AALS Section on
Financial Institutions and Consumer Financial Protection
Objectives, Institutional Forms, and Accountability in the Post-Crisis
Friday, January 7,
2011 AALS Annual
Section on Financial Institutions and Consumer Financial Services will hold a panel
presentation of selected papers during the AALS 2011 Annual Meeting in San
years into the deepest financial crisis in decades, debates rage on about the
core objectives of regulating finance, the relative importance of competing
objectives and the relative competences of competing local, national and global
regulators.This program will
assess the recent reform efforts in context, to shed light on the choices
inherent in determining who gets to regulate whom, how, and for whose
sake.What, if any, tradeoffs must
be made between systemic stability and growth?… safety and soundness and consumer protection?… risk management and innovation?… home country, host country, and
regulatory effectiveness and accountability?
policy makers, academics and market participants have staked out positions on
the merits; yet others contend that reform has been mired in false
choices.The program will address
the competing claims; explore the relationships among regulation, finance, and
its economic, political and social context; and try to shift the terms of
theoretical and policy debates to chart the path ahead.Of particular interest are papers that:
·Engage with economic and political
thought on urgent policy problems,such as macroprudential and countercyclical regulation;
·Address the challenges of
compliance, regulatory arbitrage, and regulatory capture;
·Contribute to the debate about the
institutional structure of regulation and the competing bases for allocation of
regulatory authority; and
·Explore insights for
financial regulation from other law disciplines, including bankruptcy,
international law, and administrative law, as well as institutional and
behavioral fields outside the law.
Call for Papers:
teachers and other scholars are invited to submit a manuscript or précis on any
aspect of the foregoing topic.Junior faculty members are particularly encouraged to submit.A review committee consisting of
Section officers will select one or more papers or proposals and will invite
the author(s) of each selected submission to make a presentation at the program
panel.A précis should be
comprehensive enough to allow the review committee to evaluate the likely
content and quality of the proposed paper; however, complete drafts will
receive preference in the selection process.Please send submissions to the Program Chair--Anna Gelpern,
American University Washington College of Law, firstname.lastname@example.org later than August 1, 2010.
Please forward this Call for Papers to anyone who might be interested.
members of AALS member and fee-paid law schools are eligible to submit papers
for this panel presentation. Foreign, visiting and adjunct faculty
members, graduate students, and fellows are not eligible to submit for this
panel presentation; however, any such submissions may be considered for other
parts of the Section program at the Annual Meeting.
Registration Fee and Expenses:
Paper participants will be responsible for paying their annual meeting
registration fee and travel expenses.
How will papers be reviewed?
will be selected after review by members of the Executive Committee of the
Dan has previously posted on the University of North Texas and its plans to open a law school in the Dallas area (see here and here). This recent news story indicates that the opening will be postponed for a year.
Congrats (?) to Seattle resident Molly Ringle, named earlier this week as the 2010 grand prize winner in the annual Bulwer-Lytton Fiction Contest.
For the first month of Ricardo and Felicity's affair, they greeted one
another at every stolen rendezvous with a kiss — a lengthy, ravenous
kiss, Ricardo lapping and sucking at Felicity's mouth as if she were a
giant cage-mounted water bottle and he were the world's thirstiest
Georgetown Law Center has announced the appointment of William Treanor as its new dean. Treanor joined the Fordham faculty in 1991 and became dean in 2002. In addition to being a highly successful academic administrator, he is a notable legal historian. Treanor is a double Yale grad and recently completed his Ph.D in history from Harvard. In 1998, he took a leave from Fordham and served as Deputy Attorney General in the Office of Legal Counsel during the last years of the Clinton administration. He's also a really nice guy.
As I noted over at Leiter's Law School Reports, this news is a double edged sword for Fordham. It's losing a very successful dean. But the fact that Georgetown chose to tap a Fordham professor suggests what many of us already believe: that Fordham is among the law school elite.
Greece joined the eurozone in 2001. But why should the market
have cared that Greece entered the eurozone when its finances did not improve?
