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Eliminating Conflicts of Interest in Banks: The Significance of the Volcker Rule

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Public policy has been focused on controlling the conflicts of interests in banks for the last eighty-five years with limited success. Banks have a unique place in the economy as intermediaries between investors and companies, allowing them to obtain significant private, proprietary information. Public policy is focused on trying to ensure that banks do not […]

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Delegation and Dysfunction

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Much of the scholarly literature lauds cooperative federalism, in which states regulate to achieve federal standards, as an innovative federal-state partnership. But delegation of authority also has grave dangers caused by principal-agent problems, among others. The largely toothless nondelegation doctrine captures these challenges, but the bidirectional difficulties of principals adequately monitoring agencies, and vice versa, […]

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Containing Systemic Risk By Taxing Banks Properly

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At the root of recurring bank crises are deeply-implanted incentives for banks and their executives to take systemically excessive risk. Since the 2008- 2009 financial crisis, regulators have sought to strengthen the financial system by requiring more capital (which can absorb losses from risk-taking) and less risk-taking, principally via command-and-control rules. Yet bankers’ baseline incentives […]

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Resolving the Crisis in U.S. Merger Regulation

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Regulation by litigation has driven U.S. merger regulation to crisis. The reliance on private lawsuits to police disclosures and potential conflicts of interest in mergers, takeovers, and other control transactions has resulted in the filing of claims after every major transaction. However, it has failed to achieve meaningful benefits for shareholders and has instead deprived […]

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Stock Market Manipulation and Its Regulation

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More than eighty years after federal law first addressed stock market manipulation, federal courts remain fractured by disagreement and confusion about manipulation law’s most foundational questions. Only last year, plaintiffs petitioned the Supreme Court to resolve a sharp split among the federal circuits concerning manipulation law’s central question: whether trading activity alone can ever be […]

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Regulating by Example

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Agency regulations are full of examples. Regulated parties and their advisors parse the examples to develop an understanding of the applicable law and to determine how to conduct their affairs. However, the theoretical literature contains no study of regulatory examples or of how they might be interpreted. Courts differ about whether examples serve as an […]

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Should Regulation Be Countercyclical?

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Politicians and commentators have from time to time proposed that regulations be suspended or delayed during recessions because of their adverse impact on employment. We evaluate this argument from within a macroeconomic framework. When the business cycle is taken into account, it is possible that regulations should be weakened during downturns and strengthened during upturns, […]

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Savings Policy and the Paradox of Thrift

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The debate among legal scholars about individuals’ failure to save enough for retirement adopts a “micro” perspective. It focuses on the causes and consequences of undersaving from the perspective of individuals and analyzes how legal interventions, such as tax subsidies and nudges, can best address individual saving mistakes. This debate depends on certain assumptions about […]

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How Lawyers Can Help Macroeconomists in the Wake of Three Major Challenges

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Macroeconomics has changed in light of both developments in the world and its internal intellectual evolution. This article explores ways in which legal scholarship can help inform macroeconomic research and macroeconomic policymaking in light of three important developments: (i) limitations on conventional monetary policy in a world with lower equilibrium interest rates; (ii) labor markets […]

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What Happens When an Acquaintance Buys Your Data?: A New Privacy Harm in the Age of Data Brokers

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Data brokers have begun to sell consumer information to individual buyers looking to track the activities of romantic interests, professional contacts, and other people of interest. The types of data available for consumer purchase seem likely to expand over the next few years. This trend invites the emergence of a new type of privacy harm, […]

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The Ownership of Clearinghouses: When “Skin in the Game” Is Not Enough, the Remutualization of Clearinghouses

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A central question for corporate law scholarship has revolved around the ownership structure of enterprises. Why are some businesses owned by employees, some by customers, and some by investors? Until now, the question has centered on the relative benefits offered to these stakeholders by one form or another. This Article explores how ownership structure can […]

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Cost-Benefit Analysis and the Structure of the Administrative State: The Case of Financial Services Regulation

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The viability and desirability of conducting cost-benefit analysis of financial regulation is a subject of intense academic debate. Opponents claim that such analysis is feasible for environmental regulation but not for financial regulation because of the difference in the benefits that require monetization in the respective areas. This Article argues that the recent debate misses […]

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Probabilistic Compliance

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Uncertain legal standards are pervasive but understudied. The key theoretical result showing an ambiguous relationship between legal uncertainty and optimal deterrence remains largely undeveloped, and no alternative conceptual approaches to the economic analysis of legal uncertainty have emerged. This Article offers such an alternative by shifting from the well-established and familiar optimal deterrence theory to […]

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Unstacking the Deck: Administrative Summary Judgment and Political Control

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The Administrative Procedure Act’s provisions on formal adjudication give individuals charged in administrative enforcement actions the right to an in-person oral hearing. But not always. Agency prosecutors can circumvent formal hearing procedures without the consent of the defendant by resolving cases on “administrative summary judgment.” A 1971 Harvard Law Review Article endorsed this procedure as […]