Banking and Finance Law Commons^™

From The Schoolhouse To The Poorhouse: The Credit Card Act's Failure To Adequately Protect Young Consumers, Eboni S. Nelson

Faculty Publications

No abstract provided.

Review Of Seeds Of Destruction: Why The Path To Economic Ruin Runs Through Washington, And How To Reclaim American Prosperity, Michael S. Barr

Reviews

The United States has just gone through the worst financial crisis since the Great Depression. Our financial system came to brink of collapse, saved only by a massive intervention by the federal government. Although officially the Great Recession is now over, high unemployment and slow growth persist. Deficits that were ballooning in the 2000s with the weight of tax cuts, increased health care expenditures, and defense spending related to Iraq and Afghanistan, even before the financial crisis, have continued to climb, as lower tax receipts, automatic stabilizers, and fiscal stimulus kicked into gear.

Chapman Dialogue And Law Review Symposium Keynote Address: Ex Ante Versus Ex Post Approaches To Financial Regulation, Steven L. Schwarcz

Faculty Scholarship

Ideal financial regulation would work ex ante, to prevent financial failures. Once a failure occurs, there may already be economic damage, and it may be difficult to stop the failure from spreading and becoming systemic. The reality, though, is that preventing financial failures should be only one role for regulators. Even an optimal prophylactic regulatory regime cannot anticipate and prevent every failure. This paper, which formed my Chapman Dialogue Address at Chapman University School of Law and the keynote speech at Chapman Law Review’s 2011 Symposium on the Future of Financial Regulation, attempts to contrast fundamental differences between ex ante …

Capture In Financial Regulation: Can We Redirect It Toward The Common Good?, Lawrence G. Baxter

Faculty Scholarship

“Regulatory capture” is central to regulatory analysis yet is a troublesome concept. It is difficult to prove and sometimes seems refuted by outcomes unfavorable to powerful interests. Nevertheless, the process of bank regulation and supervision fosters a closeness between regulator and regulated that would seem to be conducive to “capture” or at least to fostering undue sympathy by regulators for the companies they oversee. The influence of very large financial institutions has also become so great that financial regulation appears to have become excessively distorted in favor of these entities and to the detriment of many other legitimate interests, including …

Adaptive Regulation In The Amoral Bazaar, Lawrence G. Baxter

Faculty Scholarship

Twelfth Oliver Schreiner Memorial Lecture,delivered on 20 October 2010 at the School of Law, University of the Witwatersrand, Johannesburg, South Africa. Many gradual changes in science, law and society are crystallizing to shape a significant transformation in administrative law. The doctrinal framework within which Justice Schreiner himself attempted to modernize how law should regulate government and private economic activity seems from our vantage point to be quite antiquated. In explaining why, my examples will come from the world of financial services, but they could easily be found anywhere in the area of law and regulation. First I will outline the …

Drafting A Model Collective Action Clause For Eurozone Sovereign Bonds, Mitu Gulati, Lee C. Buchheit

Faculty Scholarship

In the wake of the Eurozone sovereign debt crisis, the European financial authorities announced last November that all Eurozone sovereign bonds issued after mid-2013 must contain an identical collective action clause (CAC) in order, if necessary, to facilitate a restructuring of those
instruments.

CACs in sovereign bonds have been the subject of considerable attention over the last ten years. They were introduced into sovereign bonds governed by U.S. law only in early 2003. Yet a surprising number of versions of the clause can be found in modern sovereign bonds.

The history of the research and development of this contractual provision …

Greek Debt: The Endgame Scenarios, Mitu Gulati, Lee C. Buchheit

Faculty Scholarship

Perhaps Greece -- a country with a debt to GDP already approaching 150 percent and set to move even higher -- avoids a debt restructuring. Perhaps not.

What are the possible scenarios if Greece cannot return to the capital markets to refinance this gargantuan debt stock once its EU/IMF bailout package expires in two years time? What would a Greek debt restructuring look like after mid-2013? And (sharp intake of breath here) what would happen if such a debt restructuring were undertaken before that point?

Identifying And Managing Systemic Risk: An Assessment Of Our Progress, Steven L. Schwarcz

Faculty Scholarship

Although a chain of bank failures remains an important symbol of systemic risk, the ongoing trend towards disintermediation—or enabling companies to directly access the ultimate source of funds, the capital (i.e., financial) markets, without going through banks or other financial intermediaries—is making these failures less critical than in the past. While banks and other financial institutions remain important sources of capital, companies today are able to obtain most of their financing through financial markets without the use of intermediaries. As a result, financial markets themselves are increasingly central to any examination of systemic risk.