The answer is probably that the market believed that either
eurozone countries would discipline Greece’s financial excesses or bail out
Greece if they failed. If so, the irony is palpable. Greece (like most other
eurozone countries) did not comply with a treaty provision requiring financial
discipline but was allowed into the eurozone anyway. Investors must have
reasoned that if the treaty provision governing financial discipline could be
ignored, then the treaty provision banning bail-outs could be ignored as well.
And they were right. But if the treaty could be ignored, then why would
entering a treaty make a difference to Greece’s creditworthiness in the first
place? . . .
[goes on to discuss ECB policies that enabled wealth
transfers disguised as cheap credit and enabled by implicit government
The rest is history. The parallel between the Greek debt
crisis and the subprime crisis is striking. Trashy debt is alchemised to gold
through manipulations driven by a political agenda. In the case of subprime
debt, this took the form of collateralised debt obligations consisting of
government-supported mortgage-backed securities. In the case of Greek bonds, it
was European Monetary Union. Subprime debt, long believed to be risky,
magically becomes almost as safe as Treasury bonds. Greece, which has spent half
its existence as an independent nation in default, magically becomes almost as
creditworthy as Germany. In both cases, investors expected to be bailed out,
and were. In both cases, politically motivated wealth transfers were disguised
as cheap credit. In both cases, taxpayers who resisted cash transfers to
low-income groups found out later that they had to pay for what they did not
want because the alternative was financial Armageddon.
Read the whole thing here.We’ve had numerous posts on the Euro
crisis and on Greece, in particular, here at the Lounge.You can access them here.
Yesterday I wrote about viewing the Supreme Court's landmark decision of McDonald v. City of Chicago as a voting paradox. I promised nifty charts and diagrams in a follow-up post, and I'll partially deliver today.
One way that I think is easy to see the paradox at work here is to look at the opinions in chart form. Below is a convention that I first discovered in an article by Michael Meyerson, The Irrational Supreme Court. I think this convention is a very easy way to see what's going on in a case's varying opinions. The chart has a row for each opinion in the case with a parenthetical indicating the number of Justices who agree. (I exclude Justice Scalia's separate concurring opinion because he fully joined Justice Alito's plurality.)
Opinion author and number of Justices joining
Does the Due Process Clause incorporate?
Does the Privileges or Immunities Clause incorporate?
Is the Second Amendment incorporated?
The bottom line shows the tally for each issue and highlights the paradox. The paradox arises because no individual Justice would vote according to the bottom line, as answering the first two questions “no” (concluding that the Second Amendment is incorporated neither through the Due Process Clause nor the Privileges or Immunities Clause), would lead to answering the third question “no” as well (concluding that the Second Amendment is not incorporated). However, the Court as a collective entity can and did answer the first two questions “no” but the third, outcome-determinative question “yes.”
I'll continue tomorrow with more about voting paradoxes generally and some of the theory behind them.
Thanks Dan for letting me join this great community to share some thoughts with you. Today, like many constitutional law professors, I'm thinking about the Second Amendment. But my thoughts are probably a little different than most others.
Certain to be missed in the coverage of today’s decision inMcDonald v. Chicago, the Supreme Court decision that incorporates the Second Amendment against state and local governments, is the fact that the City of Chicago actually won both of its arguments . . . yet, it lost its case.
How is this possible? Chicago has a phenomenon called the voting paradox to thank, in particular a very specific instance of it that I have written about before called the precedent-based voting paradox.
To understand the paradox, think of the two arguments Chicago made to the Supreme Court. First, Chicago argued that the Second Amendment is not incorporated via the Fourteenth Amendment’s Due Process Clause. Five of the nine Supreme Court Justices agreed with Chicago on this point -- Justice Stevens in his lone dissent; Justices Breyer, Ginsburg, and Sotomayor in Justice Breyer’s dissent; and Justice Thomas in his concurrence in the result. To be fair, Justice Thomas had a different reason for agreeing with Chicago than the others, but he ultimately agreed that the Due Process Clause does not incorporate the Second Amendment.
