Wednesday, December 30, 2020

Happy New Year & Four Bank Supervision Literature Reviews

BLPB readers, I hope that everyone is enjoying the holiday season and the semester break!  I also want to get an early start on wishing everyone a HAPPY NEW YEAR!!! 

Before we leave 2020, I wanted to share that if you missed Bank Supervision: Past, Present, and Future, a stellar virtual conference hosted by the Federal Reserve Board of Governors, Harvard Law School, and the Wharton School on December 11, you can still access the conference materials here.  There's lots of great stuff, including four literature reviews (below) that banking law profs researching in this area are certain to find helpful.  Enjoy!  And a big shout-out to the hosts for such a successful event!

Literature Review on Economics: Beverly Hirtle, Banking Supervision: The Perspective from Economics

Literature Review on Law: Julie Andersen Hill, Bank Supervision: A Legal Scholarship Review

Literature Review on History: Sean H. Vanatta, Histories of Bank Supervision

Literature Review of Supervisory Practices: Jonathan Fiechter and Aditya Narain, Enhancing Supervisory Effectiveness –Findings from IMF Assessments

December 30, 2020 in Colleen Baker, Financial Markets | Permalink | Comments (0)

Wednesday, December 23, 2020

Hiring Announcement: University of Oklahoma College of Law

Dear BLPB Readers:

The University of Oklahoma College of Law

Associate Professor of Law  

The University of Oklahoma College of Law seeks outstanding applicants, either entry level or pre-tenure lateral, to fill a full-time tenure-track position to begin fall semester 2021. Successful applicants must have a J.D. or equivalent academic degree, strong academic credentials, a commitment to excellence in teaching, and demonstrably outstanding potential for scholarship. We welcome candidates in all subject matter areas, with particular interest in filling curricular needs that include criminal law, family law, constitutional law, wills and trusts, bankruptcy, and real estate transactions.  Complete announcement is here: Download OULaw_TenureTrackHiringAnnouncement

 

December 23, 2020 in Colleen Baker, Jobs | Permalink | Comments (0)

Wednesday, December 9, 2020

A Much Welcomed CCP Literature Review by Berndsen

In doing my weekly SSRN search, I was absolutely delighted to see Professor Ron Berndsen’s Five Fundamental Questions on Central Counterparties (here) (note: these institutions are sometimes also referred to as CCPs or clearinghouses).  Berndsen has produced an extensive and invaluable review of the “booming literature on CCPs, of which about 60% is published in the last five years.”  As he notes, this area “can be considered as the most important niche of financial economics.” 

Berndsen organizes the review through “asking five fundamental questions about CCPs.”  Table 6 on p.30 (copied below) provides these questions and shortened answers.

 

Berndsen_Table6



I am grateful to Berndsen for writing this article, proposing future research topics based on his extensive review of the literature, and providing a comprehensive bibliography (even if it has increased my "to read" list!).  An abstract of the article is below:           

Central counterparties (CCPs) are designed to reduce aggregate counterparty credit risk and function as market infrastructures for capital markets in securities and derivatives. Although CCPs, also known as clearing houses, exist for well over a century, they have gained prominence since they became the main international public policy response to the Lehman crisis of making over-the-counter derivative transactions safer. This G20's response to the Lehman crisis of making central clearing mandatory for standardized over-the-counter derivative transactions has been translated into law, Dodd-Frank for the US and EMIR for the EU. However, CCPs remain to some extent controversial with adversaries claiming that they potentially increase systemic risk and proponents viewing them as systemic risk reducing when properly designed and maintained. In this article I review the booming literature on CCPs, of which about 60% is published in the last five years, by asking five fundamental questions about CCPs. The aim is to construct a broad, academically substantiated, synthesis about CCPs and to propose directions for future research in what can be considered as the most important niche of financial economics.

December 9, 2020 in Colleen Baker, Financial Markets | Permalink | Comments (0)

Wednesday, December 2, 2020

Skinner on Central Banks and Climate Change

Over the summer, I had the good fortune of hearing Professor Christina Parajon Skinner present her important and timely work on Central Banks and Climate Change.  I was thrilled to see that this article was recently posted to SSRN (here) and I'm reading it now!  Here's the abstract:

Central banks are increasingly called upon to address climate change. Proposals for central bank action on climate change range from programs of “green” quantitative easing, to increases in risk-based capital requirements to deter banks from lending to climate-unfriendly business. Politicians and academics alike have urged climate risk as both macroeconomic and financial stability risk. Nevertheless, in the U.S., the Federal Reserve has been measured in its response to climate change.

