T. Arnold, Amanda Dixon, Hadar Tanne, Madison Sherrill, G. Gulati
The black letter law says that money damages are the preferred remedy for contract breach under US law. Specific performance is reserved for extraordinary circumstances. Contract theory tells us that default rules generally reflect what a majority of contracting parties would agree to, had they considered the matter. But do contracting parties agree with the law’s preference for money damages over specific performance? In a data set of more than 1000 M&A contracts, we find that in over 80% of transactions, parties choose specific performance as their preferred remedy. Using interviews with senior M&A lawyers we seek to unpack the reasons why parties are contracting around the law’s distaste for specific performance and default rule of money damages.
{"title":"'Lipstick on a Pig': Specific Performance Clauses in Action","authors":"T. Arnold, Amanda Dixon, Hadar Tanne, Madison Sherrill, G. Gulati","doi":"10.2139/ssrn.3696103","DOIUrl":"https://doi.org/10.2139/ssrn.3696103","url":null,"abstract":"The black letter law says that money damages are the preferred remedy for contract breach under US law. Specific performance is reserved for extraordinary circumstances. Contract theory tells us that default rules generally reflect what a majority of contracting parties would agree to, had they considered the matter. But do contracting parties agree with the law’s preference for money damages over specific performance? In a data set of more than 1000 M&A contracts, we find that in over 80% of transactions, parties choose specific performance as their preferred remedy. Using interviews with senior M&A lawyers we seek to unpack the reasons why parties are contracting around the law’s distaste for specific performance and default rule of money damages.","PeriodicalId":275936,"journal":{"name":"Duke Law School Public Law & Legal Theory Research Paper Series","volume":"76 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-11-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123042598","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-03-07DOI: 10.1017/9781108694469.002
Michael D. Frakes, Melissa Wasserman
One objective of the patent litigation system is to screen meritorious from non-meritorious patents and invalidate the latter. While much of this screening may occur at trial, some amount of targeting may take place at the time of the filing of the suit itself. In this chapter, we assess the targeting efficiency of the patent litigation system at this earlier filing stage. Should the system indeed screen at this stage, one would predict a higher likelihood of patent lawsuits among a set of patents with weaker underlying validity relative to a set of patents with stronger underlying validity. In prior work, we found that as examiners were given less time to review applications, they granted patents at higher rates, with the resulting marginal patents exhibiting greater markers of invalidity and attracting more litigation. An implication of these findings is that patents with more questionable validity — due to the leniency of the examiner — are indeed more likely to wind up in litigation, a finding supportive of filing-stage screening of meritorious claims. Our analysis in this book chapter attempts to generalize these prior findings to sources of examiner leniency beyond time constraints. More broadly, we characterize an examiner’s leniency by their overall grant rate, taking advantage of the fact that applications are effectively randomized across examiners. Consistent with our prior findings, we find that lenient examiners are more likely, on average, to issue patents with markers suggestive of weaker underlying validity and that are more likely to attract litigation. Ultimately, our findings suggest that legally invalid patents issued by the U.S. Patent Office are substantially more likely to be the target of litigation relative to legally valid patents.
