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Colleen Baker

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PhD (Wharton) Professor Baker is an expert in banking and financial institutions law and regulation, with extensive knowledge of over-the-counter derivatives, clearing, the Dodd-Frank Act, and bankruptcy, in addition to being a mediator and arbitrator.

Previously, she spent time at the U. of Illinois Urbana-Champaign College of Business, the U. of Notre Dame Law School, and Villanova University Law School. She has consulted for the Federal Reserve Bank of Chicago, and for The Volcker Alliance.  Prior to academia, Professor Baker worked as a legal professional and as an information technology associate. She is a member of the State Bars of NY and TX. Read More

Last Monday, the Financial Stability Board (FSB) released the consultative document, Guidance on financial resources to support CCP resolution and on the treatment of CCP equity in resolution (here).  As readers know, I’ve written several times about clearinghouses, the central feature of the G20’s reforms to the over-the-counter derivative markets following the 2007-08 crises, implemented in the US in Dodd-Frank’s Title VII (for example, here and here).    

The Guidance’s title is a succinct encapsulation of its two-part focus.  In the first part, it uses a five-step process to evaluate the adequacy of a CPP’s resources and available tools to support its resolution (were that to prove necessary).  These steps include:

Step 1: identifying hypothetical default and non-default loss scenarios (and a combination of them) that may lead to resolution;

Step 2: conducting a qualitative and quantitative evaluation of existing resources and tools available in resolution;

Step 3: assessing potential resolution costs;

Step 4: comparing existing resources and tools to resolution costs and identifying any gaps; and

Step 5: evaluating the availability, costs and benefits of potential means of addressing any identified gaps.     

In the second part, the Guidance focuses on how to treat CCP…

As I write about derivatives, I’m always excited to see new articles in this area such as Professor Sue Guan’s Benchmark Competition (here; forthcoming, Maryland Law Review).  And I was also delighted to learn that we’d overlapped at Wharton (Guan earning a B.S. in 2009 and, me, a PhD in 2010).  I’ve had a chance to read about Guan’s intriguing article on Columbia Law School’s Blue Sky Blog (here) and look forward to reading the article soon.  Here’s the abstract:

Over-the-counter (OTC) markets—those for currencies, derivatives, swaps, bonds, commodities—make up an immense and critical component of global financial markets. Certain benchmarks, such as the London Interbank Offered Rate (LIBOR), are hardwired throughout these markets and play crucial roles in pricing and valuation. For example, interest payments on instruments ranging from student loans and mortgages to synthetic derivatives are tied to the value of LIBOR. In 2016, estimates of notional exposure to U.S. dollar LIBOR totaled about $200 trillion—ten times U.S. GDP that year. Correspondingly, minuscule variations in a benchmark’s value will impact vast numbers of assets and transactions for hundreds of millions of people.

These benchmarks have become so ubiquitous for an important reason: they have…

In his Wednesday post (here), co-blogger Stefan J. Padfield highlighted a recent development in the arbitration area that I also want to bring to readers’ attention.  I’m sure that all BLPB readers are a party to an arbitration agreement as these provisions have become so widespread in consumer adhesion contracts.  The New York Times recently ran a fascinating article by Michael Corkery and Jessica Silver-Greenberg, ‘Scared to Death’ by Arbitration: Companies Drowning in their Own System.  It details an innovative development in which entrepreneurial lawyers “are leaders in testing a new weapon in arbitration: sheer volume,” which is something the current arbitration system can’t handle. 

Arbitration provisions in consumer adhesion contracts generally bar class-action lawsuits and might also bar class-wide arbitration.  And it often makes little economic sense for an individual to take a large corporation to arbitration.  Not surprisingly, many don’t.  Corkery and Silver-Greenberg note that “Over the past few years, the nation’s largest telecom companies, like Comcast and AT&T, have had a combined 330 million customers.  Yet annually an average of just 30 people took the companies to arbitration…”  Now entrepreneurial lawyers such as Teel Lidow, who runs FairShake, and Travis Lenkner at…

In these unprecedented times, the Federal Reserve is opening unprecedented facilities, including its new Municipal Liquidity Facility.  Professor Robert C. Hockett at Cornell Law School has posted a great 3-page paper on this for everyone (like myself) who is interested in quickly learning more about this new Fed program.  Check it out here; Abstract is below.

On April 9th the Fed announced it would be opening an unprecedented new Municipal Liquidity Facility (‘MLF’) for States and their Subdivisions now struggling to address the nation’s COVID-19 pandemic. This is effectively ‘Community QE’ in all but name. Because Community QE will constitute a literal lifeline to States and their Subdivisions, and will in light of its novelty be as unfamiliar as it is essential, this Memorandum briefly summarizes what the new Facility enables now and will likely enable in future. On this basis it then recommends a three-phase ‘Game Plan’ for States and their Subdivisions to put into operation immediately – that is, April 13th.

The American Business Law Journal (ABLJ) is a triple-blind peer review journal published quarterly “on behalf of the Academy of Legal Studies in Business (ALSB).”  Its articles explore a range of business and corporate law topics, and it is a great resource for academics, industry professionals, and others.  Its “mission is to publish only top quality law review articles that make a scholarly contribution to all areas of law that impact business theory and practice…[and it] search[es] for those articles that articulate a novel research question and make a meaningful contribution directly relevant to scholars and practitioners of business law.”  I’ve previously posted about the journal (here).