This article considers the scope of the Fed’s policy and legal authority to address climate change. Drawing on insights from corporate finance and macroeconomics, the article first considers how climate risk presents risks that are policy problems for the Fed. From that policy basis, the article constructs a legal framework — stitching together a variety of Fed laws, regulations, and precedents of practice — to discern where the Fed can legitimately move forward on climate change and the areas that, at present, sit outside the Fed’s legal remit.

The article concludes that the Fed’s authority to address climate change is strongest in a responsive posture — that is, to respond to climate-related economic shocks and to tailor supervision to better account for encroaching operational risks and asset-quality deterioration. However, the Fed lacks a solid legal basis for seeking to proactively make the financial system greener. Ultimately, the article prompts some reflection on the ideal role of the Fed vis-à-vis the fiscal authority of the Treasury, the political actors in Congress, and the Executive.   

December 2, 2020 in Colleen Baker | Permalink | Comments (0)

Wednesday, November 18, 2020

New FSB Report: Holistic Review of the March Market Turmoil

Yesterday, the Financial Stability Board (FSB) released a report: Holistic Review of the March Market Turmoil (Report).  It contains lots of really interesting information and is well worth a read (for a quick overview, there’s an Executive Summary and a two minute YouTube video of Randal K. Quarles, FSB Chair and a Governor of the Federal Reserve System, discussing the Report). 

I thought its emphasis on the increasingly central role of market liquidity to financial market resilience particularly important.  Today, both the traditional, highly regulated banking system and the market-based credit system provide credit to the economy.  These systems are interconnected and roughly equivalent in size.  Although the market-based credit system – non-bank financial intermediation (NBFI) – looks, smells, and acts like banking, it is not similarly regulated nor does it have access to deposit insurance or the Federal Reserve’s lender of last resort liquidity facility.  Nevertheless, in the financial crisis of 2007-09 and this past March, the Federal Reserve provided extraordinary liquidity and other support to the NBFI to promote financial stability and address bank-like runs.

On p.2, the Report notes that “The need to intervene in such a substantial way has meant that central banks had to take on material financial risk.  This could lead to moral hazard issues in the future, to the extent that markets do not fully internalise their own liquidity risk in anticipation of future central bank interventions in times of stress.”  The Report explains on p.33 just how extensive this recent central bank support was: “Overall, these measures lead to a US$7 trillion increase in G7 central bank assets in just eight months (Graph 5.1).  In contrast, G7 central bank assets only rose by about US$3 trillion in the year following the collapse of Lehman Brothers in 2008.”   

The market-based credit system underprices liquidity risk.  Measures must be taken to address this significant issue.  As I wrote in The Federal Reserve As Last Resort (footnotes removed from quote):

Liquidity is not free. Liquidity risk is one of the fundamental risks in financial markets. All else being equal, liquid financial assets are less risky than illiquid ones and, therefore, worth more.  Financial investors generally expect to receive a "liquidity premium" for illiquid financial assets. In the past, however, both economic and financial theories have sometimes treated liquidity as costless. And international financial institutions have long mismanaged and mispriced liquidity risk.  Not surprisingly, liquidity assistance emerged as one of the most sought-after remedies provided by the Federal Reserve and central banks around the world during the financial crisis.

On p.50, the Report states that “Taken together, the measures introduced [by central banks] essentially removed risk from investors and transferred it to the balance sheet of central banks and hence of the public sector as a whole.”  I’m excited for the FSB’s upcoming “work programme” on NBFI (see p.3 of the Report for details), and hope that in the future, investors will be required to retain more of their contracted for risk and that the resilience of this sector greatly improves.   

