Financial Regulatory Suspensions and Debt Provision during the Covid-19 crisis

Policymakers and regulators have launched financial relief and rescue programs to promote economic recovery and alleviate household suffering during the COVID-19 pandemic. In doing so, prudential regulation for banks has been adjusted and it remains uncertain if such suspensions are temporary or entail longer-term effects. In our paper ‘Debt Expansion as “Relief and Rescue” at the Time of […]

Rising concerns about policy uncertainty

Both the Federal Open Market Committee and the International Monetary Fund have blamed uncertainty about fiscal, regulatory, and monetary policy decisions as a major contributor to the 2008-09 global financial crisis and the slow recoveries afterwards. Recently, due to trade tensions and the pandemic, concerns about policy uncertainty have intensified. As a result, the ability to operate amidst an uncertain economic policy environment is becoming indispensable for any modern […]

Recent Risk Alert Highlights Need for SEC Action Regarding Potential Greenwashing by Financial Firms

On April 9th, the SEC’s Division of Examinations issued a “Risk Alert” regarding three types of financial firms – investment advisers, registered investment companies, and private funds – that offer Environmental, Social & Governance (“ESG”) products and services. The Examinations Division is prioritizing review of ESG practices in response to the rapidly growing demand by […]

Europe’s Regulatory Playbook for ESG Rating Providers

As individual and institutional investors move toward investing according to environmental, social, and governance (“ESG”) criteria, ESG ratings – scores given to companies or financial instruments on the basis of meeting these criteria – are becoming critically important in guiding investment portfolios.  While substantial work has been put into designing clear ESG standards that would […]

SEC Effort to Regulate State Sponsors of Terrorism (SST) Disclosure

The SEC Division of Corporation Finance (DCF) reviews financial filings of publicly traded corporations to ensure compliance with accounting standards and disclosure requirements.  If the SEC has any questions after reviewing the financial reports, the SEC will send a comment letter asking about perceived deficiencies.  Firm responses to SEC inquiries vary from simply answering questions posed via a response letter to amending their financial reports.  […]

Unsecured to the Satisfaction

When engaging in 13(3) lending, the Federal Reserve must be “secured to [its] satisfaction,” which it has generally (and reasonably) taken to mean that its ex ante expectation should be that it will be fully repaid.i However, the Fed also interprets the legislative history of 13(3) as suggesting that this standard cannot be met with an entirely unsecured loan—a loan in which the Fed takes no collateral, third-party guarantee, or […]

A comparative comment on the banking bailout literature

In the past decade, the literature on banking, financial law and regulation, the most recent financial crisis, financial stability, and bank insolvency has grown substantially. However, there is still a strong need for additional legal analysis of these topics for several reasons.1 First, much of the scholarly work pertains to the area of finance and economics and does not directly address legal considerations. Second, given the overwhelming […]

Financial Lawmaking and the Incoherence of Antinovelty Doctrine

Courts do not look kindly on innovative financial regulatory institutions. In 2010, the Supreme Court struck down a provision providing dual-level for-cause removal protection for members of the Public Company Accounting Oversight Board (PCAOB), reasoning that the measure’s “lack of historical precedent” was “[p]erhaps the most telling indication of [its] severe constitutional problem.” Ten years later, the Court wrote nearly […]

Sunsetting as an Adaptive Strategy

The enactment of financial legislation in the wake of a financial crisis exhibits a number of shortcomings. First, information is scarce regarding causes of the crisis, let alone what would be an appropriate response. Despite that difficulty, legislators feel compelled to legislate given media and public demands for governmental action. This suggests that it will […]

Financial Regulators Should Not Fear Enforcing the Law

Decrying “regulation by enforcement” is in vogue these days, especially in the financial sector. The phrase has popped up in discussions about consumer finance protection (“regulation by enforcement certainly is pushing the envelope”), investment adviser disclosures (“regulating without rules”), securities offerings (“regulation by enforcement is such bad public policy”), and more. Even a U.S. senator […]