{"title":"Do Patent Lawsuits Target Invalid Patents","authors":"Michael D. Frakes, Melissa Wasserman","doi":"10.1017/9781108694469.002","DOIUrl":"https://doi.org/10.1017/9781108694469.002","url":null,"abstract":"One objective of the patent litigation system is to screen meritorious from non-meritorious patents and invalidate the latter. While much of this screening may occur at trial, some amount of targeting may take place at the time of the filing of the suit itself. In this chapter, we assess the targeting efficiency of the patent litigation system at this earlier filing stage. Should the system indeed screen at this stage, one would predict a higher likelihood of patent lawsuits among a set of patents with weaker underlying validity relative to a set of patents with stronger underlying validity. In prior work, we found that as examiners were given less time to review applications, they granted patents at higher rates, with the resulting marginal patents exhibiting greater markers of invalidity and attracting more litigation. An implication of these findings is that patents with more questionable validity — due to the leniency of the examiner — are indeed more likely to wind up in litigation, a finding supportive of filing-stage screening of meritorious claims. \u0000Our analysis in this book chapter attempts to generalize these prior findings to sources of examiner leniency beyond time constraints. More broadly, we characterize an examiner’s leniency by their overall grant rate, taking advantage of the fact that applications are effectively randomized across examiners. Consistent with our prior findings, we find that lenient examiners are more likely, on average, to issue patents with markers suggestive of weaker underlying validity and that are more likely to attract litigation. Ultimately, our findings suggest that legally invalid patents issued by the U.S. Patent Office are substantially more likely to be the target of litigation relative to legally valid patents.","PeriodicalId":275936,"journal":{"name":"Duke Law School Public Law & Legal Theory Research Paper Series","volume":"15 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-03-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121300879","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The “social welfare function” (SWF) is a powerful tool that originates in theoretical welfare economics and has wide application in economic scholarship, for example in optimal tax theory and environmental economics. This Article provides a comprehensive introduction to the SWF framework. It then shows how the SWF framework can be used as the basis for regulatory policy analysis, and why it improves upon cost-benefit analysis (CBA). Two types of SWFs are especially plausible: the utilitarian SWF, which sums individual well-being numbers, and the prioritarian SWF, which gives extra weight to the well-being of the worse off. Either one of these is an improvement over CBA, which uses a monetary metric to quantify well-being and is thereby distorted by the declining marginal utility of money. The Article employs a simulation model based on the U.S. population survival curve and income distribution to illustrate, in detail, how the two SWFs differ from CBA in selecting risk-regulation policies.
{"title":"A Better Calculus for Regulators: From Cost-Benefit Analysis to the Social Welfare Function","authors":"M. Adler","doi":"10.2139/ssrn.2923829","DOIUrl":"https://doi.org/10.2139/ssrn.2923829","url":null,"abstract":"The “social welfare function” (SWF) is a powerful tool that originates in theoretical welfare economics and has wide application in economic scholarship, for example in optimal tax theory and environmental economics. This Article provides a comprehensive introduction to the SWF framework. It then shows how the SWF framework can be used as the basis for regulatory policy analysis, and why it improves upon cost-benefit analysis (CBA). \u0000Two types of SWFs are especially plausible: the utilitarian SWF, which sums individual well-being numbers, and the prioritarian SWF, which gives extra weight to the well-being of the worse off. Either one of these is an improvement over CBA, which uses a monetary metric to quantify well-being and is thereby distorted by the declining marginal utility of money. The Article employs a simulation model based on the U.S. population survival curve and income distribution to illustrate, in detail, how the two SWFs differ from CBA in selecting risk-regulation policies.","PeriodicalId":275936,"journal":{"name":"Duke Law School Public Law & Legal Theory Research Paper Series","volume":"196 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-02-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132484231","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article develops an empirical model of firms’ choice of corporate laws under inertia. Delaware dominates the incorporation market, though recently Nevada, a state whose laws are highly protective of managers, has acquired a sizable market share. Using a database of firm incorporation decisions from 1995 to 2013, we show that most firms dislike protectionist laws, such as anti-takeover statutes and liability protections for officers, and that Nevada’s rise is due to the preferences of small firms. Consistent with the bonding hypothesis, our estimates indicate that despite inertia, Delaware would lose significant market share and revenues if it adopted protectionist laws. (JEL G34, G38, K21, K22, L25, L51)