November 18, 2020 in Colleen Baker, Financial Markets | Permalink | Comments (0)

Wednesday, November 11, 2020

Hiring Announcement - Kelley School of Business at Indiana University

BLPB Readers, below are hiring announcements of the Kelley School of Business at Indiana University:

Tenure Track Posting

The Kelley School of Business at Indiana University seeks applications for a tenured/tenure-track position in the Department of Business Law and Ethics, effective fall 2021. The candidate selected will join a well-established department of 26 full-time faculty members who teach a variety of courses on legal topics, business ethics, and critical thinking at the undergraduate and graduate levels. It is anticipated that the position will be at the assistant professor rank, though appointment at a higher rank could occur if a selected candidate’s record so warrants. Complete posting here: Download BLE tenure-track ad (to start fall 2021)

Lecture (non tenure track) Posting

The Kelley School of Business at Indiana University seeks applications for a full-time, non-tenure-track lecturer position in the Department of Business Law and Ethics, effective fall 2021. The candidate selected will join a well-established department of 26 full-time faculty members who teach a variety of residential and online courses on legal topics, business ethics, and critical thinking at the undergraduate and graduate levels. Lecturers have teaching and service responsibilities, but are not expected to engage in research activities. Complete posting here: Download BLE Lecturer ad (to start fall 2021)

 

November 11, 2020 in Colleen Baker, Jobs | Permalink | Comments (0)

Some Wednesday Tidbits

In today's post, I thought I'd share with BLPB readers a few tidbits of information that caught my eye this morning:

1) Today, the Financial Stability Board (FSB) released the "2020 list of global systemically important banks (G-SIBs)."  Topping the list of 30 are Citigroup, HSBC, and JP Morgan Chase.

2) The FSB also recently released a discussion paper for public consultation: Regulatory and Supervisory Issues Relating to Outsourcing and Third Party Relationships.  Reading it has now been added to my "do to list" as it addresses issues such as banks' reliance on cloud computing, a topic I wrote about in Banking on the Cloud (w/David Fratto and Lee Reiners), an article for last year's BLPB symposium.

3) Bill Ackman, CEO of the hedge fund Pershing Square, is "hedging the pandemic again." 

4) Ok, so this one didn't really catch my eye so much as I went looking for it!  I'm working on finishing this year's BLPB symposium article... Huang and Takát's The CCP-bank nexus in the time of Covid-19 shares the happy news that despite the intense market volatility of March 2020, clearinghouses performed well.  However, procyclical margin calls by clearinghouses did create liquidity squeezes during this time of market stress.  The authors state that  "Going forward, the interaction of CCPs [clearinghouses] with clearing member banks is critical ("CCP-bank nexus"). Importantly, actions that might seem prudent from an individual institution's perspective, such as increasing margins in a turmoil, might destabilise the nexus overall.  Therefore, central banks need to assess banks and CCPs jointly rather than in isolation."  Sounds incredibly wise to me!  

November 11, 2020 in Colleen Baker | Permalink | Comments (0)

Wednesday, November 4, 2020

Call for Papers: Michigan Law School 2021 Junior Scholars Conference

Michigan Law School 2021 Junior Scholars Conference

April 16-17, 2021

Call for Papers

Deadline for Submission: January 4, 2021

The University of Michigan Law School is pleased to invite junior scholars to attend the 7th Annual Junior Scholars Conference which will take place virtually on April 16-17, 2021. The conference provides junior scholars with a platform to present and discuss their work with peers and receive feedback from prominent members of the Michigan Law faculty. The Conference aims to promote fruitful collaboration between participants and to encourage their integration into a community of legal scholars. The Junior Scholars Conference is intended for academics in both law and related disciplines. Applications from graduate students, SJD/PhD candidates, postdoctoral researchers, lecturers, teaching fellows, and assistant professors (pre-tenure) who have not held an academic position for more than four years, are welcomed.

Complete call for papers Download Cfp Michigan Law School 2021 Junior Scholars Conference.

November 4, 2020 in Call for Papers, Colleen Baker | Permalink | Comments (0)

Wednesday, October 7, 2020

Securities Financing and Derivatives Markets Interconnections and Potentials for Greater Transactional Efficiencies

I just did a quick read through ISDA’s new whitepaper, Collaboration and Standardization Opportunities in Derivatives and SFT Markets.  “SFT” stands for securities financing transactions.  I encourage anyone studying these markets to at least review its Executive Summary.  As it states “This paper explains and illustrates how and why two large, important and interconnected markets – derivatives and securities financing transactions (SFTs) – could collaborate to achieve greater standardization and improved efficiency.” (p. 3)    

It's divided into two parts: 1) an overview of the relevant markets (repo, stock loan, and derivatives), their interconnectedness, and possibilities for and benefits of greater transactional efficiencies, and 2) a proposal for implementing these objectives.  

Much of the paper focuses on market interconnections, which strongly argue for the possibility of improved transactional efficiencies.  I kept thinking about interconnections from a systemic risk/financial stability perspective, and how (if at all) promoting greater transactional efficiencies (which, at least at first glance, seems like a good idea) might impact such considerations. 

