Columbia Law School
Sky Blog
Bankruptcy and Restructuring
The Nonprime Mortgage Crisis: Willful Blindness and Positive Feedback Lending
The Wall Street Journal recently reported that federal prosecutors are pursuing criminal cases against bank executives for allegedly selling flawed mortgage securities. The crux of the cases? That the bankers ignored warnings they were packaging too many shaky mortgages into …
Millstein Governance Forum on December 10, 2015 at CLS
On December 10th, Columbia Law School’s Millstein Center on Global Markets and Corporate Ownership will be hosting its 10th annual Millstein Governance Forum.
For the past decade, the Forum has served as one of the premiere …
Taxes and Ability to Pay in Municipal Bankruptcy
After languishing relatively disused for nearly eighty years, municipal bankruptcy is part of the new normal. The eyes of the nation were riveted on Detroit, and smaller filings across the country have proliferated in recent years. As Warren Buffett has …
PwC highlights Ten Key Points from the Fed’s TLAC Proposal
The Fed proposed its long-awaited Total Loss-Absorbing Capacity (TLAC) requirements on October 30th. As expected, the Fed’s proposal came out tougher than the Financial Stability Board’s (FSB) TLAC standard proposed last year,[1] including limitations on capital distributions and bonus …
The Financial Industry’s Bankruptcy Plan for Resolving Failed Megabanks Would Give Unwarranted Benefits to Their Executives and Wall Street Creditors
What Kept Pre-Modern Credit Networks Afloat?
Despite having become a cliché, the past is not always a foreign country. When Craig Muldrew wrote in his book, Economy of Obligation, “Increasing consumption and investment in the expansion of production meant that household debt loads grew to …
Was Bernanke Courageous?
As reflected in the title of the new memoir by Former Federal Reserve Chairman Ben Bernanke, The Courage to Act: A Memoir of a Crisis and Its Aftermath, Bernanke clearly believes that he and other Fed policymakers demonstrated exceptional …
Considering the Transformation of the OTC Derivatives Market, 1984-2015
In my recent paper, “Private and Public Controls in the Over-the-Counter Derivatives Market, 1984-2015”, I study how private and public controls operated jointly in OTC derivatives over the period. A main conclusion is that private incentives especially shaped …
The Swaps Pushout Rule: Much Ado About the Wrong Thing?
A provision of the Dodd-Frank Act popularly known as the “swaps pushout rule” prohibited FDIC-insured banks from entering into certain types of swaps contracts. Congress recently reversed this provision, so that banks can continue trading in these swaps. The reversal …
Failure of the Clearinghouse: Dodd-Frank’s Fatal Flaw?
Bankruptcy in Groups
Group bankruptcies tend to be large (e.g., Global Crossing, Maxwell, MG Rover, Parmalat) and affect a significant number of stakeholders. Business groups constitute a common way for ultimate owners to exercise control over a large number of companies while containing …
Remarks by OFR Director Richard Berner at the Third Annual Workshop on Financial Interconnectedness
Thank you to the organizers and BIS for the opportunity to address this research conference on “Global Financial Interconnectedness.” The OFR was established to identify, monitor, and assess threats to financial stability, so improving our collective understanding of the interconnectedness …
Collateral Damage: Adopting the LSOC Model and Insurance in the US Futures Markets
It is confounding that futures customers currently receive a lower level of protection than cleared swaps customers under US law. This legal phenomenon has occurred because the law in the US derivatives markets developed in a piecemeal fashion over several …
Renegotiation and the Choice of Covenants in Debt Contracts
Incomplete contracting theories build on the idea that it is either not feasible or too costly for contracting parties such as borrowers and lenders to write contracts that perfectly anticipate all future scenarios. As a result, transacting parties are left …
Could Solvency II Threaten the Financial Stability of European Insurance?
The European insurance sector has approximately 6.8 trillion euros of assets under management. It is the largest European institutional investor, a fundamental element of financial stability and provides support for the global economy. Additionally, the European insurance sector is a …
Wachtell Lipton discusses Treasury Department Seeking to Curb “Cash-Rich” and REIT Spin-Offs
The Treasury Department and the Internal Revenue Service have announced (in Notice 2015-59) that they are studying issues related to the qualification of certain corporate distributions as tax-free under Section 355 of the Internal Revenue Code in situations involving …
The Financial Industry’s Plan for Resolving Failed Megabanks Will Ensure Future Bailouts for Wall Street
The high-risk business model of large financial conglomerates (frequently called “universal banks”) was an important cause of the financial crisis. Universal banks rely on cheap funding from deposits and shadow banking liabilities to finance their speculative activities in the capital …
The Detroit Bankruptcy Blueprint
What unites Atlantic City, the Chicago Public School System, and Puerto Rico’s electric company? They are financially distressed government entities facing various legal and political barriers to using the United States bankruptcy system. Negotiations over those barriers are, in part, …
PwC discusses Resolution: Single point of entry strategy ascends
The release last week of public summaries of the resolution plans submitted by the 12 largest financial institutions operating in the US reveal more insight into the institutions’ resolution strategies than ever before, including the strategy for each of their …