Banking and Finance Law Commons^™

Germany: Hsh Nordbank Capital Injection, 2009, Anmol Makhija

Journal of Financial Crises

State-controlled HSH Nordbank AG (HSH) lost EUR 2.8 billion in 2008, mainly because of impairments to its holdings of US structured credit securities. On April 29, 2009, the German bank regulator informed HSH that it would close HSH if the owners did not recapitalize the bank to the 8% total capital ratio requirement. In June 2009, the state governments of Hamburg and Schleswig-Holstein injected EUR 3 billion (USD 3.8 billion) of capital in ordinary shares with voting rights and provided a EUR 10 billion asset guarantee, called a “risk shield,” for a 7.85% annual fee. Over the next few years, …

Cyprus: Laiki Bank Capital Injection, 2012, Stella Schaefer-Brown

Journal of Financial Crises

In 2011, Cyprus’s second-largest bank, Marfin Popular Bank—later renamed Cyprus Popular Bank, but commonly known as Laiki Bank—lost billions of euros when the Greek government restructured its sovereign debt, decimating its equity capital and shutting its access to market liquidity. In late 2011, supervisors estimated the bank’s capital shortfall at EUR 3.1 billion. In January 2012, the bank submitted a plan to the central bank that included EUR 1.8 billion of capital raised from private investors and EUR 1 billion of capital increases through debt-to-equity swaps and deleveraging. However, Laiki Bank was unable to raise private capital and asked the …

France: Bank Of France Capital Injection, 1805, Ayodeji George

Journal of Financial Crises

After receiving the exclusive right to issue bank notes in Paris in 1803, the Bank of France became a significant source of funding for the French government in early 1805, as Napoleon prepared for a key battle of the Napoleonic Wars. In the first half of 1805, the French treasury paid back loans with notes with later maturities rather than metallic money, draining the metallic liquidity reserves of the Bank of France far below levels that bankers at the time considered prudent. After the circulation of an unfounded rumor that Napoleon himself had raided the metallic reserves for the war …

Belgium: Fortis Group Capital Injection, 2008, Ayodeji George

Journal of Financial Crises

In September 2008, in the wake of the freezing of credit markets caused by the Global Financial Crisis (GFC), Fortis Group, a financial conglomerate incorporated in Belgium and the Netherlands, faced depositor runs and share price deterioration. These negative consequences were a result of its exposures to US subprime mortgage-related assets and other losses from its 2007 acquisition of ABN AMRO, a large Dutch bank. Over the weekend of September 27–29, authorities from Belgium, the Netherlands, Luxembourg, and the European Central Bank (ECB) held emergency talks, resulting in the announcement of EUR 11.2 billion (USD 14.3 billion) in capital injections …

Belgium And France: Dexia Group Capital Injection, 2008, Ayodeji George

Journal of Financial Crises

Dexia Group (Dexia, or the Group) was a banking and insurance conglomerate that specialized in public financing with major operations in Belgium, France, and Luxembourg. Following the collapse of Lehman Brothers in mid-September 2008, Dexia faced a liquidity crunch as wholesale funding markets froze. Faced with insolvency concerns, authorities from the bank’s three primary markets, Belgium, France, and Luxembourg, conducted overnight negotiations to agree on capital injection terms. On September 30, 2008, authorities and the bank’s board of directors announced a EUR 6.4 billion (eventually EUR 6 billion) capital injection intended to restore Dexia’s solvency and maintain systemwide stability. The …

Austria And Germany: Hypo Alpe Adria Capital Injections, 2008, Bailey Decker

Journal of Financial Crises

Hypo Alpe Adria (HAA) was Austria’s sixth-largest bank at the time of the Global Financial Crisis of 2007–2009 (GFC), with EUR 41.2 billion (USD 29.2 billion) in total assets as of June 30, 2008. HAA pursued a growth strategy in Southeastern Europe in the years preceding the GFC, which proved troublesome for HAA’s loan portfolio and led to large write-downs in autumn 2008. HAA’s majority shareholder was a German landesbank, Bayerische Landesbank (BayernLB). On October 26, 2008, the Austrian Parliament passed a EUR 100 billion support scheme in response to the GFC, with EUR 15 billion allocated for troubled banks. …

