David Zaring

Modernizing the Bank Charter

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In my new article, Modernizing the Bank Charter, I take a look at the actual practice of regulators when deciding whether to license a bank – or a fintech – and thereby afford them both the burdens and the benefits of supervision by the Office of the Comptroller of the Currency.  I argue that the practice of those who grant charters has been to make sure a bank makes business sense and that the chartering process has been ultra-cautious – even if it does not allow for adequate review and is sometimes too opaque. This caution, however, suggests that … Read more

Ethical Bankers

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The capstone of regulatory reform in the wake of the financial crisis can be characterized as an effort to change the financial industry by getting bankers to behave more ethically. Regulators have emphasized the importance of “culture” set by a “tone at the top” that makes “ethical conduct” a primary organizational value—though they have not given much content to any of these terms.

Janet Yellen, chair of the Federal Reserve Board, has said: “[W]e expect the firms we oversee to follow the law and to operate in an ethical manner. Too often in recent years, bankers at large institutions have … Read more

Financial Reform’s Internationalism

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Financial reform has driven many changes in American governance, but the most dramatic one may prove to be the government’s cautious, but wide-ranging, embrace of a revised global regime to regulate international finance. That reform has moved the equilibrium of the separation of powers in foreign affairs towards Congress and uses the informal way that financial regulatory standards spread across the globe to do the work that customary international law used to do.

Both of these developments derive from the way that international financial cooperation has evolved.  The agencies charged with implementing Dodd-Frank have embraced “soft law” in their international … Read more

Law and Custom as Constraints on the FOMC

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The Federal Open Market Committee, which controls the supply of money in the United States, may be the country’s most important agency. The chair of the committee is often dubbed the second most powerful person in Washington, only deferring to the President himself. Financial scholars and analysts obsess over the institution, leading to a rich tradition of FOMC Kremlinology, veneration, and second-guessing in business schools and economics departments.

But legal scholars have been less entranced by the committee, put off, perhaps, by the fact that the institution has never been checked by the courts or the Administrative Procedure Act. As … Read more

Against Being Against the Revolving Door

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I have argued, in an article in the Illinois Law Review, and in an op-ed for the New York Times/DealBook, that the perils of the revolving door, whereby lawyers move in and out of government service whilst many wring their hands about it, are overstated.   In this post, I want to defend that argument mostly with reference to the employment outcomes of a set of elite prosecutors, most of whom went through the revolving door, but who have not exhibited the signs of corruption we might expect.

I’m not surprised by the result.  Most government officials have plenty of reasons … Read more

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