Second, Chicago argued that the Second Amendment is not incorporated via the Fourteenth Amendment’s Privileges or Immunities Clause. This argument was based on the 1873 Slaughter-House Cases, which seriously restricted the meaning of that clause. Although that decision has been criticized from all quarters, the Court has stuck to it, including eight Justices today. Those Justices relied on the Slaughter-House Cases, as well as the 1876 case ofUnited States v. Cruikshank, which specifically said that the Second Amendment was not incorporated pursuant to the Privileges or Immunities Clause. The four Justices in the plurality stated that they “decline[d] to disturb” Slaughter-House, and the four dissenters followed the case as well. Only Justice Thomas argued for overturning Slaughter-House, saying that he “reject[s]” the case. He had more damning words for Cruikshank, saying that it “is not a precedent entitled to any respect.”
Thus, Chicago won 5-4 on its Due Process Clause argument and won 8-1 on its Privileges or Immunities Clause argument. Yet all the headlines are about a victory for gun rights.
A full explanation of how this happens is beyond the scope of this short post, but the short answer comes from the field of social choice. Social choice studies the difficulty of aggregating individual preferences. Because the Supreme Court is made up of individual Justices with individual preferences but has to reach an aggregated result, sometimes paradoxes occur in which the results on the individual issues do not correspond to the result on the outcome. This can occur when the Court, without a majority opinion, reaches two (or more) issues that are sufficiently unrelated and when no one issue garners a majority result consistent with the outcome of the case.
I'll have more to say about McDonald and the voting paradox
tomorrow, including some nifty charts and diagrams. But for now, what McDonald illustrates is the power of this paradox. Chicago wins its arguments, but it loses its case.
Imagine being the lawyer for Chicago trying to explain this to your client . . . .
The Jérôme Kerviel three-week trial ended in Paris on
Friday, and that means that this post is my last in this series.Kerviel will have to wait until October
5, when the Court
has said that it will announce its decision, to find out whether he’ll
spend the next four years in jail and be ordered to repay the EUR 4.9 billion
he lost through unauthorized trading.
The highlight of the trial occurred when the final witness,
Daniel Bouton (former chairman and chief executive of Société Générale) took
It is not the business of a bank to risk its very existence .
. . I cannot believe for one second any of Jérôme Kerviel’s supervisors were
aware. I’m sorry, my dear fellow.
Yeah, tell that to Bear Stearns or Lehman Brothers or any of
the other financial institutions that either collapsed or were bailed out.The notion that Société Générale and
other firms damaged by large rogue trading losses may have turned a blind eye
to unauthorized trading meets with much less resistance today, post-crisis,
than it did when I first raised it in 2000.Yet I continue to be puzzled by people
who take as a given the need for plausible deniability in governments, armies,
business organizations – indeed, almost any organized group imaginable . . .
except financial institutions. (This strange tendency recently came up in an exchange with
the Fourteenth Banker, in
to a guest post at theParetoCommons).This blind spot is particularly ironic, given the extent to which Basel’s
capital requirements create additional incentives for firms bent on the
pursuit of trading profits to turn a blind eye to “unauthorized” trading.
Now, I don’t mean to suggest that Soc Gen consciously
allowed Kerviel to nearly bankrupt the firm (and destabilize the very markets
in which the bank operates), any more than Barings did.I suspect that they didn’t.But these things tend to spiral out of
control once they get started – the trader has incentives to double down,
rather than admit defeat, and supervisors, risk managers, and other compliance
personnel accustomed to ignoring things that don’t look right have a tendency
to . . . well, continue to ignore things that don’t look right, until funding
problems make discovery inevitable.
