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Still Too Big to Fail
Still Too Big To Fail Opportunities for Regulatory Action Seven Years after the Bear Stearns Rescue May 7, 2015 By Jennifer Taub Professor of Law Vermont Law School A project of the Corporate Reform Coalition About the Author Jennifer Taub is a professor of law at Vermont Law School. She is the author of the book Other People’s Houses: How Decades of Bailouts, Captive Regulators, and Toxic Bankers Made Home Mortgages a Thrilling Business (Yale Press, 2014). A graduate of Yale College and Harvard Law School, before joining academia, Taub was an associate general counsel at Fidelity Investments. About the Corporate Reform Coalition The Corporate Reform Coalition is made up of more than 75 or- ganizations and individuals from good governance groups, en- vironmental groups and organized labor, and includes elected officials and socially responsible investors. The coalition seeks to promote corporate governance solutions to combat undisclosed money in elections. For more information, please visit www.CorporateReformCoalition.org. Corporate Reform Coalition Democracy through Accountability May 6, 2015 Contents Summary 4 Remembering Bear Stearns 7 Lehman, AIG, and the Bailouts 10 Gaps and Opportunities for Regulatory Action 15 1. Ending TBTF Bailouts with Living Wills and Emergency Lending Accountability 16 2. Further Reduce Excessive Borrowing by the Top Banks 17 3. Reducing Dependence on Short-Term Wholesale Loans and Providing Transparency 18 4. Close Loopholes for Evading Derivatives Regulation 19 5. Accountability Through Pay Rules 21 6. Political Spending Disclosure Requirements 22 Conclusion 24 Bibliography 26 Still Too Big To Fail: Opportunities for Regulatory Action Summary Seven years after the financial crisis began, many of the conditions that helped cause the near collapse of our banking system — and that were used to rationalize the multi-trillion dollar U.S. -
Modernizing Financial Services: the Glass-Steagall Act Revisited
MODERNIZING FINANCIAL SERVICES: THE GLASS-STEAGALL ACT REVISITED National Association of Federally-Insured Credit Unions NATIONAL ASSOCIATION OF FEDERALLY-INSURED CREDIT UNIONS | NAFCU.ORG | 1 INTRODUCTION: Since the financial crisis, the credit union industry has experienced significant consolidation in the financial marketplace while the largest banks have reaped record profits and grown in both size and scope. From 2008 to 2017, the National Credit Union Administration (NCUA) chartered only 29 new federal credit unions while, during that same period, 2,528 credit unions closed or merged out of existence. The post-crisis regulatory environment has contributed to this decade-long trend of consolidation, but credit unions have also faced barriers to growth in the form of field of membership rules, capital requirements, and limits on interest rates, among many other restrictions. Accordingly, while it is essential to promote regulatory relief that reduces compliance burdens, credit unions also need modern rules to evolve and grow. Regulatory burden and the pressure to consolidate affects more than just the credit union industry. Community banks have experienced similar declines.1 The lack of new charters among community institutions illustrates the extent to which complex and poorly tailored regulations have put a stranglehold on growth and, by extension, limited consumer financial services. In recognition of these trends and the need for regulatory relief, Congress recently passed the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155). S. 2155 garnered bipartisan support and helped alleviate some burdens associated with reporting under the Home Mortgage Disclosure Act and the NCUA’s member business lending rules, and provided new safe harbors for compliance with federal consumer financial protection laws. -
Too Many Voters to Fail: in Uencing and Political Bargaining for Bailouts
