Banking Law Prof Blog

New Bank Operates Out of a Double-Wide Trailer

Here's an interesting story about what is reported to be the only new bank chartered this year.  I'm not sure what this says about the banking industry!

link:  http://dealbook.blogs.nytimes.com/2010/08/30/in-hard-times-one-new-bank-double-wide/

(ag) Sept. 28, 2010, in Economy

National Economic Council Director Lawrence Summers is going back to Harvard. What Does This Mean?

 
Larry Summers, who has served as the Obama administration's National Economic Council Director through these difficult economic times is resigning. 

Bloomberg has a short story on Summers' departure and then a longer analysis as follows:

Geithner Says Summers ‘Instrumental’ to U.S. Economic Growth.  By Rebecca Christie

     Sept. 21 (Bloomberg) -- U.S. Treasury Secretary Timothy F. Geithner said National Economic Council Director Lawrence Summers, who will return to Harvard University by the end of the year, has been an integral part of efforts to help the economy recover from recession.

     “Few economists can claim as big an imprint on American history as Larry Summers,” Geithner said in a statement. “Over the past few years, his insights have been essential to helping President Obama guide us through the worst economic crisis since the Great Depression. Larry always asks the tough questions and forces the hard debate about the best way forward for our economy and for our country.”

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Summers Will Leave White House to Return to Harvard (Update3)
2010-09-21 21:50:00.222 GMT -     By Hans Nichols
     Sept. 21 (Bloomberg) -- Lawrence Summers plans to leave his job as director of the president’s National Economic Council and return to Harvard University at the end of the year, the administration announced.
     “I will always be grateful that at a time of great peril for our country, a man of Larry’s brilliance, experience and judgment was willing to answer the call and lead our economic team,” President Barack Obama said in a statement. “He has helped guide us from the depths of the worst recession since the 1930s to renewed growth.”
     Summers said in the White House statement that, while he will miss working in the administration, “I’m looking forward to returning to Harvard to teach and write about the economic fundamentals of job creation and stable finance as well as the integration of rising and developing countries into the global system.”
     The announcement was made as the administration and Democrats are preparing for November’s congressional elections.
Republicans are campaigning to regain control of Congress by arguing that Obama’s policies haven’t done enough to help pull the U.S. out of the worst U.S. recession since the Great Depression.
     The departure of Summers will leave Treasury Secretary Timothy Geithner as the only member of Obama’s original top-tier economic team. Last year, Obama asked Summers, 55, to stay through 2010 and his departure is part of a long-standing plan, an administration official said.

                      Seeking Replacement

     Administration officials are weighing whether to name a prominent corporate executive to replace Summers to counter criticism the administration is anti-business, one person familiar with White House discussions said. White House aides are also eager to name a woman to serve in a high-level position, two people said. They also are concerned about finding someone with Summers’s experience and stature, one person said.
     The second half of a president’s term typically is a time of turnover in staff and advisers, many of whom also had roles in the presidential campaign. Obama yesterday indicated that some members of his White House economic team may leave after the election.
     “This is tough, the work that they do,” he said in an hour-long town hall discussion on the economy broadcast on CNBC.
“They’ve been at it for two years, and they’re going to have a whole range of decisions about family that will factor into this as well.”

                       Earlier Departures

     Since the end of July, Peter Orszag, director of the Office of Management and Budget, and Christina Romer, head of the Council of Economic Advisers, left the administration.
     Obama said yesterday he has “not made any determination about personnel.” He praised Summers and Geithner, as well as the rest of his economic advisers, saying that they “have done an outstanding job.”
     Summers was President Bill Clinton’s Treasury secretary from 1999 to 2001, when he became president of Harvard. He earned his doctorate at the university in Cambridge, Massachusetts, in 1982 and became its youngest tenured professor at age 28. He spent time on the staff of the White House Council of Economic Advisers in the 1980s before joining the World Bank as chief economist.

                     Administration Debates

     Summers has been a forceful advocate of his positions within the administration and also urged restraint on issues such as the economic stimulus and adoption of the “Volcker Rule,” which limits banks from engaging in proprietary trading, people familiar with those matters said.
     In internal discussions, Summers has argued that the administration needs to make more overtures to the business community and has opposed political advisers who want the president to strike a more populist tone, one person said.
     Summers and Geithner have become a target of Republican leaders as the campaign season gets under way. House Republican leader John Boehner of Ohio said in an Aug. 24 speech that Obama should fire the two officials along with the rest of the administration’s economic team.
    “We do not have the luxury of waiting months for the president to pick scapegoats for his failing ‘stimulus’ policies,” Boehner said in a speech in Cleveland.