{"title":"Regulatory Competition and the Market for Corporate Law","authors":"O. Eldar, Lorenzo Magnolfi","doi":"10.2139/ssrn.2685969","DOIUrl":"https://doi.org/10.2139/ssrn.2685969","url":null,"abstract":"This article develops an empirical model of firms’ choice of corporate laws under inertia. Delaware dominates the incorporation market, though recently Nevada, a state whose laws are highly protective of managers, has acquired a sizable market share. Using a database of firm incorporation decisions from 1995 to 2013, we show that most firms dislike protectionist laws, such as anti-takeover statutes and liability protections for officers, and that Nevada’s rise is due to the preferences of small firms. Consistent with the bonding hypothesis, our estimates indicate that despite inertia, Delaware would lose significant market share and revenues if it adopted protectionist laws. (JEL G34, G38, K21, K22, L25, L51)","PeriodicalId":275936,"journal":{"name":"Duke Law School Public Law & Legal Theory Research Paper Series","volume":"10 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-12-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125314203","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2016-06-24DOI: 10.4337/9781784715052.00009
Deborah A. DeMott
The thesis of this essay, written as a chapter in a forthcoming book, is that in the mutual fund context, the specifics of fiduciary duty reflect the distinctive qualities of this form of investment in securities. The particular contours that shape fiduciary duty reflect many factors, including the highly prescriptive regulatory context distinctively applicable to mutual funds. To sharpen its depiction of the fiduciary distinctiveness of mutual funds, I draw contrasts with two other avenues through which an investor may delegate investment choice: (1) "private" funds, that is, vehicles for pooled investments that are not subject to the full regulatory regime applicable to mutual (or "public") funds; and (2) non-fund investment relationships through which an investment adviser undertakes to manage an investor's individual securities account. The essay also argues that mutual funds represent a distinctively hybrid form of investment. Interposing the fund between investors and the fund's assets implicates questions of entity governance, however the fund is organized; the fact that regulation requires mutual fund shares to be redeemable causes them to resemble products that may be sold into secondary markets. And the ongoing tri-partite relationship between a mutual fund's manager, its assets, and its investors at least by analogy constitutes an agency relationship, in which managers owe fiduciary duties on an ongoing basis. Contrasts between mutual funds and private funds are timely, in part because the population of investment advisers now registered with the SEC includes many who advise at least one private fund. Newly-available information about private funds' practices calls into question whether they are always consistent with fund managers' duties to investors, as do data concerning practices of hedge fund managers during the financial crisis. Investments in private funds are not (unlike mutual funds) subject to a redeemability requirement. Even when investors in private funds met criteria for investor sophistication, they made investment decisions in an environment of informational opacity, including how fund managers might use the discretion they retained. Crisis-era data suggest that discretion was not always used in a manner consistent with the fiduciary duties that private fund managers owed to investors.
{"title":"Fiduciary Contours: Perspectives on Mutual Funds and Private Funds","authors":"Deborah A. DeMott","doi":"10.4337/9781784715052.00009","DOIUrl":"https://doi.org/10.4337/9781784715052.00009","url":null,"abstract":"The thesis of this essay, written as a chapter in a forthcoming book, is that in the mutual fund context, the specifics of fiduciary duty reflect the distinctive qualities of this form of investment in securities. The particular contours that shape fiduciary duty reflect many factors, including the highly prescriptive regulatory context distinctively applicable to mutual funds. To sharpen its depiction of the fiduciary distinctiveness of mutual funds, I draw contrasts with two other avenues through which an investor may delegate investment choice: (1) \"private\" funds, that is, vehicles for pooled investments that are not subject to the full regulatory regime applicable to mutual (or \"public\") funds; and (2) non-fund investment relationships through which an investment adviser undertakes to manage an investor's individual securities account. The essay also argues that mutual funds represent a distinctively hybrid form of investment. Interposing the fund between investors