Banking and Finance Law Commons^™

Behavioral Finance Symposium Summary Paper, Michael S. Barr, Annabel Jouard, Andrew Norwich, Josh Wright, Katy Davis

Other Publications

On September 14-15, 2017, the University of Michigan’s Center on Finance, Law, and Policy and behavioral science research and design lab ideas42 brought together influential leaders from academia, government, nonprofits and the financial sector for a two-day symposium on behavioral finance. Behavioral finance is the study of how behavioral biases and tendencies affect financial decisions, and in turn how those impact financial markets.

Regulating Fintech, William Magnuson, William J. Magnuson

Vanderbilt Law Review

The global financial crisis of 2008 ushered in the most sweeping reform of financial regulation in the United States since the New Deal. Alarmed by the systemic risk that financial institutions posed to the broader economy, as well as perceived abuses engendered by the "too big to fail" mindset among banking executives, legislators moved quickly to impose a slew of new requirements on the financial sector. These reforms, passed under the umbrella of the Dodd-Frank Act, drastically altered the regulatory landscape for financial institutions.' Wall Street firms found themselves subject to a bewildering array of new regulatory requirements, from restrictions …

Fintech Industrial Banks And Beyond: How Banking Innovations Affect The Federal Safety Net, Cinar Oney

Fordham Journal of Corporate & Financial Law

The FinTech industry has been utilizing technological innovations to provide services traditionally offered by the banking and financial industry. Until now, many FinTech firms engaging in these activities had non-bank state licenses. The uncertainties surrounding their current business models and the desire to expand the operations led some of these firms to apply for industrial bank charters. An industrial bank charter is one of the few ways for a commercial firm to control a depository institution and allows FinTech firms to retain their technological investments that are not directly related to banking. However, access of these industrial banks to the …

What Would We Do Without Them: Whistleblowers In The Era Of Sarbanes-Oxley And Dodd-Frank, Sean Griffith, Jane A. Norberg, Ian Engoron, Alice Brightsky, Tracey Mcneil, Jennifer M. Pacella, Judith Weinstock, Jason Zuckerman

Fordham Journal of Corporate & Financial Law

No abstract provided.

Commentary: Why We Need To Stop Fining Big Banks Like Wells Fargo, Mehrsa Baradaran

Popular Media

When big banks behave badly, they know that the worst thing they’ll get is a fine; no one is going to end up in jail. Instead, shareholders end up paying the cost, not the bank employees responsible. Shareholders are a diffuse group of investors, many of whom hold shares as a part of a diverse portfolio. They are not the ones who commit such fraud, nor do they have much power to change the bank’s day-to-day operations.

Clearly fines don’t work to prevent misconduct. We should instead rely on the constitutional method of dealing with wrongdoing: the criminal justice system.

Ethical Finance As A Systemic Challenge: Risk, Culture, And Structure, Saule T. Omarova

Cornell Journal of Law and Public Policy

This Article analyzes the principal themes in the newly reinvigorated public debate on the role of ethical norms and cultural factors in financial markets and identifies its key conceptual and normative limitations. It argues that the principal flaw in that debate is that it tends to ignore the critical role of systemic, structural factors in shaping individual firms' internal cultural norms and attitudes toward legitimate business conduct. Reversing the causality assumption underlying the current academic and policy discourse on institutional culture, the Article discusses how broader reform measures seeking to alter the fundamental structure and dynamics of the financial market-on …

Acts Of Financial Distress In The Eu: Is The Eu To Blame?, Venetia Argyropoulou

Washington International Law Journal

This Article seeks to determine if there is a legal basis for European Union (“EU”) Institutions to be held accountable for measures taken by an EU Member State in cases of financial distress. The Article begins by exploring the concept of sovereignty and then evaluates the limitations placed on state sovereignty by participation in the EU. Next, it explores the definitions of economic coercion and countermeasures and considers whether the actions taken by EU institutions in the context of the Cyprus banking haircut would satisfy either of these definitions. Lastly, this Article studies whether EU law can provide a basis …