I encourage more of us in the banking and financial institutions area to give additional thought to systemic risk and financial stability issues related to securities lending, including due to its interconnections with derivatives markets.  For example, while there has been much written about AIG’s CDS problems in the 2007-08 financial crisis, comparatively little work has addressed the securities lending issues it had (for example, see Securities Lending and the Untold Story in the Collapse of AIG).  Nevertheless, “Participants in the SFT and derivatives markets have traditionally overlapped.  Banks (including investment banks, commercial banks and central banks), prime brokers, funds (including hedge funds, pension funds and sovereign wealth funds) and market infrastructures (such as clearing houses) are among the biggest players in both the derivatives and SFT markets.” (p. 12) 

Well, once I finish my article on NCWOL claims for clearinghouse shareholders for the upcoming BLPB Virtual Symposium, maybe I’ll turn my attention to clearinghouses and securities lending.  I’d also love to see more work in this area by BLPB readers, and if you’ve an article related to these topics, please do send it my way!

October 7, 2020 in Colleen Baker, Financial Markets | Permalink | Comments (0)

Tuesday, October 6, 2020

October 14 - Systemic Risk Council Webinar

BLPB Readers,

Exciting news!  On the morning of October 14, 2020, the Systemic Risk Council is offering a webinar on Ensuring Financial Stability: Relaunching the Reform Debate After Pandemic Dislocation.  The Agenda looks fantastic! A brief summary of the program is below:

The stimulus response to the global pandemic has surfaced new debates and highlighted lingering questions about the role of central banks, accountability, reform, and the roles of levered markets and shadow banking.  This Systemic Risk Council program brings together leading voices to explore how the financial industry, regulators, and policy makers can address key issues around bank stability, resolution, and the mounting leverage in the global economic system.

October 6, 2020 in Colleen Baker | Permalink | Comments (0)

Monday, October 5, 2020

The Business Law Prof Blog Symposium Goes Virtual!

ConnectingThreadsIV-1024x683

The fourth annual Business Law Prof Blog symposium, Connecting the Threads, is happening, despite the pandemic.  We are proceeding in a virtual format, hosted on Zoom on Friday, October 16.  More information is available here.

The line-up includes an impressive majority of our bloggers speaking on a wide range of topics from shareholder proposals to social enterprise, opting out of partnership, and much more.  Most papers will have a faculty and student discussant.  My submission, “Business Law and Lawyering in the Wake of COVID-19,” is coauthored with two students and carries one hour of Tennessee ethics credit.  While I wish we could host everyone in person in Knoxville, it always is an amazing day when we all get together.  I look forward to learning more about what everyone is working on and hearing what everyone has to say.

October 5, 2020 in Ann Lipton, Colleen Baker, Conferences, Haskell Murray, Joan Heminway, Joshua P. Fershee, Marcia Narine Weldon, Stefan J. Padfield | Permalink | Comments (0)

Wednesday, September 30, 2020

Professor Wilmarth’s Taming the Megabanks

This Friday, Professor Art Wilmarth’s new book, Taming the Megabanks: Why We Need a New Glass-Steagall Act (Cambridge University Press), will be released.  Wilmarth recently published an overview of his work on Duke Law School’s FinReg Blog, a paragraph of which is below: 

Taming the Megabanks contends that we must adopt a new Glass-Steagall Act to separate banks from securities markets. A new Glass-Steagall Act would restore financial stability and ensure that our financial system serves Main Street business firms and consumers instead of Wall Street speculators. Universal banks would be broken up and would no longer dominate our financial system. Shadow banks would shrink substantially because they could no longer fund their activities by offering short-term financial instruments that function as substitutes for deposits. A more decentralized and competitive financial system would provide better services to commerce, industry, and society. 

I’m really looking forward to receiving my copy, purchased for a very reasonable $34.95!  I’ve read many of Wilmarth’s articles, and I’ve always learned a lot from each one.  A LOT!

September 30, 2020 in Books, Colleen Baker | Permalink | Comments (1)

Sunday, September 13, 2020

Sept 15 Deadline - Call for Submissions: AALS Section on Financial Institutions and Consumer Financial Protection

Dear BLPB readers:

The AALS Section on Financial Institutions and Consumer Financial Protection invites submissions of no more than five pages for the 2021 annual meeting. Selected speakers would present on Tuesday, January 5, from 1:15 to 2:30 pm ET.  The submission can be the abstract and/or introduction from a longer paper, and it should relate to the following session description:

After the 2008 financial crisis, Congress overhauled financial regulation. The Dodd-Frank Act of 2010 created a new consumer protection agency, limited bank investment, imposed new capital and liquidity requirements, created an umbrella financial council, and reworked derivatives oversight, among many significant pieces. This session will explore ideas about what the next sweeping financial legislation should entail.