and the fund's assets implicates questions of entity governance, however the fund is organized; the fact that regulation requires mutual fund shares to be redeemable causes them to resemble products that may be sold into secondary markets. And the ongoing tri-partite relationship between a mutual fund's manager, its assets, and its investors at least by analogy constitutes an agency relationship, in which managers owe fiduciary duties on an ongoing basis. Contrasts between mutual funds and private funds are timely, in part because the population of investment advisers now registered with the SEC includes many who advise at least one private fund. Newly-available information about private funds' practices calls into question whether they are always consistent with fund managers' duties to investors, as do data concerning practices of hedge fund managers during the financial crisis. Investments in private funds are not (unlike mutual funds) subject to a redeemability requirement. Even when investors in private funds met criteria for investor sophistication, they made investment decisions in an environment of informational opacity, including how fund managers might use the discretion they retained. Crisis-era data suggest that discretion was not always used in a manner consistent with the fiduciary duties that private fund managers owed to investors.","PeriodicalId":275936,"journal":{"name":"Duke Law School Public Law & Legal Theory Research Paper Series","volume":"9 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-06-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"117344146","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Non-ad valorem assessments on property are a fiscal innovation born from financial stress. Unable to raise property taxes due to limitations, many localities have turned to these charges as an alternative method to fund local services. In this paper, we seek to explain differential levels of non-ad valorem assessment financing through the analysis of property tax records of a large and diverse set of single family homes in California. We theorize that assessments, as opposed to other forms of taxation, will be used when residents hold anti-redistributive preferences. We show that assessment financing is most common in cities with high median household incomes and greater ethnic diversity. We also show that certain types of assessments, those with narrow geographic range, are frequently levied on expensive homes in poorer communities. We argue that this new form of financing exacerbates economic inequality by creating additional inequities in public service provisions.
{"title":"Neighborhoods by Assessment: An Analysis of Non-Ad Valorem Financing in California","authors":"Mathew D. McCubbins, Ellen C. Seljan","doi":"10.2139/ssrn.2794680","DOIUrl":"https://doi.org/10.2139/ssrn.2794680","url":null,"abstract":"Non-ad valorem assessments on property are a fiscal innovation born from financial stress. Unable to raise property taxes due to limitations, many localities have turned to these charges as an alternative method to fund local services. In this paper, we seek to explain differential levels of non-ad valorem assessment financing through the analysis of property tax records of a large and diverse set of single family homes in California. We theorize that assessments, as opposed to other forms of taxation, will be used when residents hold anti-redistributive preferences. We show that assessment financing is most common in cities with high median household incomes and greater ethnic diversity. We also show that certain types of assessments, those with narrow geographic range, are frequently levied on expensive homes in poorer communities. We argue that this new form of financing exacerbates economic inequality by creating additional inequities in public service provisions.","PeriodicalId":275936,"journal":{"name":"Duke Law School Public Law & Legal Theory Research Paper Series","volume":"72 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-06-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125230464","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Robin C. Feldman, Mark A. Lemley, J. Masur, A. Rai
As scholars who write in intellectual property (“IP”), we write this letter with aspirations of reaching the highest ethical norms possible for our field. In particular, we have noted an influx of large contributions from corporate and private actors who have an economic stake in ongoing policy debates in the field. Some dollars come with strings attached, such as the ability to see or approve academic work prior to publication or limitations on the release of data. IP scholars who are also engaged in practice or advocacy must struggle to keep their academic and advocacy roles separate.Our goal is to bring attention to the dramatic changes that are occurring in the field, highlight the potential pitfalls, and suggest a set of ethical norms to which we will strive to adhere. We conclude this letter with a set of ethical norms to which a large number of IP academics have already subscribed. We welcome additional signatories to the principles expressed in this letter.