Survey Of Ad Hoc Capital Injections, June Rhee, Benjamin Hoffner, Greg Feldberg, Andrew Metrick

Journal of Financial Crises

Government recapitalizations of systemic banking organizations can be costly and unpopular but are sometimes necessary to protect depositors and prevent financial contagion. This paper surveys 23 Yale Program on Financial Stability case studies of ad hoc capital injection programs, defined as programs that provide capital to a single institution or a clearly defined minority of institutions. We saw a marked increase in capital injection programs in the past 50 years, more than half of which were ad hoc. Authorities designing ad hoc capital injections face difficult decisions—when to deploy them rather than let a bank fail; whether to impose losses …

The False Choice Between Digital Regulation And Innovation, Anu Bradford

Northwestern University Law Review

This Article challenges the common view that more stringent regulation of the digital economy inevitably compromises innovation and undermines technological progress. This view, vigorously advocated by the tech industry, has shaped the public discourse in the United States, where the country’s thriving tech economy is often associated with a staunch commitment to free markets. U.S. lawmakers have also traditionally embraced this perspective, which explains their hesitancy to regulate the tech industry to date. The European Union has chosen another path, regulating the digital economy with stringent data privacy, antitrust, content moderation, and other digital regulations designed to shape the evolution …

Remembering Robert H. Mckinney, James Owsley Boyd

Keep Up With the Latest News from the Law School (blog)

The Maurer School of Law is mourning the passing of its graduate Robert H. McKinney, a visionary attorney, businessman, civic leader, and philanthropist, who died over the weekend at his home in Michigan. He was 98.

McKinney enrolled at the IU School of Law in Indianapolis after his World War II duties, but was recalled to active duty during the Korean War. McKinney transferred to IU’s law school in Bloomington, where he graduated in 1952.

He remained actively involved with both law schools—and the university—for more than 70 years. In 2011 the IU School of Law in Indianapolis was renamed …

The Shortseller Enrichment Commission? Whistleblowers, Activist Short Sellers, And The New Privatization Of Public Enforcement, Alexander I. Platt

Washington Law Review

Two developments have transformed the detection of corporate fraud in the last decade: the Securities and Exchange Commission’s Whistleblower Bounty Program (WBP) and the rise of activist short sellers. The WBP offers up financial bounties to individuals who bring forward actionable information about securities fraud. Activist shorts conduct due diligence to identify overvalued public companies, take short positions, reveal the negative information, and then enjoy trading profits if and when the stock tanks. Considered separately, these institutions are widely regarded as socially valuable innovations that help deter fraud.

But, it turns out, they are not fully separate. Activist shorts have …

Regulating Crypto Intermediaries, Eric D. Chason

Faculty Publications

Early 2024 produced a dramatic rebound in cryptocurrency markets as Bitcoin hit an all-time high price in March 2024. This surge was fueled in large part by judicial and regulatory action. After years of denials and a high-profile defeat in court, the U.S. Securities and Exchange Commission (SEC) finally approved the first exchange-traded funds (ETFs) for Bitcoin in January 2024. Many believe that these approvals will lead to a greater shift of investment funds into crypto. Crypto regulation is not, however, ready for this shift. While ETFs have clear treatment under current law, other institutions lack the same clarity or …

Velazquez Named To Sec Investor Advisory Committee, James Owsley Boyd

Keep Up With the Latest News from the Law School (blog)

The U.S. Securities and Exchange Commission announced today (Sept. 10) six new members—including an associate professor from the Indiana University Maurer School of Law—to fill vacancies on its Investor Advisory Committee.

Prof. Alvin Velazquez, who joined the Indiana Law faculty this summer, is one of only two members of academia newly appointed to the committee. The committee advises the SEC on regulatory priorities and initiatives to protect investors and promote the integrity of the U.S. securities markets.