Jérôme Kerviel is not the “pawn for profit” that his lawyers
contend, nor should he escape blame.He lost nearly EUR 5 billion at Société Générale and concealed those
losses through a series of fake trades, lies, and forged documents.But Soc Gen, rather than being the
victim of fraud, as it has claimed in court, is actually complicit in that
At the start of the trial, Newsweek
remarked “as Jérôme Kerviel goes on trial, the $5.9 billion he allegedly
cost his bank in 2008 seems oddly insignificant.”And they are right.That France's second-biggest bank faced
potential bankruptcy in January 2008 because of a single trader’s €50bn ($61bn)
of unhedged positions, the unwinding of which impacted markets around the world,
seems now to barely register outside of France (where Kerviel continues to
command a cult-like Robin Hood status).
Before Fannie and Freddie and Bear Stearns and Lehman and
Madoff and the $700 billion bailout, this seemed like real money. But now, much
like Kerviel, who told
investigators, “I was in a virtual world. The amounts didn’t make sense
anymore. I was caught in a spiral,” and Nick Leeson, who once said, “You
distance yourself somehow from the quantity of it. . . It tends to be numbers
that come up on the screen—it does not have the real factor such as the money
you have in your pocket,” the Kerviel incident seems small and unimportant, and
risk-taking institutions that shift the blame (and costs) of failure onto
others seem commonplace.
I’m going to remember that as I slog through the 2000-page
costly farce also known as the Dodd-Frank bill (about which I will have much
A few days ago the White House announced the appointment of 13 incredibly talented men and women as White House Fellows. You'll find brief bios on these outstanding individuals here, and additional information on the Program here.
I'm wondering if any law profs out there had the privilege of serving as White House Fellows. Any names?
I guess I'm going to lose a big chunk of my work week watching the Kagan hearings. Probably you are, too.
So why not start the week with University of New Mexico Dean Kevin Washburn's article on Kagan (available at ssrn), "Elena Kagan and the Miracle at Harvard." Here is Washburn's abstract:
For most of the past fifty years, attending Harvard Law School was a miserable experience. Though students were happy to obtain a Harvard degree, they regretted the great personal cost of earning it. Harvard Law School was widely viewed as irreparable because the obstacles to changing the culture of the hide-bound, ivy-covered walls of an elite law school seemed too great. Student anomie at Harvard appeared to be structural, an inevitable by-product of admitting more than 550 law students each year and pitting them in a three-year competition for grades, elite law review membership, and, ultimately, jobs in fancy law firms. While a handful of students reaped vast rewards, others were scarred for life. A person looking for a challenge could scarcely have found a greater one in the Harvard deanship. During Elena Kagan’s tenure as dean, a miracle occurred. Harvard Law School was transformed. Today, students embrace the institution. The professors engage with one another. And the school’s widely discussed dysfunctions are distant memories. Kagan accomplished this miracle by modeling two important and traditional American values: hard work and community. Kagan was known for walking the halls tirelessly to learn the views of her bright and independent colleagues and to seek consensus. She broke the gridlock between faculty political factions that had atrophied the academic life of the institution. Even more importantly. she transformed the student experience. This essay seeks to describe Kagan’s transformational leadership and provide insight as to the specific changes Kagan made to accomplish the miracle.
The New York Times reports that Marty Ginsburg, tax professor at Georgetown and husband of Ruth Bader Ginsburg, passed away earlier today, at age 78. More information here.
This is a great loss for not only Justice Ginsburg and her family, but the law professor community at large. I met Marty Ginsburg in 2008 when he and the Justice visited Willamette; he was a kind, brilliant, self-deprecating man with a wicked sense of humor. He will be missed.
For a good write-up of Marty Ginsburg and his many quirks and charms, see David Lat's post on Above the Law.
Say hey! Willie Mays here. I was quite a phenomenal batter during my career, amassing over 3,200 hits, walloping 660 homers, driving in over 1,900 runs, and finishing with a career batting average above .300.
You might be surprised, then, to learn that I started my professional career by going 0-12 at the plate before collecting my first hit: a home run. During my career, I would hit an additional 17 home runs off this same pitcher (the most I hit off of any hurler).
Can you identify this hall-of-fame southpaw?
Pictured: Willie Mays, card #90 in the 1954 Topps set. Said Joe DiMaggio, "There has never been a perfect ball player. Willie Mays came closest to perfection."