{"title":"Open Letter on Ethical Norms in Intellectual Property Scholarship","authors":"Robin C. Feldman, Mark A. Lemley, J. Masur, A. Rai","doi":"10.2139/SSRN.2714416","DOIUrl":"https://doi.org/10.2139/SSRN.2714416","url":null,"abstract":"As scholars who write in intellectual property (“IP”), we write this letter with aspirations of reaching the highest ethical norms possible for our field. In particular, we have noted an influx of large contributions from corporate and private actors who have an economic stake in ongoing policy debates in the field. Some dollars come with strings attached, such as the ability to see or approve academic work prior to publication or limitations on the release of data. IP scholars who are also engaged in practice or advocacy must struggle to keep their academic and advocacy roles separate.Our goal is to bring attention to the dramatic changes that are occurring in the field, highlight the potential pitfalls, and suggest a set of ethical norms to which we will strive to adhere. We conclude this letter with a set of ethical norms to which a large number of IP academics have already subscribed. We welcome additional signatories to the principles expressed in this letter.","PeriodicalId":275936,"journal":{"name":"Duke Law School Public Law & Legal Theory Research Paper Series","volume":"28 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-01-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121645459","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In March 2012, Greece conducted one of the biggest and most brutal sovereign debt restructurings ever, asking holders of Greek government bonds to take net present value haircuts of near 80 percent. Greece forced acquiescence to its terms from a large number of its bonds by using a variety of legal strong-arm tactics. With the vast majority of Greek bonds, the tactics worked. There were, however, thirty-six bonds guaranteed by the Greek state, which, because of the weakness of the underlying companies, were effectively obligations of the Greek state. Yet, on these thirty-six bonds, even though Greece desperately needed every euro of respite it could get, no restructuring was even attempted. Why not? The answer we received was that the guarantees escaped the restructuring because their contractual provisions made them much harder to restructure than the ordinary Greek government bonds. Assuming this contract-based claim to be true, the foregoing, in combination with the Euro area crisis of 2010-2014 throws up an opportunity to test the extent to which markets price legal differences in bond contract terms. We report evidence that the markets did price in at least some of the advantage that guaranteed bonds had over ordinary sovereign bonds in the months immediately prior to the March 2012 restructuring.
{"title":"From Pigs to Hogs","authors":"Stephen Choi, G. Gulati","doi":"10.2139/ssrn.2434272","DOIUrl":"https://doi.org/10.2139/ssrn.2434272","url":null,"abstract":"In March 2012, Greece conducted one of the biggest and most brutal sovereign debt restructurings ever, asking holders of Greek government bonds to take net present value haircuts of near 80 percent. Greece forced acquiescence to its terms from a large number of its bonds by using a variety of legal strong-arm tactics. With the vast majority of Greek bonds, the tactics worked. There were, however, thirty-six bonds guaranteed by the Greek state, which, because of the weakness of the underlying companies, were effectively obligations of the Greek state. Yet, on these thirty-six bonds, even though Greece desperately needed every euro of respite it could get, no restructuring was even attempted. Why not? The answer we received was that the guarantees escaped the restructuring because their contractual provisions made them much harder to restructure than the ordinary Greek government bonds. Assuming this contract-based claim to be true, the foregoing, in combination with the Euro area crisis of 2010-2014 throws up an opportunity to test the extent to which markets price legal differences in bond contract terms. We report evidence that the markets did price in at least some of the advantage that guaranteed bonds had over ordinary sovereign bonds in the months immediately prior to the March 2012 restructuring.","PeriodicalId":275936,"journal":{"name":"Duke Law School Public Law & Legal Theory Research Paper Series","volume":"83 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-01-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114952834","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
As exemplified by the dramatic failure of AIG, insurance companies and their affiliates played a central role in the 2008 global financial crisis. It is therefore not surprising that the Dodd-Frank Act — the United States’ primary legislative response to the crisis — contained an entire title dedicated to insurance regulation, which has traditionally been the responsibility of individual states. The most important insurance-focused reforms in Dodd-Frank empower the Federal Reserve Bank to impose an additional layer of regulatory scrutiny on top of state insurance regulation for a small number of “systemically important” nonbank financial companies, such as AIG. This Article argues, however, that in focusing on the risk that an individual insurance-focused, nonbank financial company could become systemically significant, Dodd-Frank largely overlooked a second, and equally important, potential source of systemic risk in insurance: the prospect that correlations among individual insurance companies could contribute to or cause widespread financial instability. In fact, this Article argues that there are often substantial correlations among individual insurance companies with respect to both their interconnections with the larger financial system and their vulnerabilities to failure. As a result, the insurance industry as a whole can pose systemic risks that regulation should attempt to identify and manage. Traditional state-based insurance regulation, this Article contends, is poorly adapted to accomplishing this given the mismatch between state boundaries and systemic risks, as well as states’ limited oversight of noninsurance financial markets. As such, this Article suggests enhancing the power of the Federal Insurance Office — a federal entity primarily charged with monitoring the insurance industry — into supplement or preempt state law when states have failed to satisfactorily address gaps or deficiencies in insurance regulation that could contribute to systemic risk.
