …

Complexity, Innovation, And The Regulation Of Modern Financial Markets, Dan Awrey

Cornell Law Faculty Publications

The intellectual origins of the global financial crisis (GFC) can be traced back to blind spots emanating from within conventional financial theory. These blind spots are distorted reflections of the perfect market assumptions underpinning the canonical theories of financial economics: modern portfolio theory, the Modigliani and Miller capital structure irrelevancy principle, the capital asset pricing model and, perhaps most importantly, the efficient market hypothesis. In the decades leading up to the GFC, these assumptions were transformed from empirically (con)testable propositions into the central articles of faith of the ideology of modern finance: the foundations of a widely held belief in …

International Investments Arbitration: Winning, Losing And Why, Susan D. Franck

Contributions to Books

In late 2008, as financial markets were crashing, the Vale Columbia Center on Sustainable International Investment launched the Columbia FDI Perspectives. The first Perspective, entitled “The FDI recession has begun,” correctly forecast an FDI recession in the following year. From that first Perspective in late 2008 to the end of 2010, the series published thirty-three concise notes on topical FDI-related issues by diverse experts in the field. The purpose of these Perspectives is to inform readers about some of the important issues and trends in the contemporary debate on FDI, and to promote a wide-ranging discussion about the policy implications …

Consumer Protection Out Of The Shadows Of Shadow Banking: The Role Of The Consumer Financial Protection Bureau, David Reiss

Faculty Scholarship

No abstract provided.

Capture Nuances In The Contest For Financial Regulation, Lawrence G. Baxter

Faculty Scholarship

Applying capture analysis in the hotly contested arena of financial regulation is difficult. Numerous regulators with widely differing missions and widely diverse stakeholders are involved. Regulators operate under widely differing authorizing legislation. They even function at different levels of government. Agencies are often at odds with each other when it comes to determining optimal public policy. Unlike policy disputes in many other areas of regulation, which can be settled by reference to scientific data, public policy in financial regulation rests profoundly on essentially contested economic ideologies. This makes financial policy doubly difficult: one the one hand, it requires deep expertise—and …

Corporate Governance And Executive Compensation In Financial Firms: The Case For Convertible Equity-Based Pay, Jeffrey N. Gordon

Faculty Scholarship

Unlike the failure of a nonfinancial firm, the failure of a systemically important financial firm will reduce the value of a diversified shareholder portfolio because of economy-wide reductions in expected returns and a consequent increase in systematic risk. Thus, diversified shareholders of a financial firm generally internalize systemic risk, whereas managerial shareholders and blockholders do not. This means that the governance model drawn from nonfinancial firms will not fit financial firms. Regulations that limit risk-taking by financial firms can thus provide a benefit, rather than necessarily impose a cost, for the typical diversified public shareholder. Managerial shareholding also gives rise …

Confronting Financial Crisis: Dodd-Frank's Dangers And The Case For A Systemic Emergency Insurance Fund, Jeffrey N. Gordon, Christopher Muller

Faculty Scholarship

Inherent tensions in the financial sector mean that episodes of extreme stress are inevitable, if unpredictable. This is true even when financial regulatory and supervisory regimes are effective in many respects. The government's capacity to intervene may determine whether distress is confined to the financial sector or breaks out into the real economy Although adequate resolution authority to address a failing financial firm is a necessary objective of the current regulatory reforms, a firm-by-firm approach cannot address a major systemic failure. Major blows to the financial system, such as the financial crisis of 2007-2009, may require capital support of the …

A Regulatory Design For Monetary Stability, Morgan Ricks

Vanderbilt Law School Faculty Publications

This Article proposes a unified regulatory approach to the issuance of "money-claims"--a generic term that refers to fixed-principal, very short-term IOUs, excluding trade credit. The instability of this market is arguably the central problem for financial regulatory policy. Yet our existing regulatory system lacks a coherent approach to this market. The Article proposes a public-private partnership ("PPP") regime, under which only licensed entities would be permitted to issue money - claims (subject to de minimis exceptions). Licensed moneyclaim issuers would be required to abide by portfolio restrictions and capital requirements. In addition, the government would explicitly insure licensed issuers' outstanding …

Reinventing Homeownership: A Compendium Of Concepts To Consider, Denise Gabel, David J. Reiss

Cornell Law Faculty Publications

This policy brief presents a compendium of innovative mortgage products that challenge the dominant mortgage product of the 20th Century, the high down payment, thirty year amortization, fixed interest rate mortgage. These innovative products do not, however, go to the other extreme like the subprime and Alt-A mortgages of the early 21st Century with attributes such as low down payments, balloon payments and quick to adjust interest rates. Rather, they take into account demographic trends, changes in the workplace and existing barriers to homeownership to structure new products for contemporary households. These innovative products take on the big questions in …

License To Deal: Mandatory Approval Of Complex Financial Products, Saule T. Omarova

Cornell Law Faculty Publications

This Article explores the possibility of creating a system of mandatory pre-approval of complex financial products as an ex ante solution to the problem of systemic risk containment. Building on the concept of regulatory precaution borrowed from environmental and health law, and elements of pre-CFMA regulation of commodity futures, the Article outlines the broad contours of a new licensing scheme that would place the burden of proving social and economic utility of complex financial instruments on the intermediaries that structure and market them. Fundamentally a thought experiment, this proposal seeks to enrich the current policy debate by expanding the range …

Regulation Goes Medieval, Andrew A. Schwartz

Publications

Section 301 of the 2009 federal Credit Card Accountability, Responsibility, and Disclosure Act prohibits the issuance of consumer credit cards to young adults ages 18–20 unless the credit contract is cosigned by an older adult who accepts joint liability for the card, or else the young adult proves she has “independent means of repaying” her credit card obligations. This prohibition is at odds with a 50-year trend of extending the rights of adulthood to people ages 18–20. It also blocks an important source of credit for young entrepreneurs, who often use consumer credit to launch their enterprises.

Back To The Future: Applying The Collateral Bars Of Section 925 Of The Dodd-Frank Act To Previous Bad Acts, Chad Howell

Journal of Business & Technology Law

No abstract provided.

Direct And Indirect U.S. Government Debt, Steven L. Schwarcz

Faculty Scholarship

No abstract provided.

Shadow Banking, Financial Markets, And The Real Estate Sector, Steven L. Schwarcz

Faculty Scholarship

This is a relatively brief “firestarter” talk prepared by the author for the World Economic Forum’s Industry Partnership Strategists Meeting 2012 (held on October 3, 2012) on transformation of the real estate sector in light of ongoing shifts in the financial markets and broader global trends.

Conflicted Gatekeepers: The Volcker Rule And Goldman Sachs, Andrew F. Tuch

Scholarship@WashULaw

In many areas of regulation, rules require one person to act with loyalty to another person, or at least constrain one person’s pursuit of self-interest by restricting the extent to which that person may act in conflict with the interests of another person. These rules are typically justified on the basis of reducing (economic) agency costs. However, recently-adopted provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act, which include the so-called Volcker Rule, impose such conflict of interest rules on underwriters selling securities to investors, including sophisticated investors - a context in which agency costs do not arise. …