Liberalisasi Perbankan Dan Peranan Bank Asing Dalam Perbankan Di Indonesia, Afganovic Mujadid Ashilah, Alvianty Dwi Puspita, Alvin Persada Putera

Technology and Economics Law Journal

This study evaluates the impact of banking liberalization in Indonesia, particularly in relation to the presence of foreign banks, and compares the requirements for establishing foreign banks with those of other ASEAN countries. Using a doctrinal method, this study analyzes regulations and legislation, including Law No. 14 of 1967, Law No. 7 of 1994, and POJK No. 12/POJK.03/2021. The results of the study show that banking liberalization has brought significant benefits such as knowledge and technology transfer, increased competition, access to international markets, and economic stability. A concrete example is the role of foreign banks in rescuing troubled domestic banks …

Komparasi Pengawasan Bisnis Bank Digital Dan Bank Konvensional Berdasarkan Peraturan Perbankan Di Indonesia, Arifin Pringgo Laksono, Candra Wahyu Saputro, Ega Kesatrya Putra

Technology and Economics Law Journal

Digital transformation in Indonesia's banking industry has created new opportunities and challenges for the national financial system. The increase in digital banking transactions is supported by digital economic growth of USD 90 billion, reflecting significant changes in consumer preferences and banking structures. However, this pace of development has been accompanied by a 50% increase in cybersecurity incidents from 2021 to 2023, threatening public trust and financial system stability. Regulations set by the Financial Services Authority (OJK) through POJK No. 12/POJK.03/2021 and POJK No. 12/POJK.03/2018 have attempted to accommodate the needs of digital banks, but challenges in technology oversight, cybersecurity, and …

Shadow Banking And Securities Law, Gabriel Rauterberg, Jeffery Y. Zhang

Law & Economics Working Papers

Shadow banking may be the single greatest challenge facing financial regulation. Financial institutions that function like banks, but outside the scope of banking regulation—aptly termed “shadow banking”—were at the heart of the Global Financial Crisis and most episodes of serious financial stress since then. Scholars have largely focused on one response to this problem—extending traditional banking regulation to shadow banks. Yet more than fifteen years after the crisis, major regulatory efforts along this route have stalled.

In this Article, we explore the uneasy case for greater regulation of shadow banking through securities law. Our first contribution is analytical. We demonstrate …

Przegląd Orzecznictwa Sądów Polskich W Sprawach Kredytów Hipotecznych Dotyczących Walut Obcych (Wybrane Przykłady), Edyta Rutkowska-Tomaszewska, Marta Fabiszewska

internetowy Kwartalnik Antymonopolowy i Regulacyjny (internet Quarterly on Antitrust and Regulation)

This review presents a selection of Polish court cases that have been rendered in recent years (2017–2023) by the Supreme Court and common courts (district and appellate) in cases of loans relating to foreign currencies (denominated or indexed to a foreign currency). These rulings are presented according to the leading problems on which they focus, which are reflected in the titles of the separate subdivisions of this study, i.e.: the status of the consumer borrower; agreements concluded between entrepreneurs; the scope of a lender’s obligation to inform the borrower about foreign currency risk; repayment of a loan directly in a …

Bankowość Elektroniczna W Polsce W Opinii Klientów Indywidualnych W Świetle Wyników Badania Własnego, Weronika Mazurek

internetowy Kwartalnik Antymonopolowy i Regulacyjny (internet Quarterly on Antitrust and Regulation)

Considering the dynamic technological progress, electronic banking is now both a modern and convenient means for clients to communicate with their bank remotely. Importantly, e-banking is gaining increasing prominence as a commonly accepted and key tool for financial management in modern society. The purpose of this article is to present the results of a survey conducted among individual clients in possession of a bank account. The survey focuses on understanding the ways in which e-banking shapes clients’ habits and influences their preferences. The survey has set out two research hypotheses. First, that there is a growing trend of traditional banking …

Giant Asset Managers, The Big Three, And Index Investing, Dorothy S. Lund, Adriana Z. Robertson