{"title":"Regulating Systemic Risk in Insurance","authors":"","doi":"10.2139/ssrn.2404492","DOIUrl":"https://doi.org/10.2139/ssrn.2404492","url":null,"abstract":"As exemplified by the dramatic failure of AIG, insurance companies and their affiliates played a central role in the 2008 global financial crisis. It is therefore not surprising that the Dodd-Frank Act — the United States’ primary legislative response to the crisis — contained an entire title dedicated to insurance regulation, which has traditionally been the responsibility of individual states. The most important insurance-focused reforms in Dodd-Frank empower the Federal Reserve Bank to impose an additional layer of regulatory scrutiny on top of state insurance regulation for a small number of “systemically important” nonbank financial companies, such as AIG. This Article argues, however, that in focusing on the risk that an individual insurance-focused, nonbank financial company could become systemically significant, Dodd-Frank largely overlooked a second, and equally important, potential source of systemic risk in insurance: the prospect that correlations among individual insurance companies could contribute to or cause widespread financial instability. In fact, this Article argues that there are often substantial correlations among individual insurance companies with respect to both their interconnections with the larger financial system and their vulnerabilities to failure. As a result, the insurance industry as a whole can pose systemic risks that regulation should attempt to identify and manage. Traditional state-based insurance regulation, this Article contends, is poorly adapted to accomplishing this given the mismatch between state boundaries and systemic risks, as well as states’ limited oversight of noninsurance financial markets. As such, this Article suggests enhancing the power of the Federal Insurance Office — a federal entity primarily charged with monitoring the insurance industry — into supplement or preempt state law when states have failed to satisfactorily address gaps or deficiencies in insurance regulation that could contribute to systemic risk.","PeriodicalId":275936,"journal":{"name":"Duke Law School Public Law & Legal Theory Research Paper Series","volume":"61 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-12-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126380388","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
As the first copycat litigation of NML Capital v. Argentina, the case of Export-Import Bank of the Republic of China v. Grenada ("Ex-Im Bank v. Grenada") has implications for the future direction of sovereign debt restructurings. It not only complicates the already muddy pari passu saga by involving official lenders and judgment debts but also potentially exacerbates the holdout problem by marching into a whole new battle over the negative pledge clause. This article offers an analysis of the case, and draws out its policy and practical implications.
{"title":"Ex-Im Bank v Grenada: Adding Clarity or Confusion?","authors":"Cheng-Yun Tsang","doi":"10.1093/CMLJ/KMV022","DOIUrl":"https://doi.org/10.1093/CMLJ/KMV022","url":null,"abstract":"As the first copycat litigation of NML Capital v. Argentina, the case of Export-Import Bank of the Republic of China v. Grenada (\"Ex-Im Bank v. Grenada\") has implications for the future direction of sovereign debt restructurings. It not only complicates the already muddy pari passu saga by involving official lenders and judgment debts but also potentially exacerbates the holdout problem by marching into a whole new battle over the negative pledge clause. This article offers an analysis of the case, and draws out its policy and practical implications.","PeriodicalId":275936,"journal":{"name":"Duke Law School Public Law & Legal Theory Research Paper Series","volume":"51 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-08-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126314845","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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