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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

As many BLPB readers know, former Chairman of the Federal Reserve System, “inflation slayer,” and namesake of the famous “Volcker Rule,” Paul A. Volcker, passed away Sunday.  He was 92.  Much has already been – and will continue to be – written about him.  To pay tribute to this great man and public servant, I wanted to share a few such pieces (in bold), with a quote from each (in italics).    

The Volcker Alliance (here)

Mr. Volcker worked in the United States Federal Government for almost 30 years, culminating in two terms as Chairman of the Board of Governors of the Federal Reserve System from 1979-1987, a critical period in bringing a high level of inflation to an end. He also served as Under Secretary of the Treasury in the 1970s, a period of historic change in international monetary arrangements.  Upon leaving public service, he headed two private, non-partisan Commissions on the Public Service, in 1987 and 2003; both recommended a sweeping overhaul of the organization and personnel practices of the United States Federal Government. His last official role in government service was as head of the President’s Economic Recovery Advisory Board, established by President-Elect Obama…

In reading, CFTC Relying More Heavily on Coordination with Criminal Prosecutors, I saw that the CFTC recently released their Division of Enforcement Annual Report for FY2019 (Report) (here).

Surprisingly, it’s only the second such report, and it aims to increase the transparency, continuity, and consistency surrounding the priorities of the Division of Enforcement (Division).  This strikes me as a good thing.  In case you’re wondering, the current priorities are: “preserving market integrity; (2) protecting customers; (3) promoting individual accountability; and (4) increasing coordination with other regulators and criminal authorities.”  The Report also provides several interesting charts and lots of metrics about the Division’s enforcement activities.

I found several items in the Report particularly interesting.  First, in May 2019, the Division made its Enforcement Manual public for the first time (here).  Second, the amount recovered in enforcement actions for FY 2019 – $1,321,046,710 – was the 4th highest amount ever for the CFTC!  Third, there’s much focus these days on entities’ compliance programs.  This should be of interest to the increasing number of law schools offering compliance courses/curriculum.  Indeed, the Report’s concluding paragraph states that “The ultimate goal is to foster among our market participants a…

The University of Michigan Law School invites junior scholars to attend the 6th Annual Junior Scholars Conference, which will be held on April 17-18, 2020, in Ann Arbor, Michigan. The conference provides junior scholars with a platform to present and discuss their work with peers, and to receive detailed feedback from senior members of the Michigan Law faculty. The Conference aims to promote fruitful collaboration between participants and to encourage their integration into a community of legal scholars. The Junior Scholars Conference is intended for academics in both law and related disciplines. Applications from graduate students, SJD/PhD candidates, postdoctoral researchers, lecturers, teaching fellows, and assistant professors (pre-tenure) who have not held an academic position for more than four years, are welcomed.

Applications are due by January 3, 2020.  Conference flyer here: Download CfP for Michigan Law 2020 Junior Scholars Conference

Further information can be found at the Conference website: https://www.law.umich.edu/events/junior-scholars-conference/Pages/2020conference.aspx

I want to wish all BLPB readers a Happy Thanksgiving!

Below, I’ve excerpted information about the upcoming Law and Ethics of Big Data research symposium.  The call for papers is here: Download BIG DATA CALL FOR PAPERS March 27-28 2020 at GA Tech

Law and Ethics of Big Data

Hosted and Sponsored by: Cecil B. Day Program for Business Ethics Machine Learning @ Georgia Tech (ML@GATECH)Georgia Institute of Technology, Scheller College of Business Co-Hosted by: Virginia Tech Center for Business Intelligence Analytics The Department of Business Law and Ethics, Kelley School of Business March 27th and 28th 2020 at the Scheller College of Business, Georgia Institute of Technology, Atlanta, GA

Abstract Submission Deadline: February 1, 2020

We are pleased to announce the research colloquium, “Law and Ethics of Big Data,” at the Scheller College of Business, Georgia Institute of Technology, Atlanta, GA, co-hosted by Professor Deven R. Desai, Assistant Professor Angie Raymond of Indiana University, and Professor Janine Hiller of Virginia Tech.

Due to the success of this multi-year event that is in its seventh year, the colloquium will be expanded and we seek broad participation from multiple disciplines; please consider submitting research that is ready for the discussion stage.

Today, I read about at least two interesting fintech regulation-related news items.

First, the New York State Department of Financial Services “has granted a charter under New York Banking Law to Fidelity Digital Asset Services, LLC (FDAS), to operate as a limited liability trust company as part of the state’s rapidly growing virtual currency marketplace.” (here)

Second, CFTC Chairman Heath Tarbert published an op-ed, Fintech Regulation Needs More Principles, Not More Rules, in Fortune magazine (here).  The title aptly summarizes this short piece.  In general, I tend to agree with Tarbert that “a principles-based approach is the best way to govern this emerging market,” but that some areas, such as customer protection, might be “more suited to a rules-based approach.”  Tarbert also notes that “CFTC staff is currently considering how the core principles applicable to exchanges…and clearinghouses…can be better tailored for fintech,” and that “core principles have been central to our evaluation of clearinghouses that would clear derivatives resulting in delivery of Bitcoin” (information about ICE’s physically settled Bitcoin contracts here).