Faculty Scholarship

A robust literature describes the incentives and stewardship practices of the “Big Three” asset managers (BlackRock, Vanguard, and State Street Global Advisors), often referring to these asset managers as “passive.” This is so common that the “Big Three,” “index fund,” and “passive manager” are used almost interchangeably by both academics and practitioners. This shorthand emerged in the foundational scholarship in this area, and while it may remain useful in certain contexts, its casual use obscures important features of the market and contributes to misperceptions. In this chapter, we demonstrate that it is a mistake to equate passive investing with index …

Mareva Injunction And Crypto Fraud, Man Yip

Research Collection Yong Pung How School Of Law

Without a Mareva injunction, there is always a risk that any victory on the substantive merits would be rendered hollow in practice by the absence of assets against which the judgment may be enforced. Indeed, it is in cases concerning fraud that the risk of a nugatory judgment is most amplified because the defendant would have the propensity to engage in dishonest practices. Alarmingly, nearly 30 years aft er Mercedez Benz, the ‘black hole’ has enlarged because fraudsters can easily hide behind complex corporate structures and the anonymity of cyberspace. 2 Th is chapter focuses on the use of Mareva …

Climate Allocation Compass, A Framework For Real-World Decarbonization (Compass-Frwd), Perrine Toledano, Ajay S. Jagdish, Maria Diez Andres, Ana M. Camelo Vega, Rob Furdak, Christina Bastin, Matt Goldklang, Jane Smyth

Columbia Center on Sustainable Investment

Climate finance currently falls far short of what's required to achieve net-zero targets. In a collaboration with the Man Group, we offer a framework setting out how investors can help to close this gap.

Key takeaways:

1. To address the global climate finance gap,CCSI and Man Group have developed the Climate Allocation Compass, a Framework for Real-World Decarbonization (‘Compass-FRWD’).
2. Compass-FRWD is a six-step asset allocation framework designed to guide strategic capital investment across multiple portfolios. It does so by setting financing targets relative to real-world emission gaps, thereby prioritizing sectors and geographies according to decarbonization needs.
3. Compass-FRWD provides a cyclical, investor-level …

Crypto Losses, Xuan-Thao Nguyen, Jeffrey A. Maine

Articles

The crypto industry has been hit hard with various market forces and scams, leaving investors with trillion-dollar losses in recent years. The appropriate tax treatment of such losses has yet to be fully examined, as there is scant guidance and a dearth of academic literature on the subject. This Article attempts to fill this gap by applying general tax principles to crypto losses and making several recommendations to improve the clarity and consistency of tax results. It explores various theories of crypto loss “realization” (including theft, abandonment, and worthlessness), highlighting where additional guidance is needed. And it considers appropriate legislative …

Analisis Efektivitas Jaminan Perorangan Sebagai Pemenuhan Hak Kreditur Dalam Penyelesaian Kredit Yang Wanprestasi Pada Bank X, Maria Audy Vania Putri, Akhmad Budi Cahyono

Lex Patrimonium

This paper analyzes how the effectiveness of personal guarantees in supporting the fulfillment of creditor rights in resolving defaulted loans at banks. This paper is prepared using a non-doctrinal research method. Understanding the role of personal guarantees in the context of defaulted credit settlement is essential to optimize the process and final results of credit settlement. The results show that personal guarantees play an important role in the fulfillment of creditor rights in defaulted credit settlements. The analysis of the effectiveness of personal guarantees includes an evaluation of the collateral registration process, collateral value assessment procedures, and credit settlement mechanisms. …

Fhfa Comment Letter Regarding Fhlbs Mission, David J. Reiss

Cornell Law Faculty Working Papers

The Federal Housing Finance Agency (the “FHFA”) has requested Input regarding the regulatory statement of the Federal Home Loan Bank System’s (the “System”) mission to better reflect its appropriate role in the housing finance system. I commend the FHFA for being realistic about the System in its Request for Input; it acknowledges that there is a mismatch between its mission and its current operations.