Please send your anonymized materials by September 15, 2020, to Joseph Graham, jgraham@bu.edu. Please also indicate (a) whether you are tenured, pre-tenure, or other; (b) how far along the full article is, and (c) optionally, any other information that might benefit the committee in selecting a diverse panel of speakers.

On behalf of the Section on Financial Institutions and Consumer Financial Protection

Chair: Rory Van Loo (Boston University)

Chair-Elect: Pat McCoy (Boston College)

Executive Committee Members:

Hilary Allen (American University)

Felix Chang (University of Cincinnati)

Gina-Gail Fletcher (Duke University)

Kathryn Judge (Columbia University)

Michael Malloy (University of the Pacific)

Christopher Odinet (University of Iowa)

Paolo Saguato (George Mason University)

Jennifer Taub (Western New England University)

Andrew Tuch (Washington University)

David Zaring (University of Pennsylvania)

 

September 13, 2020 in Call for Papers, Colleen Baker | Permalink | Comments (0)

Wednesday, September 9, 2020

Professor Odinet on Predatory Fintech and the Politics of Banking

Just today, Professor Christopher Odinet posted Predatory Fintech and the Politics of Banking (forthcoming, Iowa Law Review) to SSRN (here).  It's already been downloaded over 100 times, and I can't wait to read it!  Here's the Abstract:

With American families living on the financial edge and seeking out high cost loans even before COVID-19, the term financial technology or “fintech” has been used like an incantation aimed at remedying everything that’s wrong with America’s financial system. Scholars and supporters from both the public and private sector proclaim that innovations in financial technology will “bank the unbanked” and open new channels to affordable credit. This exuberance for all things tech in finance has led to a quiet yet aggressive deregulatory agenda, including, as of late, a federal assault via rulemaking on the ability of states to police the cost and privilege of extending credit within their borders. This deregulation and the ethos behind it have made space for growth in high cost, predatory lending that reaches across state lines via websites and smart phones and that is aggressively targeting cash-strapped families. These loans are made using a business model whereby funds are funneled through a group of lightly regulated banks in a way designed to take advantage of federal preemption. Fintech companies rent out and profit from the special legal status of these bank partners, which in turn keeps the bank’s involvement in the shadows. Stripping down fintech’s predatory practices and showing them for what they really are, this Article situates fintech in the context of this country’s longstanding dual banking wars, both between states and the federal government and between consumer advocates and banking regulators. And it points the way forward for scholars and regulators willing to shake off fintech’s hypnotic effect. This means, in the short term, using existing regulatory tools to curtail the dangerous lending identified here, including by taking a more expansive view of what it means for a bank to operate safely and soundly under the law. In the long term, it means having a more comprehensive and national discussion about how we regulate household credit in the digital age, specifically through the convening of a Twenty-First Century Commission on Consumer Finance. The Article explains how and why the time is ripe to do both. As the current pandemic wipes out wages and decimates savings, leaving desperate families turning to predatory fintech finance ever more, the need for reform has never been greater.

September 9, 2020 in Colleen Baker, Financial Markets | Permalink | Comments (0)

Thursday, September 3, 2020

Call for Presenters - AALS Section on Real Estate Transactions and Section on Academic Support

Dear BLPB readers:

AALS Section on Real Estate Transactions and Section on Academic Support

The Changing Architecture of Legal Education: 

Real Estate Transactions as a Case Study

Seeking Panelists:

What real property law courses should law schools be teaching?

Who should be teaching these courses?

How should the courses be taught?

The Section on Real Estate Transactions and the Section on Academic Support seek to explore these questions and related issues at their joint online session during the 2021 AALS Annual Meeting, The Changing Architecture of Approaches to Legal Education: Real Estate Transactions as a Case Study.

Members of the legal academic community are invited to submit statements of interest in joining the panel of presenters who will discuss the following in the context of real property law and related courses (mortgage finance, securitization, commercial leasing, housing law, real estate development, etc.):

  • Law schools’ curricular choices
  • Course content and design
  • Teaching and pedagogy application.