Asean Investment Treaties, Rcep, And Cptpp: Regional Strengths, Norms, Institutions, And Politics, Diane A. Desierto

Washington International Law Journal

Southeast Asia attracts foreign investment more rapidly than elsewhere in the world, including China. Southeast Asia’s evolving regional strategies, norms, institutions, and politics for investment governance should be of considerable interest to global decision-makers. This Article compares evolving investment treaty strategies and norms between the regional investment treaties of: (1) the Association of Southeast Asian Nations (“ASEAN”); (2) the latest draft investment chapter of the China-led sixteen-member Regional Comprehensive Economic Partnership (“RCEP”), to which all ten ASEAN Member States are also negotiating parties; and (3) some features of the current draft investment chapter for the Trans-Pacific Partnership (now renamed the …

Private Wealth And Public Goods: A Case For A National Investment Authority, Robert C. Hockett, Saule T. Omarova

Cornell Law Faculty Publications

Much American electoral and policy debate now centers on how best to reignite the nation’s economic dynamism and rebuild its competitive strength. Any such undertaking presents an extraordinary challenge, demanding a correspondingly extraordinary institutional response. This Article proposes precisely such a response. It designs and advocates a new public instrumentality--a National Investment Authority (“NIA”)--charged with the critical task of devising and implementing a comprehensive long-term development strategy for the United States.

Patterned in part after the New Deal-era Reconstruction Finance Corporation, in part after modern sovereign wealth funds, and in part after private equity and venture capital firms, the NIA …

Insuring Sustainable Homeownership, David J. Reiss

Cornell Law Faculty Publications

The Federal Housing Administration has been a versatile tool of government since its creation during the Great Depression. It was created in large part to inject liquidity into a moribund mortgage market. It has since been repositioned to achieve a variety of additional social goals, some of which have not been realized. The FHA’s failed programs, coupled with the recent financial woes of the FHA that resulted in a government bailout, have fueled criticism of the institution. The FHA has been more successful, however, in achieving its broader goals than is generally recognized. Nonetheless, its mission still needs clarification and …

Hls 200: A Latina's Story About The Bicentennial, Margaret E. Montoya

Faculty Scholarship

This essay sketches an arc from my childhood to being an Harvard Law School student to my academic work and professional commitments as a law professor and an alumna of Harvard Law School, working to increase access and success in the legal and medical professions for students and faculty of color. I compare aspects of legal and medical education using demographic data as well as some observations about how diverse faculty have transformed the two professions in their respective approaches to and rationales for diversifying the professions and examine the work being done by diverse faculty in law and health. …

The European Aspects Of Global Financial Developments, Virag Ilona Blazsek

The Journal of Business, Entrepreneurship & the Law

What is the position of Europe—and specifically the European Union (EU)—on the world map of global finances in 2017? This comment seeks to answer this question by focusing on three key issues. First, it analyzes Europe’s post-2008 bank bailouts, its sector-wide rescue packages, and its consequential sovereign-debt crisis. Second, it considers the role of the international credit rating agencies and asks why Europe does not have a large rating agency of its own. Third, it assesses the EU’s major recent regulatory developments related to the financial sector. There is no doubt that Europe is in a sustained economic and political …

Convergence And Divergence Between International Investments Law And Human Rights Law, In The Context Of The Greek Sovereign Debt Restructuring, Venetia Argyropoulou

The Journal of Business, Entrepreneurship & the Law

International investment law developed separately from and was, for a long period, perceived as incompatible with human rights law. Despite the tendency to distinguish the evolution of these two fields of international law, however, they are not completely dissimilar. Inter alia, they both aim to safeguard investors’ rights to property, to promote respect for due process, and to address the undisputed position of power of the state against the individual. In situations of sovereign default, the asymmetry between the powers of the state and the rights of investors is even more clearly demonstrated, even within the European Union. Indeed, although …