Foreword: The Three And A Half Minute Transaction: Boilerplate And The Limits Of Contract Design, Mitu Gulati, Robert E. Scott

Faculty Scholarship

The Hofstra Law Review has organized an “Ideas” symposium around our book manuscript “The Three and a Half Minute Transaction” (see http://ssrn.com/abstract=1937900). The idea for this symposium came from a debate that occurred at a faculty workshop at the Hofstra Law School some months ago where we were presenting our book manuscript. The topics of conversation included the following: the future of the current big-law-firm model, what value lawyers add in commercial transactions that use boilerplate contracts, why (and whether) boilerplate contracts are so slow to change, why law firms do not generally have R&D departments, the resolution of the …

Political Risk And Sovereign Debt Contracts, Mitu Gulati, Stephen J. Choi, Eric A. Posner

Faculty Scholarship

Default on sovereign debt is a form of political risk. Issuers and creditors have responded to this risk both by strengthening the terms in sovereign debt contracts that enable creditors to enforce their debts judicially and by creating terms that enable sovereigns to restructure their debts. These apparently contradictory approaches reflect attempts to solve an incomplete contracting problem in which debtors need to be forced to repay debts in good states of the world; debtors need to be granted partial relief from debt payments in bad states; debtors may attempt to exploit divisions among creditors in order to opportunistically reduce …

The Paradoxes Of Dodd-Frank, James D. Cox

Faculty Scholarship

No abstract provided.

Overwhelming A Financial Regulatory Black Hole With Legislative Sunlight: Dodd-Frank's Attack On Systemic Economic Destabilization Caused By An Unregulated Multi-Trillion Dollar Derivatives Market, Michael Greenberger

Journal of Business & Technology Law

No abstract provided.

Irs's Recent Uncertain Tax Positions Initiative: A Tangle Of Accounting, Tax And Privilege Issues, 9 Depaul Bus. & Comm. L.J. 401 (2011), Kathryn J. Kennedy

UIC Law Open Access Faculty Scholarship

Given the extremely limited source of resources available to the IRS in recent years, it's not surprising that it is exploring all sorts of avenues to increase its efficiency, particularly relying on corporate taxpayers to self report questionable tax positions. Under the banner of "corporate governance" and "transparency," the Service issued a series of proposals in 2010 requiring disclosure of uncertain tax positions ("UTPs") by corporate taxpayers. The Service essentially piggybacked on the recently imposed 2006 audit requirements that reserves be posted for contingent tax liabilities (i.e., tax positions that could later not be sustained, and therefore had to be …

Mortgage Modification And Strategic Behavior: A Contrarian Interpretation Of The Countrywide Financial Corporation Settlement, Gregory S. Crespi

Faculty Journal Articles and Book Chapters

Christopher Mayer, Edward Morrison, Thomas Piskorski and Arpit Gupta of Columbia University have recently published in the Law and Finance eJournal a comprehensive study demonstrating the significant impacts on strategic default rates of the widely publicized Countrywide Financial Corporation settlement of 2008. While their study is comprehensive and carefully done, their implicit assumption that strategic defaults are something to be discouraged rather than encouraged, a position that I have criticized in my earlier work, undercuts the usefulness of their work for policy guidance. From their perspective the Countrywide settlement provides a cautionary tale about difficult trade-offs to be faced in …

Consumer Casualties, Amy J. Schmitz

Faculty Publications

On July 21, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank),' which among other things calls for creation of the Consumer Financial Protection Bureau (CFPB) to serve as a centralized agency charged with protecting consumers from lending abuses and improper practices. The question is when and whether this agency will come to fruition-or suffer as a casualty of political warfare.

Investment Recommendations And The Essence Of Duty, Onnig H. Dombalagian

American University Law Review

No abstract provided.

The New Laws And Regulations For Financial Conglomerates: Will They Better Manage The Risks Than The Previous Ones?, Elizabeth F. Brown

American University Law Review

No abstract provided.

Is The Public Utility Holding Company Act A Model For Breaking Up The Banks That Are Too-Big-To-Fail, Roberta S. Karmel

Faculty Scholarship

No abstract provided.

Derivatives: A Twenty-First Century Understanding, Timothy E. Lynch

Loyola University Chicago Law Journal

Derivatives are commonly defined as some variation of the following: financial instruments whose value is derived from the performance of a secondary source such as an underlying bond, commodity, or index. This definition is both over-inclusive and under-inclusive. Thus, not surprisingly, even many policy makers, regulators, and legal analysts misunderstand them. It is important for interested parties such as policy makers to understand derivatives because the types and uses of derivatives have exploded in the last few decades and because these financial instruments can provide both social benefits and cause social harms. This Article presents a framework for understanding modern …

A Vision For Scaling Microfinance: More Than Dollars And Smarts, Deborah Burand

Book Chapters

The following is a stock-taking of some of the key initiatives that have taken place to date in the world of microfinance at building an international financial architecture that attracts and retains flows of commercial capital to microfinance. It also is a call to those of us in the microfinance world to do much, much more.