As explained more in the “Background” section below, the Sections are specifically looking to highlight issues related to course offerings, curricular design, and teaching methodologies that can better prepare students for modern practice and ensure student achievement of course objectives. Statements of interest (including a description/summary of your proposed presentation) should be emailed to Andrea Boyack at andrea.boyack@washburn.edu by September 17, 2020.

There is no formal paper requirement associated with participation on the panel. 

The full call for presenters is here: Download AALS Section on Real Estate Transactions and Section on Academic Support Call for Presenters

September 3, 2020 in Colleen Baker | Permalink | Comments (0)

Wednesday, September 2, 2020

Call for Papers In Legal Strategy, Ethics, Leadership, and Compliance For Organizations

Dear BLPB readers:

CALL FOR PAPERS IN
LEGAL STRATEGY, ETHICS, LEADERSHIP, AND COMPLIANCE FOR ORGANIZATIONS

The Tobias Leadership Center at Indiana University, the Center for Legal Studies & Business Ethics in the Spears School of Business at Oklahoma State University, and the American Business Law Journal to Cohost 2021 Symposium:

Ethical Leadership and Legal Strategies for Post-2020 Organizations

The Tobias Leadership Center at Indiana University, the Center for Legal Studies & Business Ethics at the Spears School of Business, and the American Business Law Journal (ABLJ) welcome submissions on legal strategy, ethics, leadership, and compliance issues that may advance positive organizational change following the multiple challenges of 2020: Public health issues, an economic recession, civil rights and social justice movements, changing working conditions, environmental concerns, innovation, and evolving legal norms. This theme is consistent with 2020 AACSB Standard 9. The ABLJ anticipates publishing a special issue devoted to the symposium theme.

The challenges facing organizations around the globe following the convergence of monumental events in 2020 require a renewed focus on ethical leadership and legal strategies that build structures and organizations to make a positive societal impact. Often times, the law is lagging in its ability to address new means of interacting and conducting business. Given the severity and reach of challenges in 2020, it is imperative to advance the legal and ethical research to meet the moment. This symposium hopes to generate a broad range of scholarship that develops options and opportunities for organizations to contribute positively to their communities and the world following the disruptions of 2020. Only submissions on the symposium theme will be considered for presentation. Interdisciplinary submissions are especially welcome.

The complete call for papers is here: Download Call for papers

September 2, 2020 in Call for Papers, Colleen Baker | Permalink | Comments (0)

Tuesday, September 1, 2020

Welcome Guest Blogger John Anderson!

Prof_John_Anderson I’m delighted to share that former UVA law school classmate and friend, Professor John Anderson, is joining us as a guest blogger at the Business Law Prof Blog on Tuesdays over the next month. 

Professor Anderson teaches Business Associations, Contracts, White Collar Criminal Law, Securities Law, Human Rights, and Law and Philosophy. His recent scholarship focuses on securities enforcement, white collar crime, and intersections of law and philosophy (e.g., business ethics, constitutionalism, problems of pluralism, and human rights). Professor Anderson has been published in leading peer-reviewed journals and top law journals. He recently published a book with Cambridge University Press, Insider Trading: Law, Ethics, and Reform (2018). Professor Anderson has received numerous teaching awards, and he was named the Mississippi College Distinguished Professor of the Year for 2018-2019.  

We’re looking forward to Professor Anderson’s posts, and hope that BLPB readers enjoy them too!

September 1, 2020 in Colleen Baker | Permalink | Comments (0)

Wednesday, August 26, 2020

New Article: Professor Fandl on "Trump, Xi and the Threat to the World Trade Organization"

Professor Kevin Fandl, the President of the ALSB International Section, has posted a really timely article to SSRN: Trump, Xi and the Threat to the World Trade Organization (here).  I’m looking forward to giving it a thorough review just as soon as the new semester settles in!  Here’s the abstract:

Is the WTO big enough for two economic superpowers? China’s explosion onto the world economic stage has allowed new and unexpected challenges to emerge, most significantly, which path globalization should be guided down. For 70 years, the western world has approached globalization from a liberalist perspective, seeing it as a corollary to democracy and rules-based economic growth. Yet China, which benefited enormously from globalization, has exceled in the absence of democracy, challenging the idea that the liberal world order is necessary or even desirable.


