The American Association of Law Schools section on financial regulation is seeking paper proposals for the January meeting on all topics of financial regulation and regulatory reform. The deadline for proposal submissions is August 1, fast approaching; I have posted details below the fold, and you can also contact my colleague Anna Gelpern with any […]
Archive | Finance
David Zaring Offers a Comment on ‘Regulation by Deal’
In my earlier post from last night on the Dodd-Frank financial reform bill, I asked whether the highly discretionary provisions in the legislation addressing aspects of systemic risk have the effect of “returning” us to the 2008 crisis policy of “regulation by deal.” That term comes from a paper by Steven M. Davidoff and David […]
A Return to ‘Regulation by Deal’?
(Update: Thanks, Glenn, for the Instalanche! If readers want a further discussion of this, including a short response from one of the co-authors of the “Regulation by Deal” paper, David Zaring, go here. One reason to look at that further comment is that it gives an approximate definition of “regulation by deal” from the paper.) […]
Jack Goldsmith on Cyber War
This week’s The New Republic features a cover story by Harvard Law School’s Jack Goldsmith on cyberwar. (June 24, 2010.) It’s a long, serious review essay, using Richard A. Clarke and Robert K. Knake’s new book, Cyber War, as the hook. But Jack goes well beyond a book review into the rapidly expanding literature on […]
More Musing on Liquidity and Solvency Distinctions in Sovereign Debt Crises
I want to return again briefly to how the traditional distinction of liquidity and insolvency in a crisis applies to sovereign states such as Greece. Liquidity is usually thought of as a gap in information that causes investors, creditors, depositors or others to suddenly question an institution’s financial position. In the classic bank run, the […]
The EU SPV
Anna Gelpern’s post on the Roubini blog (that I posted on earlier) had an interesting point I wanted to follow up. She remarks in passing, “apropos commitment, isn’t it interesting that the European Commission will issue collateralized debt (secured by its €141bn budget)?” Indeed, and even more interesting that the bulk of the bailout fund […]
Anna Gelpern on Greek Sovereign Debt
My colleague and a rising star in sovereign debt studies, Anna Gelpern, has a new and important post at the Roubini blog, on the question of where Greece goes with the new announcement of a trillion-dollar fund. The opening: Leading economists and editorialists say Greece will restructure its debt (here, here, here, here and here are just a […]
Contingent Convertible Debt
Many commentators have raised the idea of requiring banks and financial institutions to issue contingent convertible debt that can be converted to equity as a sort of pre-set form of re-capitalization in case of trouble. Greg Mankiw has said that it is his favorite idea in financial regulation reform. He has pointed to reports that […]
Derivatives Clearinghouses and Exchanges
Update: The Lincoln version of the derivatives legislation clears the Senate Agriculture Committee today (which raises another set of issues, different from the ones under discussion below): Democrats won the support of a senior Republican who voted in a Senate committee Wednesday for a sweeping overhaul of the market for derivatives, the complex financial instruments […]
The Goldman Fraud Suit
I’m sure many VC readers have been looking at the papers today, trying to sort out facts versus allegations, in the SEC suit against Goldman Sachs for fraud involving CDOs. The Wall Street Journal, New York Times, Washington Post, and Financial Times all have good stories, to take the papers from my front lawn. One […]
Greenspan’s ‘The Crisis’ and Modigliani and Miller
I just finished reading Alan Greenspan’s paper for the spring Brookings economics confab, The Crisis, and then a bunch of reactions around the econo-blogosphere. The paper is well worth reading – it’s time to get beyond the blame game and the mea culpas and mea non-culpas, in order to get to longer term regulatory reform. […]
Two Views of Credit Default Swaps
Two items in today’s Wall Street Journal (Tuesday, March 9, 2010) capture two different views of regulatory reform of credit default swaps. The first is the emerging European view: European leaders pushed for a ban on speculative bets against government debt following recent financial turmoil in Greece … German Chancellor Angela Merkel said Tuesday that […]
Euro-Sense and Sensibility in the Greek Debt Crisis
Not everyone is quite so fascinated as I with CDS spreads on Greek sovereign debt. However, the issues raised by the Greek debt difficulties and the urgent discussions in the Eurozone over a possible bailout, attendant moral hazard, and the like are far more than merely fiscal or monetary questions. Rather, this crisis is one […]
CDSs, Greek Bonds, and Insurable Interests?
The former General Counsel of Long Term Capital Management – it of the late 1990s near global financial meltdown – James Rickards, had a comment in the Financial Times a few days ago (Feb 11, 2010) on the credit default swap market and Greek sovereign debt. Key section: Greece’s travails are often measured by reference […]
Did Political Ignorance Help Cause the Financial Crisis?
Political scientist Jeffrey Friedman has an excellent article arguing that political ignorance by both regulators and voters played a key role in causing the financial crisis: You are familiar by now with the role of the Federal Reserve in stimulating the housing boom; the role of Fannie Mae and Freddie Mac in encouraging low-equity mortgages; […]