Too many Voters to Fail: Inuencing and Political Bargaining for Bailouts Linda M. Schilling∗ December 23, 2019 Abstract The paper provides a novel theory of how banks not only exploit but also cause being perceived as 'too big to fail'. Bank creditors are also voters. Economic voting prompts politicians to grant bailouts given a bank failure. The bank's capital structure acts as a tool to impact the electoral vote and thus the bail-out by changing the relative group size of voters who favor as opposed to voters who object the bailout. The creditors' anticipation of high bailouts, in return, allows the bank to reduce funding costs today, by this maximizing revenues. Key words: corporate nance, bail-outs, political economy, economic voting, capital structure, inuencing JEL codes: G3, P16, D72 ∗Ecole Polytechnique CREST, email: [email protected]; CREST, 5 avenue Le Chate- lier, 91120 Palaiseau, France, phone: +33 (0)170266726. I very much thank Allan Drazen for numerous insightful comments. I thank my OxFIT discussant Sergio Vicente and Sean Hundtofte for coming up with the title 'Too many voters to fail'. The paper started o during a 2017 research visit at the Becker Friedman Institute of the University of Chicago and concluded during a research visit at the Simons Institute at UC Berkeley. The hospitality and support of both institutions is greatly acknowledged. This work was also conducted under the ECODEC laboratory of excellence, ANR-11-LABX-0047. 1 Motivation Bank failures are politically important events. When a bank fails, bank creditors at risk of losing money can hold politicians accountable for their losses since creditors are also voters (Anderson, 2007). -
The Antitrust Implications of "Going Private" and Other Changes of Corporate Control Thomas A
Boston College Law Review Volume 49 Article 2 Issue 4 Number 4 9-1-2008 The Antitrust Implications of "Going Private" and Other Changes of Corporate Control Thomas A. Piraino Jr Follow this and additional works at: http://lawdigitalcommons.bc.edu/bclr Part of the Antitrust and Trade Regulation Commons Recommended Citation Thomas A. Piraino Jr, The Antitrust Implications of "Going Private" and Other Changes of Corporate Control, 49 B.C.L. Rev. 971 (2008), http://lawdigitalcommons.bc.edu/bclr/vol49/iss4/2 This Article is brought to you for free and open access by the Law Journals at Digital Commons @ Boston College Law School. It has been accepted for inclusion in Boston College Law Review by an authorized editor of Digital Commons @ Boston College Law School. For more information, please contact [email protected]. THE ANTITRUST IMPLICATIONS OF "GOING PRIVATE" AND OTHER CHANGES OF CORPORATE CONTROL THOMAS A. PutAiNo, JR.* Abstract: Public shareholders likely have suffered billions of dollars in losses in recent years as a result of collusion among potential purchasers in change-of-control transactions. Unfortunately, the federal courts have been unable to devise an appropriate antitrust approach to collusion in change-of-control transactions. This article proposes a new approach to the antitrust regulation of the market for the control of public and pri- vate companies. Collusion among purchasers in that market has occurred in nearly every American industry The proposed approach will effectively deter the three types of anticompetitive conduct most likely to occur in these circumstances: (1) express agreements to allocate bids among po- tential purchasers, (2) implicit bid rigging by potential purchasers, and (3) consortiums among potential purchasers to submit single bids in company auctions. -
Executive Intelligence Review, Volume 36, Number 30, August 7, 2009
Executive Intelligence Review EIRAugust 7, 2009 Vol. 36 No. 30 www.larouchepub.com $10.00 Reality of Collapse Destroys Fantasy of Recovery The Incredible Shrinking Obama Presidency ‘China Youth Daily’ Circulates LaRouche’s Proposals LaRouche Webcast: The Fall Of the House of Windsor SUBSCRIBE TO EIR ONLINE The Banking System Has Already Collapsed! “There is no possibility of a non-collapse of the present financial system—none! It's finished, now!” —Lyndon H. LaRouche, Jr., webcast, July 25, 2007 Unless the Homeowners and Bank Protection Act “is enacted as a first order of business of the 110th Congress in September [2007], many millions of Americans will be evicted from their homes.... The foreclosure tsunami is occurring, not as a result of a mere housing or mortgage crisis, but a disintegration of the entire global financial system.” —EIR Editorial, Aug. 31, 2007 “My view of the economy is that the fundamentals are strong.” —President George W. Bush, Dec. 20, 2007 EIR Online’s Subscribers Know What Is Really Going On.... Do You? To subscribe: www.larouchepub.com/eiw Call 1-800-278-3135 (toll-free) See back cover for subscription rates Founder and Contributing Editor: Lyndon H. LaRouche, Jr. Editorial Board: Lyndon H. LaRouche, Jr., Antony Papert, Gerald Rose, Dennis Small, Edward Spannaus, Nancy Spannaus, Jeffrey Steinberg, EI R William Wertz Editor: Nancy Spannaus Managing Editors: Bonnie James, Susan Welsh Science Editor: Marjorie Mazel Hecht Technology Editor: Marsha Freeman From the Managing Editor Book Editor: Katherine Notley Graphics Editor: Alan Yue Photo Editor: Stuart Lewis Circulation Manager: Stanley Ezrol “ INTELLIGENCE DIRECTORS f I were President, I’d end this thing right now!” Lyndon LaRouche Counterintelligence: Jeffrey Steinberg, Michele I Steinberg declared at his Aug. -
The Too BIG to FAIL Problem Is Alive, Well and Getting Worse
The Too BIG to FAIL Problem Is Alive, Well and Getting Worse Presentation to the Financial Stability Board workshop at the Federal Reserve Bank of New York SEPTEMBER 16, 2019 Dennis M. Kelleher, President and CEO, Better Markets, 1825 K Street, NW, Washington, DC 20006 “Those who do not learn from history are doomed to repeat it.” - George Santayana BetterMarkets.com | © 2019 Better Markets, Inc. | 1 Too BIG to FAIL Is Alive andBetter Well Markets Lehman Brothers collapsed into bankruptcy on September 15, 2008, 11 years ago yesterday, which ignited the worst financial crash since the Great Crash of 1929 and caused the worst economy since the Great Depression of the 1930s. “Those who do not learn from history are doomed to repeat it.” - George Santayana That may be fine for decisions by individuals who suffer the consequences from their own actions. • However, it is a dereliction of duty for public officials, policymakers and regulators who should know better given very recent history, • particularly because the American people eventually are going to suffer the consequences of their actions. BetterMarkets.com | © 2019 Better Markets, Inc. | 2 Too BIG to FAIL Is Alive andBetter Well Markets FSB stated purpose of the evaluation of too-big-to-fail (TBTF) systemiCally important banks (SIBs) reforms “Assess wHetHer tHe implemented reforms are reducing tHe systemic and moral Hazard risks associated witH systemically important banks (SIBs). It will also examine tHe broader effects of tHe reforms to address TBTF for SIBs on tHe overall functioning of tHe financial system.” BetterMarkets.com | © 2019 Better Markets, Inc. | 3 Too BIG to FAIL Is Alive andBetter Well Markets The better objeCtive of the FSB evaluation of TBTF SIB reforms “Assess wHetHer tHe implemented reforms are [sufficiently and effectively] reducing tHe systemic and moral Hazard risks associated witH systemically important banks (SIBs). -
A Business Lawyer's Bibliography: Books Every Dealmaker Should Read
585 A Business Lawyer’s Bibliography: Books Every Dealmaker Should Read Robert C. Illig Introduction There exists today in America’s libraries and bookstores a superb if underappreciated resource for those interested in teaching or learning about business law. Academic historians and contemporary financial journalists have amassed a huge and varied collection of books that tell the story of how, why and for whom our modern business world operates. For those not currently on the front line of legal practice, these books offer a quick and meaningful way in. They help the reader obtain something not included in the typical three-year tour of the law school classroom—a sense of the context of our practice. Although the typical law school curriculum places an appropriately heavy emphasis on theory and doctrine, the importance of a solid grounding in context should not be underestimated. The best business lawyers provide not only legal analysis and deal execution. We offer wisdom and counsel. When we cast ourselves in the role of technocrats, as Ronald Gilson would have us do, we allow our advice to be defined downward and ultimately commoditized.1 Yet the best of us strive to be much more than legal engineers, and our advice much more than a mere commodity. When we master context, we rise to the level of counselors—purveyors of judgment, caution and insight. The question, then, for young attorneys or those who lack experience in a particular field is how best to attain the prudence and judgment that are the promise of our profession. For some, insight is gained through youthful immersion in a family business or other enterprise or experience. -