With the WTO teetering on irrelevance, this is a moment to lift the hood and examine the engine of economic growth we have relied upon for decades. Though both China and the United States have the economic power to unilaterally pursue trade advantages (think NAFTA or the Belt and Road Initiative), it is not in the interest of either party to abandon the constraints imposed by the rules-based WTO system. The WTO provides an avenue to resolve disputes peacefully without the need for unilateral actions, which tend to escalate rather than resolve trade disputes. The WTO also enshrines the ideals of liberal trade by denouncing trade barriers of all kinds and pursuing open exchange. And the WTO establishes, by consensus, the rules of the road that allow countries large and small to compete in a mostly fair and equitable environment. These are public international rules that neither China nor the United States could establish and enforce on their own.

 

August 26, 2020 in Colleen Baker, International Law | Permalink | Comments (0)

Wednesday, August 19, 2020

Dueling Law Professor Amicus Curiae Briefs in Federal Fintech Charter Case: Part II

As I shared last week (here), many of us who study banking law and regulation are watching the path of Lacewell v. Office of the Comptroller of the Currency (OCC), a case about the OCC’s power to grant federal fintech charters to nondepository institutions, that is in the Second Circuit Court of Appeals.  We've been treated to dueling banking law prof amicus curiae briefs (additional amicus briefs were also filed). In this week’s post, I’ll highlight the brief written by Professor David Zaring at the Wharton School. Download Zaring_Brief


Zaring has previously written about OCC chartering practices (here). He argues that “the OCC has the authority to issue special purpose national bank charters for financial technology (fintech) companies pursuant to the National Bank Act and 12 C.F.R. §5.20(e)(1).” Hence, the District Court’s judgement should be reversed.

First, as Zaring notes, the core issue here really is: “what is banking?” He argues that the “the business of banking” is “susceptible to more than one meaning,” and that receipt of deposits is not an essential aspect of what it is to be a bank. The plain text of 12 C.F.R. §5.20(e)(1) “allow[s] national banks to obtain an SPNB [special purpose national bank] charter so long as they conduct at least one of three enumerated functions-(1) receive deposits, (2) pay checks, or (3) lend money.” Second, the OCC has a history of taking a cautious, “reasoned approach to charters,” and it “is not trying to hide an elephant in a mousehole or expand the definition of the ‘business of banking’ out of all recognition…” Indeed, Zaring asserts, “the agency’s past practice with special charters illustrates its caution.” Third, it’s costly and unwise to require online fintech firms “to tailor their businesses by state borders,” because of the U.S.’s dual banking system. “Few industries benefit more from regulation at the national level than industries that exist on the internet.” Fourth, the lack of a federal fintech charter is costly to the U.S. in terms of “investment in financial technology,” and international competitiveness in this arena. Finally, the OCC’s “chartering decisions are reviewable,” and, “if appropriate,” the “Court should clarify” this.

Zaring does an excellent job of explaining why the OCC has the authority to grant federal fintech charters to nondepository institutions, and I encourage BLPB readers to review his brief. As I previously noted, the answer to what might seem to be a technical banking law question of interest to few (and perhaps uninteresting to most) will have tremendous practical ramifications.

Stay tuned for Part III! I’ll plan to update BLPB readers when the Second Circuit Court of Appeals issues its decision.

August 19, 2020 in Colleen Baker, Financial Markets | Permalink | Comments (0)

Monday, August 17, 2020

Call for Submissions: Ohio State Business Law Journal

Attention BLPB readers:

The Ohio State Business Law Journal (OSBLJ) is a student-run and student-edited journal that provides a forum for quality, cutting edge articles related to business and corporate law. We publish bi-annually: one edition on scholarly articles and the other edition on student note written by our journal members. We are currently accepting submissions from legal scholars for our scholarly edition, which will deal with the question of whether the business legal structure hamper coping with crises.

We believe that in addition to the relevancy of this topic to the current times, this edition will tie in nicely with the theme of our upcoming symposium in March 2021, “Confronting Crises: Preparing for the Unexpected.”  In this symposium, we will have various panels, including: whether the government should take ownership of failing companies; contracting for the worst case scenario; effects of government response to crises; and tax law—the impact of government intervention and the effects it will have on businesses.

We are currently accepting submissions via Scholastica, as well as submissions via email. Any questions, as well as submissions, may be emailed to Mayu Nakano at nakano.17@osu.edu. We look forward to hearing from you!

 

August 17, 2020 in Call for Papers, Colleen Baker | Permalink | Comments (0)