(ag) Sept. 22, 2010, in Economy

 

Understanding the UCC

Here's the Quotation of the Day from Grammarian Bryan Garner: "Every ambiguity that has to be resolved, every hard construction that has to be studied out, uses up just so much of the reader's available power for nothing; the thought, with all its interest and importance, suffers for it. Economy begins, therefore, with making the expression plain and easy." John F. Genung, The Working Principles of Rhetoric 25 (1902).

Is he talking about the Uniform Commercial Code?  Obviously the UCC is NOT a stellar example of this principle.  On the other hand, if it were, lawyers and law professors might be out of a job.

Elizabeth Warren and the CFPB

Here are links to news stories about Elizabeth Warren's appointment to begin organizing the Consumer Financial Protection Bureau (CFPB).  She is very dedicated to consumer protection and very capable.  The Dodd-Frank legislation contemplates a lengthy start-up period for the new CFPB -- with transfer from Treasury to the Federal Reserve as late as July 21, 2011. 

Elizabeth Warren could be named Director of CFPB at some time between now and July 21, 2011, with the Senate confirmation process beginning after she has time to build a track record in organizaing the new bureau.  She will bring commitment, intelligence, and hard work to this new job.

Although Elizabeth Warren is an excellent choice for this position, politicians and both regulated and hertofore unregulated financial institutions would be better served to stop personalizing their reaction and start focusing on consumer protection.  Maybe I started practicing banking law when the word was:  If you do the right thing for your customers, you will be profitable for the long run and you won't need to regulators to tell you to do what you are already doing.

Links:

• CNN Money:  Elizabeth Warren Ready to Start Monday:   

http://money.cnn.com/2010/09/17/news/economy/Elizabeth_Warren_interview/index.htm?section=money_latest

• Bloomberg:  Obama Appoints Warren to Shape New Consumer Agency:

http://www.bloomberg.com/news/2010-09-16/obama-will-announce-warren-s-new-role-in-rose-garden-tomorrow.html 

(ag) Sept. 19, 2010, in Consumer Protection, Financial Regulatory Reform

Will She or Won't She Be Head of the New Consumer Financial Protection Bureau?

 
Elizabeth Warren has worked for the creation of a Consumer Financial Protection agency for the past several years.  She is a strong consumer advocate, making cogent arguments against predatory lending practices and calling for legislation to address our broken credit markets.  Her ideas became the basis for establishing the Consumer Financial Protection Bureau through the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was passed by Congress and signed into law this summer.

President Obama has chosen to appoint her Assistant to the President and Special Adviser to the Treasury Secretary, to be responsible for the establishment of the new Consumer Financial Protection Bureau.  Apparently trying to steer away from a controversial confirmation battle, the President has not named her the first Director of the Consumer Financial Protection Bureau. This appointment represents a very unusual move to circumvent the Senate confirmation process.

Link to story:  http://www.nytimes.com/2010/09/17/business/17warren.html 

(ag) Sept. 17, 2010, in Consumer Protection, Financial Regulatory Reform

Break Up Citibank for Efficiency

Why fight breaking up big banks when smaller units would be more efficient -- as well as less systemic risk?  Here's a suggestion that at least one of the TBTF financial conglomerates should be dismantled BEFORE it fails and the taxpayers have to bail it out.

Link to story:  http://blogs.barrons.com/stockstowatchtoday/2010/09/13/citi-maybe-itd-be-better-broken-up-says-mayo/?mod=yahoobarrons 

(ag) Sept. 12, 2010, in  Economy, TBTF, Financial Regulatory Reform

Hewlett Packard - The Poster Child for Board of Directors Missteps

Corporate Governance gone awry:  The latest installment in the Hewlett Packard soap opera is HP's lawsuit against its former CEO Mark Hurd, accusing him of violating his severance agreement to protect H.P.’s confidential information by taking a job as co-president of Oracle. 

Former HP CEO Mark Hurd resigned this summer in the midst of sexual harrassment charges from a marketing freelancer. 

After his departure, a shareholder filed a derivative lawsuit seeking to reclaim severance pay to Hurd.  The shareholder derivative lawsuit alleges violations of fiduciary duties by HP's directors, seeking compensatory and punitive damages.  Shareholder derivative lawsuits are filed on behalf of the company and any recoveries go to the company rather than to the shareholder plaintiff.

All this follows the 2006 episode of spying on board members to find out which of them had been leaking board discussions to the press.  And that followed the exorbitant severance payment to former CEO Carly Fiorina.

(ag) Sept. 9, 2010, in Corporate Governance