Books of the Week 2008-2010
BOOKS OF THE WEEK 2008-2010 07/04/2010 Shop Class as Soulcraft: An Inquiry into the Value of Work, by Matthew B. Crawford 06/27/30 Winning in Emerging Markets: A Road Map for Strategy and Execution, by Tarun Khanna and Krishna Palepu 06/20/2010 Reset: Iran, Turkey, and America's Future, by Steven Kinsler 06/13/2010 More Money than God, by Sebastian Mallaby 06/06/10 The Icarus Syndrome: A History of American Hubris, by Peter Beinart 05/30/10 The Man Who Loved China, by Simon Winchester 05/23/10 The Promise, by Jonathan Alter 05/16/2010 The End of the Free Market: Who Wins the War between States and Corporations, by Ian Bremmer 05/09/2010 Pakistan: Between Mosque and Military, by Hussain Haqqani 05/02/2010 The Great Reset: How New Ways of Living and Working Drive Post-Crash Prosperity, by Richard Florida 04/25/2010 Elements of Investing, by Burton Malkiel and Charles Ellis 04/18/2010 The Bridge, by David Remnick 04/11/2010 Mandela's Way: 15 Lessons on Life, Love and Courage, by Rick Stengel 04/04/2010 The Checklist Manifesto: How to Get Things Right, by Atul Gawande 03/28/2010 The Great Inflation and its Aftermath: The Past and Future of American Affluence, by Robert Samuelson 03/21/2010 The Big Short, by Michael Lewis 03/14/2010 Things I've Been Silent about: Memories of a Prodigal Daughter, by Azar Nafisi 03/07/2010 Imperial Life in the Emerald City, by Rajiv Chandrasekaran 02/28/2010 The Soros Lectures at the Central European University, by George Soros 02/21/2010 Work Hard, Study and Keep Out of Politics by James Baker Recount (movie) 02/14/2010 Into the Story, by David Maraniss "How to Tame the Deficit," by Jeffrey Sachs (article) 02/07/2010 Comeback America: Turning the Country Around and Restoring Fiscal Responsibility by David Walker 01/31/2010 Capitalism and the Jews, by Jerry Muller 01/24/2010 The Death of Conservatism, by Sam Tanenhaus 01/17/2010 Mountains Beyond Mountains: The Quest of Dr. -
Systemically Important Or “Too Big to Fail” Financial Institutions
Systemically Important or “Too Big to Fail” Financial Institutions Marc Labonte Specialist in Macroeconomic Policy Updated September 24, 2018 Congressional Research Service 7-5700 www.crs.gov R42150 Systemically Important or “Too Big to Fail” Financial Institutions Summary Although “too big to fail” (TBTF) has been a long-standing policy issue, it was highlighted by the financial crisis, when the government intervened to prevent the near-collapse of several large financial firms in 2008. Financial firms are said to be TBTF when policymakers judge that their failure would cause unacceptable disruptions to the overall financial system. They can be TBTF because of their size or interconnectedness. In addition to fairness issues, economic theory suggests that expectations that a firm will not be allowed to fail create moral hazard—if the creditors and counterparties of a TBTF firm believe that the government will protect them from losses, they have less incentive to monitor the firm’s riskiness because they are shielded from the negative consequences of those risks. If so, TBTF firms could have a funding advantage compared with other banks, which some call an implicit subsidy. There are a number of policy approaches—some complementary, some conflicting—to coping with the TBTF problem, including providing government assistance to prevent TBTF firms from failing or systemic risk from spreading; enforcing “market discipline” to ensure that investors, creditors, and counterparties curb excessive risk-taking at TBTF firms; enhancing regulation to hold TBTF firms to stricter prudential standards than other financial firms; curbing firms’ size and scope, by preventing mergers or compelling firms to divest assets, for example; minimizing spillover effects by limiting counterparty exposure; and instituting a special resolution regime for failing systemically important firms. -
The Myth of Too Big to Fail, Imad A