In a former post (here), I wrote:

A participant [at the December 2018 MRAC meeting] briefly remarked that clearinghouse default funds…

As a professor, I love it when academic research is front-page news!  So, I was delighted yesterday to see a piece there in the Financial Times, Academics accuse Morningstar of misclassifying bond funds (here – subscription required), on Huaizhi Chen, Lauren Cohen, and Umit G. Gurun’s recently posted SSRN article: Don’t Take Their Word For It: The Misclassification of Bond Mutual Funds (here). 

The gist of the article is that in deriving its risk classifications/ratings for bond funds, Morningstar’s rating system relies upon self-reported, summary data – often misreported – from bond mutual fund managers about the percentages of funds’ assets in different risk categories (AAA, AAA, B, etc.) rather than using it to supplement the data that those same funds file quarterly with the SEC.  The authors explain that assets in equity funds are generally of the same security type (for example, common stock), but that this isn’t true in the case of bond funds, which are “more bespoke and unique” with differences “in yield, duration, covenants, etc. – even across issues of the same underlying firm.” (p.2)  And while equity might have about 100 positions, bond funds generally have more than 600 issues. (p.2)  So…

Professor Kathryn Judge recently posted an essay, The New Mechanisms of Market Inefficiency (here), forthcoming in the Journal of Corporation Law.  It is a fascinating read, in addition to being a beautifully written piece.  As a banking law scholar, I’m familiar with the concept of and demand for information insensitive assets/money-like assets/safe assets/money (overlapping terms, as Judge notes).  However, this essay challenged me to think more deeply about the delicate interplay in financial markets between such assets and “information sensitive” ones, and about mechanisms fostering market efficiency and those supporting market inefficiency.  For example, Judge explains that “in order to produce some assets that are insensitive to information, markets also produce other subordinated assets that are backed by the same pool of assets and that are very sensitive to changes in the value of those assets.  As a result, domains of ‘information insensitivity’ are almost always nested on top of information sensitive domains and the border between the two is far from stable.” (p.6) 

Ultimately, this essay’s purpose is not to answer a number of “fundamental and as yet unanswered questions about the health and functioning of today’s capital markets” (p.4), but rather to reveal their importance…

“Big banks do not usually gang up to demand more financial regulation, least of all with asset managers in tow.”  That’s the first sentence of Gillian Tett’s recent piece, Banks are right to say that clearing houses are ripe for reform, in the Financial Times (here – subscription required).  Her title and lead sentence are spot on.  That should be worrisome to all.  Tett’s piece centers on a white paper, A Path Forward for CCP Resilience, Recovery, and Resolution (here), released on October 24, 2019, by nine financial institutions (Allianz Global Investors, BlackRock, Citi, Goldman Sachs, Societe Generale, JPMorgan Chase & Co., State Street, T.RowePrice, and Vanguard).  Tett states: “the current status quo around clearing houses is worrying.”  As BLPB readers know, I agree. 

The white paper calls for “enhanced risk management standards and aligning incentives through requirements for meaningful CCP [clearinghouse] own capital for covering both default and non-default losses and recapitalization resources.” (p.1)  It highlights the incentive misalignment present in many clearinghouses given their publicly-traded, shareholder ownership status: “Although CCP shareholders take 100% of the returns a CCP earns from clearing revenues, they bear only a small portion of the losses the CCP incurs…

The Younger Comparativists Committee (YCC) of the American Society of Comparative Law (ASCL) is pleased to invite submissions for its Fifth Workshop on Comparative Business and Financial Law to be held on February 7-8, 2020 at the University of Akron School of Law in Akron, Ohio. The purpose of the workshop is to highlight, develop, and promote the scholarship of new and younger comparativists in accounting, banking, bankruptcy, corporations, commercial law, economics, finance, and securities.

The deadline to submit proposals is October 25, 2019.  For more information, please see the Call for Papers.

The Estey Chair in Business Law was established in 2014 through the generosity of the Estey Family as well as through the support of alumni and friends of the College of Law at the University of Saskatchewan. The Chair was created to honour the late Supreme Court of Canada Justice Willard “Bud” Estey, a proud alumnus of the College. The Chair has previously been held by Rod Wood and Cally Jordan.

We invite applications from outstanding scholars and practitioners in the field of business law, defined broadly as including domestic and international structures (including but not limited to regulatory and dispute resolution frameworks and institutions), governance, transactions, finance, securities, competition, taxation, insolvency and related areas.

The College is seeking candidates in two categories:

  1. Those with a strong academic background and demonstrated academic leadership and teaching skills;

        OR

  1. Senior and highly experienced legal professionals.

In either category, the role of the Chair is to engage with faculty colleagues, students and members of the local legal profession and generate enthusiasm about the College’s business law programming. The College of Law provides a stimulating, supportive and highly collegial environment in which the Chair can deploy his or her knowledge and skills to…