Banking and Finance Law Commons^™

Rolling The Dice On Financial Regulatory Reform: Gambling Law As A Framework For Regulating Structured Investments, Christopher B. Chuff

Jeffrey S. Moorad Sports Law Journal (1994 - )

No abstract provided.

Consultation And Legitimacy In Transnational Standard-Setting, Caroline Bradley

Articles

No abstract provided.

Ferdinand Pecora: The Hellhound Of Wall Street, Michael A. Perino

Faculty Publications

Few Americans today know who Ferdinand Pecora was, although he was once a media superstar, a nearly daily fixture in newspapers and radio broadcasts across the country. With the onset of our current economic woes his name has slowly begun to crop up again. In April 2009, House Speaker Nancy Pelosi called for a new "Pecora Commission" to investigate "what happened on Wall Street." The next week, the Senate invoked Pecora's name in voting to create an independent committee to investigate the financial crisis, and in January 2010 the Financial Crisis Inquiry Commission held its first hearings.

Pecora, a diminutive …

Information Asymmetry And Information Failure: Disclosure Problems In Complex Financial Markets, Steven L. Schwarcz

Faculty Scholarship

Disclosure of information has been a key to regulation of the financial markets in the United States. Indeed, some have argued that the ‘exclusive focus [of federal securities regulation] is on full disclosure’ (Hazen, 2005). Yet there is relatively little dispute that although most if not all of the risks giving rise to the collapse of the market for structured securities backed by subprime mortgages were disclosed, the disclosure was ineffective. Disclosure failed because of the complexity of those securities and transactions.

This chapter examines disclosure’s insufficiency in addressing information asymmetry, arguing that complexity can cause information failure. There are …

Disintermediating Avarice: A Legal Framework For Commercially Sustainable Microfinance, Steven L. Schwarcz

Faculty Scholarship

Although microfinance is emerging as a key tool to alleviate poverty, the need for microfinance lending vastly exceeds the amount of funds that can be raised from charitable donors. Commercial bank lending is supplementing donor money, but microfinance loans made by banks are extremely expensive and sometimes even exploitive. This article examines how innovative legal structures can enable microfinance loans to be funded directly from lower-cost, and virtually limitless, capital market sources by removing, or “disintermediating,” the need for a bank intermediary. In that context, the article identifies and attempts to resolve the resulting law-and-business issues of first impression and …

Compensating Market Value Losses: Rethinking The Theory Of Damages In A Market Economy, Steven L. Schwarcz

Faculty Scholarship

The BP Deepwater Horizon spill and the Toyota car recalls have highlighted an important legal anomaly that has been overlooked by scholars — judicial inconsistency and confusion in ruling whether to compensate for the loss in market value of wrongfully affected property. This article seeks to understand the anomaly and, in the process, to build a stronger foundation for enabling courts to decide when — and in what amounts — to award damages for market value losses. To that end, the Article analyzes the normative rationales for generally awarding damages, adapting those rationales to derive a theory of damages that …

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 …

Exploring The Wfo Option For Global Banking Regulation, Lawrence G. Baxter

Faculty Scholarship

The Global Financial Crisis and the global operations by participants in the financial services industry has led observers and even senior public representatives to call for global regulatory solutions that go beyond the current, transnational regulatory network (TRN) framework provided by the G20, the Financial Stability Board and the Basel Committee on Banking Supervision. The concept of a global banking regulator has often been advocated, but this is not remotely politically viable. Recently the imaginative concept of a World Financial Organization (WFO), that would follow the model of the World Trade Organization (WTO), has been proposed. Although attractive in that …

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 …

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

Faculty Scholarship

This short address attempts to provide a succinct overview, critiquing how well the Dodd-Frank Act identifies and manages systemic risk.

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 …

Financial Industry Self-Regulation: Aspiration And Reality, Steven L. Schwarcz

Faculty Scholarship

This essay on financial industry self-regulation responds to Professor Saule Omarova’s recent article on that topic, Wall Street as Community of Fate: Toward Financial Industry Self-Regulation, 159 U. PA. L. REV. 411 (2011).

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.

Helping Microfinance Become Commercially Sustainable, Steven L. Schwarcz

Faculty Scholarship

Microfinance primarily refers to the making of small loans to low-income individuals and the poor, to enable them to start or expand small businesses. Currently, most microfinance loans are made through nonprofit microfinance institutions (MFIs) that receive donor money. However, donor-funded loans can account for only a small portion of the need. Microfinance analysts estimate, for example, that total market potential is $300 billion, of which only ten percent is currently being captured. Increasingly, the shortfall in funding is being met by commercial banks. But commercial-bank intermediation is expensive, with a global average effective interest rate (on commercial microfinance loans) …

Ask The Professor: “Omg! What Did Mf Global Do?, Ronald Filler

Articles & Chapters

This paper, written one week after MF Global, a large futures brokerage firm filed for bankruptcy, analyzes the bankruptcy, its impact on futures customers and the shortfall in customer funds that occurred on October 31, 2011. Subsequent to MF Global's bankruptcy, several customer protection rules were amended by the U.S. Commodity Futures Trading Commission and the National Futures Association.

Things Fall Apart: Regulating The Credit Default Swap Commons, Kristen N. Johnson

University of Colorado Law Review

Financial markets are an important national and international infrastructure resource that reflect attributes similar to the those that characterize commons, as described in property law literature. Through a case study examining the credit default swap market, this Article illustrates the analogy between financial markets and a traditional commons. After exploring the attributes of a commons, this Article examines the costs and benefits of the credit default swap market. Similar to a traditional commons, tragedy in financial markets occurs when market participants capture benefits while imposing the costs or negative externalities from their activities on other members of society. Commons scholars' …

Transparency Is The New Opacity: Constructing Final Regulation After The Crisis, Caroline Bradley

Articles

No abstract provided.

Executive Pay Lessons From Private Equity, David I. Walker

Faculty Scholarship

Questions about the pay of public company executives – and, specifically, the structure of that pay – continue to dominate discussions regarding U.S. corporate governance. These concerns have been amplified by the recent financial meltdown. Some commentators suggest that the aggressive structure of executive pay packages – the heavy reliance on stock options – may have led to excessive risk taking at financial institutions that contributed to the collapse. Others have argued that incentive compensation has become a fetish in corporate America and that the heavy reliance on performance-based pay is no longer justified. More generally, Professor Frankel argues that …

Local To Global: Rethinking Spheres Of Authority After A World Financial Crisis: An Introduction, Franklin A. Gevurtz

McGeorge School of Law Scholarly Articles

No abstract provided.

The Paradoxes Of Dodd-Frank, James D. Cox

Faculty Scholarship

No abstract provided.