The ABLJ has issued an invitation to ALSB members to apply for the position of Articles Editor.  Not currently a member of the ALSB?  No worries, you can easily become a member (here)!  Below is the complete invitation to apply sent from Terence Lau, the ABLJ Managing Editor.  

We invite ALSB members who are interested in serving on the Editorial Board of the American Business Law Journal to apply for the position of Articles Editor. The new Articles Editor will begin serving on the Board in August 2020. Board members…

Whenever Haskell Murray writes a running post, I always want to write one too.  I think he’s written two (here, here) since my last one (here), so I’ve decided it’s time for another!

The tenuous link to business law is this…I was blessed to have a phenomenal first-year contracts professor.  Over the years, one of my closest friends (also in that course) and I have reminded each other of the professor’s pearls of wisdom about contracts and life. “Life is a marathon, not a sprint,” he would assure us. 

I would imagine that many of us feel in the midst of a marathon these days.  As another week in these unusual times begins, I was thinking about a few of the lessons I’ve learned in distance running that were helping me to run the course we’re all on these days.  First, the importance of paying attention to your breath (Joan Heminway has written about breath and mindfulness here).  Second, if you just keep putting one foot in front of the other, you’ll eventually reach the destination/be done.  Third, the need for pacing (likely the point my contracts prof was making).  Fourth, you’ve always got…

In a December 2018 post (here), I noted that “although esoteric, such issues as who has access to an account at the Fed are critical social policy choices with real world implications that merit broad-based public debate.” 

This past week, a federal district court judge granted the Federal Reserve Bank of New York’s (FRBNY) motion to dismiss The Narrow Bank’s (TNB) complaint in TNB USA Inc. v. Federal Reserve Bank of New York (USDC SDNY) (here).  In light of this recent opinion, I wanted to reiterate my invitation to BLPB readers to think about seemingly technical, arcane issues such as who gets an account at the Fed – a master account is essentially a bank account at a regional Federal Reserve Bank enabling access to the Federal Reserve Payments System –  and how such decisions should be made. The importance of this critical policy issue is only set to increase.  A few months ago, the Federal Reserve announced plans to develop FedNow Service (here).

TNB is a financial institution with an innovative business model.  Professor Peter-Conti Brown has written about it (here).  It’s model is essentially this: open an account at the…

In today’s post, I wanted to call BLPB readers’ attention to two blog posts related to current events that I’ve found helpful.

First, a few weeks ago, I was really excited to learn that Psychology Today had asked my OU management colleague Dr. Mark Bolino, the Michael F. Price Chair in International Business, to start blogging for them.  He recently posted, Managing Employee Stress and Anxiety During the Coronavirus: Some practical, evidence-based advice for managers (here).  Although the post’s target audience is likely business managers, I think its wisdom is applicable to a wide variety of work environments.

Second, University of Chicago Booth’s Initiative on Global Markets (IGM) has a Forum (here) on COVID-19 that’s definitely worth checking out.  IGM Directors have also posted “Economic Policy Principles for Combating the Covid-19 Crisis” (here).  A summary paragraph from this insightful document is below.  Thanks to Professor Kathryn Judge for bringing the site to my attention! 

We organize our discussion around three pillars. First, following the advice of medical experts, we must do all we can to spread out the number of infections over time, or “flatten the curve.” Second, policies should facilitate production and…

To help support the economy as the nation grapples with the coronavirus, the Federal Reserve announced today its decision to take a number of actions (here), including lowering the fed funds target rate to 0 to 1/4%, increasing its holdings of Treasury securities and agency mortgage-backed securities, and taking coordinated measures with foreign central banks (I’ve written about the Fed’s use of central bank swap lines, here).  Today’s announcement is the Fed’s second interest rate cut in two weeks.  On March 3, 2020, it lowered the fed funds target rate to 1 to 1.25%.  Economist Carola Binder recently posted (here) an interesting paper, Coronavirus Fears and Macroeconomic Expectations, related to this first March 2020 interest rate cut.  Here’s the abstract:

The Federal Reserve cut interest rates by 50 basis points on March 3, 2020, in response to concerns about the coronavirus (COVID-19). On March 5 and 6, I conducted an online survey of over 500 U.S. consumers that asked about their attention to, concerns about, and responses to the coronavirus, their awareness of the Fed’s policy move, and their inflation and unemployment expectations. I then provided respondents with information about the Fed’s policy announcement, and re-elicited inflation…

In reading today’s Financial Times, Kate Beioley’s Corporate lawyers in high demand as coronavirus hits businesses (here -subscription required) caught my attention.  The informative article mentioned a recent Skadden report, Coronavirus/COVID-19 Update (here).  I thought the report provided a helpful overview of ways in which the coronavirus “may impact their [businesses’] operations and employees,” in areas including M&A activity, securities disclosures, securities litigation, annual meetings, supply chain disruptions, equity derivatives, commercial agreements, employment, and cybersecurity.  In particular, I found the discussion in the M&A section of a review of MAC provisions in 31 recent purchase agreements really interesting.  I encourage BLPB readers to review the report.