Fintech's Double Edges, Christopher G. Bradley

Chicago-Kent Law Review

This symposium essay examines the double-edged nature of financial technologies in financial transactions, especially transactions involving consumers. There are both benefits and risks—often undiscovered or hidden at first—in each new round of financial technologies. A FinTech tool may benefit consumers and then, applied later or in a different context, threaten consumer interests; a tool that harms consumer interests may then lead to development of a tool that favors them. This double-edged nature is an important but unappreciated structural feature of financial technologies. From the perspective of consumer protection, then, FinTech can neither be fully embraced as friend nor restricted as …

The Rise Of Automated Investment Advice: Can Robo-Advisors Rescue The Retail Market?, Benjamin P. Edwards

Chicago-Kent Law Review

Different types of financial advisers serve the massive and widely dispersed retail investment market. In a market riddled with conflicts of interests, many advisers exploit retail customers by pitching suboptimal products, leading to lower investment returns and lower overall growth—but also to greater profits for the financial advisers collecting kickback-style commissions. New financial technology firms, commonly known as Robo-Advisers, may disrupt this market and these exploitative practices. Still, these potentially disruptive automated investment advice firms face significant regulatory risks.

Computer As Confidant: Digital Investment Advice And The Fiduciary Standard, Nicole G. Iannarone

Chicago-Kent Law Review

Digital investment advisers are the fastest growing segment of financial technology (fintech) and are disrupting traditional investment advisory delivery models. The computer-led investment advisory service model may be growing particularly quickly due to a confluence of social and political factors. Politicians and regulators have increasingly focused on the standards of care applicable to investment advice providers. Fewer Americans are ready for retirement and many lack access to affordable investment advice. At the same time, comfort with digital platforms have increased, with some preferring electronic interaction over human interaction. Claiming that they can democratize retirement service by pro- viding advice meeting …

Regtech, Compliance And Technology Judgement Rule, Nizan Geslevich Packin

Chicago-Kent Law Review

This Article focuses on the rise of Financial Technology, which revolutionized consumer financial service products, and challenged policymakers with regulating the rapidly evolving financial industry. In particular, it explores Regulatory Technology, also known as RegTech, which is the finance industry’s use of technology, especially information technology, in the context of regulatory monitoring, reporting and compliance. RegTech is designed to solve industry needs for a more effective and efficient way to automate corporate governance and compliance processes. Not only has FinTech proven to be a vital revenue source, especially in connection with lending or money transmission services, but it also helps …

Fintech: Antidote To Rent-Seeking?, Jeremy Kidd J.D., Ph.D

Chicago-Kent Law Review

Innovations in financial technology, or Fintech, has been ongoing for decades but has recently begun to accelerate. Some observers have argued that it will soon begin to outstrip the ability of regulators to keep pace. If those predictions are accurate, what would the world look like with a financial sector that cannot be effectively regulated? One possibility—drawn from public choice economics—is that rent-seeking will be inhibited or eliminated. Rent-seeking is the distortion of law and regulation for the benefit of special interests, who expend resources to guarantee those distortions in their favor. Rent-seeking is inefficient and inhibits growth and innovation, …

New Art For The People: Art Funds & Financial Technology, Brian L. Frye

Chicago-Kent Law Review

Fine art sales have reached record levels, with the global art market achieving annual sales of over $60 billion. However, the art market is extremely risky and the most lucrative investment opportunities are typically at the high end of the market. In recent years, financial industry professionals with an interest in the art world have increasingly formed art investment funds, intended to enable smaller investors to take advantage of the opportunity to invest in the art world and diversify their portfolios. Some art funds also allow art investors to borrow against certain assets. About 45 art investment funds currently exist, …

The Promise And Perils Of Algorithmic Lenders’ Use Of Big Data, Matthew Adam Bruckner

Chicago-Kent Law Review

Tens of millions of Americans lack access to traditional forms of credit and must rely on payday and pawn loans instead. “Algorithmic lending 2.0” promises to enable fintech companies to lend to those excluded from traditional forms of credit. Version 2.0 algorithmic lenders claim to use Big Data and machine learning to increase credit access by making better predictions about prospective borrowers’ creditworthiness and decreasing the cost of credit. Supporters also claim that algorithmic lending 2.0 removes human bias from the financial services sector. Detractors have cast doubt on both claims, arguing that there is scant evidence that algorithmic lending …