The System’s operations do not do nearly enough to support the System’s stated mission of supporting the financing of housing. The System should recommit to that goal in measurable ways or its name and/or mission should …

The Unraveling Of The Federal Home Loan Banks, Kathryn Judge

Faculty Scholarship

The Federal Home Loan Bank system is a $1.3 trillion government-sponsored enterprise that operates primarily for the benefit of member financial institutions. Federal Home Loan Bank members enjoy generous dividends and ready access to fresh liquidity. The biggest beneficiaries are the biggest users of the system, including the largest banks and insurance companies in the country and banks facing financial distress. This essay explains the original aims of the Federal Home Loan Bank system, how the system fulfilled those aims quite successfully for decades following its creation in 1932 and how the system evolved to serve primarily private aims. By …

The Hidden Monetary State, Gabriel Rauterberg, Joshua Younger

Faculty Scholarship

Money is a motley. While the state enjoys a monopoly on issuing new physical currency, a variety of instruments serve money-like roles in the financial system. The commercial banking system significantly augments the money supply through issuing deposits. Alongside it, a shadow banking system has also developed, offering a range of deposit substitutes.

This Article seeks to cast new light on the U.S. financial system by exploring how, over the course of the twentieth century, federal policymakers engaged in a series of distinct and largely uncoordinated monetary experiments. As we show through historical case studies, federal authorities designed, promoted, and …

Dei As Cultural Commitment In An Era Of Backlash, Christopher D. Hampson, Elise Bernlohr Maizel

UF Law Faculty Publications

In 2023, shortly after the U.S. Supreme Court ended affirmative action in college admissions in the companion cases Students for Fair Admissions Inc. v. President & Fellows of Harvard College and Students for Fair Admissions Inc. v. University of North Carolina (SFFA), conservative officials and activists began threatening (and taking) legal action against private law firms, arguing that their diversity, equity and inclusion (DEI) programs violated state and federal law. This development should matter to bankruptcy lawyers, both as citizens of our own law firms and as counsel to companies in financial distress. We hope that this rolling assault on …

Sino-American Sanctions Convergence?, Ryan Martinez Mitchell

Cardozo International & Comparative Law Review

The People's Republic of China is rapidly constructing a new regime for economic and diplomatic sanctions. With its Anti-Foreign Sanctions Law (AFSL) and related legislation, Beijing has taken a step towards legally formalizing the means of pressure it uses against states, organizations, or individuals seen as threatening its core interests. Meanwhile, various informal coercive measures also continue to be employed. While questions remain about their scope and future uses, Beijing has especially extolled AFSL sanctions as countermeasures to U.S. interference.

This Article undertakes a detailed examination of the new Chinese sanctions framework, its historical origins, and its role in Beijing's …

Climate Impact Screening And Reporting: A Venture Capital Perspective, Ajay S. Jagdish, Perrine Toledano, Ana M. Camelo Vega

Columbia Center on Sustainable Investment

According to the International Energy Agency’s (IEA) Net-Zero Scenario, about one-third of the emissions reductions needed by 2050 depend on technologies that are currently in development. Additionally, climate adaptation finance faces an even larger investment gap.

The Climate Venture Capital community must demonstrate tangible climate impact to truly earn its reputation.

However, accurately and reliably screening, evaluating, and monitoring climate impact is challenging, with many metrics and methods still needing to be ascertained, clarified, and standardized.

With the support of Princeville Capital, CCSI offers insights into unresolved issues:

1. Attribution and baselining
2. Paris-aligned thresholds for prioritization
3. Indirect impact and tailored KPIs …

Informing The Debate On Lowering The Criminal Rate Of Interest, Gail Henderson, Katlin Abrahamson

Dalhousie Law Journal

Canada has two markets for consumer credit. Consumers with middle to high incomes can draw on ‘mainstream’ forms of credit at reasonable interest rates, such as lines of credit and credit cards issued by chartered banks. Consumers living on low to moderate incomes, who also may have a poor credit score or no credit history, often find themselves pushed to high-cost credit products, such as instalment loans issued by alternative financial services providers. The effective annual interest rate on instalment loans can run up to the maximum permitted under section 347 of the Criminal Code. Anything above this constitutes a …

Corporate Law—An Introduction To Digital Assets And A Summary Of The 2022 Amendments To The Uniform Commercial Code, David Gardner

University of Arkansas at Little Rock Law Review

No abstract provided.