Showing archive for: “Financial Regulation”
Dodd-Frank’s regulatory vacuum
There’s been a lot of talk about the regulatory impact on job-creation. Add this: the regulatory vacuum resulting from an absence of rules under Dodd-Frank. A WSJ article notes that More than 100 new derivatives requirements in the law take effect on July 16, even though regulators have yet to issue final rules in the ... Dodd-Frank’s regulatory vacuum
The uncorporate solution to corporate cash hoarding
Jason Zweig wrote Saturday in the WSJ about how companies are hoarding their cash. Microsoft, Cisco, Google, Apple and J & J “added $15 billion in cash and marketable securities to their balance sheets. Microsoft alone packed away roughly $9 billion, or $100 million a day. All told, the companies in the Standard & Poor’s ... The uncorporate solution to corporate cash hoarding
The whistleblower rules and insider trading
The SEC has adopted Dodd-Frank whistleblower rules (see Law Blog story) which have sparked controversy because they award bounties without requiring use of internal corporate reporting mechanisms. Whistleblower organizations are happy, corporations not so much. It’s a good time to remember my proposal last year to let the whistleblowers trade: The beauty of the insider ... The whistleblower rules and insider trading
Organizing Economists at the CFPB
With the recent announcement of Sendhil Mullainathan as the Assistant Director for Research at the Consumer Financial Protection Bureau (WSJ profile here), while one turns to the question of how economic input will be incorporated into agency decision-making. Luke Froeb makes a nice point about the organization of economists in administrative agencies: The FTC, which ... Organizing Economists at the CFPB
Schumer and the decline of New York
Six years ago Henry Butler and I wrote about what we called the Sarbanes-Oxley Debacle. Well, it’s still a debacle after all these years, and having significant effects on business and international competition. Yesterday’s WSJ opined, concerning the potential NYSE/Deutsche Borse merger that whoever ends up owning the iconic trading venue, the question is whether ... Schumer and the decline of New York
Private equity and financial distress
I’ve written often, particularly in my Rise of the Uncorporation, of the upside disciplinary effect of uncorporate management. This includes the salutary role of private equity (e.g., this recent post). But detractors argue that private equity-backed leveraged buyouts, by replacing equity with debt, make targets vulnerable to the disruption of bankruptcy. A recent paper by ... Private equity and financial distress
Jets and LBOs
I have written about the disciplinary effect of the uncorporate form, particularly in LBOs. See, e.g., here and Chapter 8 of my Rise of the Uncorporation. Now here’s more evidence: Edgerton, Agency Problems in Public Firms: Evidence from Corporate Jets in Leveraged Buyouts. Here’s the abstract: This paper uses rich, new data to examine the ... Jets and LBOs
The myth of government protection of financial markets
With all the calls for more government supervision of financial markets it’s healthy to keep in mind what the public actually gets from this costly supervision. In many previous posts (e.g., here, here and here) I summarized the SEC’s egregious incompetence in missing the Madoff fraud. When private firms mess up they get sued and punished ... The myth of government protection of financial markets
Unconscious Parallelism or Collusion? Libor Edition
News comes that the DOJ and SEC are “examining whether some of the world’s biggest banks colluded to manipulate a key interest rate before and during the financial crisis, affecting trillions of dollars in loans and derivatives, say people familiar with the situation.” The Wall Street Journal Reports that: The inquiry, led by the U.S. ... Unconscious Parallelism or Collusion? Libor Edition
Closing the US securities markets
The WSJ reports that the SEC is considering raising the 500-shareholder limit on the number of holders of a class of securities a company can have before having to register that security with the Commission under Section 12(g) of the 1934 Act. The SEC reportedly is also considering relaxing the “general solicitation” restriction on private ... Closing the US securities markets
Corporate governance, incentive compensation and the uncorporation
Acharya, Gabarro and Volpin’s Competition for Managers, Corporate Governance and Incentive Compensation has interesting insights and data on both corporate governance and executive compensation debates. In the final analysis, I think it’s most interesting for what it says about the uncorporation. Here’s the abstract: We propose a model in which firms use corporate governance as ... Corporate governance, incentive compensation and the uncorporation
Greenberg, Spitzer and AIG
James Freeman, reviewing Roddy Boyd’s new book about AIG in the WSJ, discusses how Eliot Spitzer forced Hank Greenberg out of AIG in March 2005, and the consequences of that move: What is certain is that the world’s largest insurer was abruptly separated from the world’s most experienced risk manager at the worst possible moment. ... Greenberg, Spitzer and AIG