Palgrave Macmillan Studies in Banking and Financial Institutions Series Editor: Professor Philip Molyneux The Palgrave Macmillan Studies in Banking and Financial Institutions are international in orientation and include studies of banking within particular countries or regions, and studies of particular themes such as Corporate Banking, Risk Management, Mergers and Acquisitions, etc. The books’ focus is on research and practice, and they include up-to-date and innovative studies on contemporary topics in banking that will have global impact and influence. Titles include: Yener Altunbas¸, Blaise Gadanecz and Alper Kara SYNDICATED LOANS A Hybrid of Relationship Lending and Publicly Traded Debt Yener Altunbas¸, Alper Kara and Öslem Olgu TURKISH BANKING Banking under Political Instability and Chronic High Inflation Elena Beccalli IT AND EUROPEAN BANK PERFORMANCE Paola Bongini, Stefano Chiarlone and Giovanni Ferri (editors) EMERGING BANKING SYSTEMS Vittorio Boscia, Alessandro Carretta and Paola Schwizer COOPERATIVE BANKING: INNOVATIONS AND DEVELOPMENTS COOPERATIVE BANKING IN EUROPE: CASE STUDIES Roberto Bottiglia, Elisabetta Gualandri and Gian Nereo Mazzocco (editors) CONSOLIDATION IN THE EUROPEAN FINANCIAL INDUSTRY Alessandro Carretta, Franco Fiordelisi and Gianluca Mattarocci (editors) NEW DRIVERS OF PERFORMANCE IN A CHANGING FINANCIAL WORLD Dimitris N. Chorafas CAPITALISM WITHOUT CAPITAL Dimitris N. Chorafas FINANCIAL BOOM AND GLOOM The Credit and Banking Crisis of 2007–2009 and Beyond Violaine Cousin BANKING IN CHINA Vincenzo D’Apice and -
BRT CLE Materials
SPECIAL GOVERNANCE WATCH: BRT STATEMENT ON THE PURPOSE OF A CORPORATION CLE Materials Document Page The Purposes of a Corporation and the Role of the Board (Cleary M&A and Corporate Governance 1 Watch) ............................................................................................................................................. Business Roundtable Redefines the Purpose of a Corporation to Promote ‘An Economy That Serves All 5 Americans’ (Press Release)............................................................................................................. Business Roundtable Statement on the Purpose of a Corporation ............................................................... 9 Council of Institutional Investors Responds to Business Roundtable Statement on Corporate Purpose 21 (Press Release) ............................................................................................................................................. Board 3.0 – An Introduction (Ronald J. Gilson & Jeffrey N. Gordon) ........................................................ 23 Caremark and Reputational Risk Through #MeToo Glasses (Cleary M&A and Corporate Governance 41 Watch) ............................................................................................................................................. Not So Sweet: Delaware Supreme Court Revives Caremark Claim, Provides Guidance On Directors’ 48 Oversight Duties (Cleary M&A and Corporate Governance Watch) ............................................. Cleary M&A and Corporate -
Too Big to Fail… Or Save
Too Big to Fail… Or Save B Y PAUL ATKINS A review of uation on a mid-September Sunday when Lehman Brothers Too Big to Fail: The Inside Story of was sinking before its management’s—and the govern- How Wall Street and Washington Fought to Save the ment’s—eyes. He tells how Henry Paulson, then U.S. Financial System—And Themselves, Secretary of the Treasury, vomited after one excruciating by Andrew Ross Sorkin, Viking, 2009, and meeting. He even recounts what John Mack, chairman of Morgan Stanley, told his wife just before they went to bed Too Big to Save? How to Fix the one night. Meanwhile, the reader must somehow hope to U.S. Financial System, by Robert Pozen, discern, from among all of the beguilingly precise details Wiley, 2009. and quotations, truth from embellishment in Sorkin is a newspaper the storytelling. uring the past eighteen months, dozens of In focusing on reporter and has authors have produced books about the details and actions of written a book in the 2007–09 financial crisis. Two of these specific people, Sorkin books illustrate well the broad choices a implicitly subscribes to same vein: he does reader has: You can spend your time being the “Great Man” theory not consider the Dentertained, picking up some color about the people play- of history—studying ing important roles and how they influenced events, or history by examining institutional and you can learn something about the underlying causes and the particular personali- effects in an interesting, approachable way. ties involved. It is structural pressures.