BU Now » financial regulation

New Basel III rules decided

Jo Breiner — Mon, 13 Sep 2010 16:07:53 +0000

The Basel Committee on Banking Supervision announced new rules in hopes of making the global banking industry safer. Will the new rules work? LAW professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law and former counsel to the Fed Board of Governors, gives his view on the impact of the new agreement.

“The Basel agreement reflects two troubling phenomena: first, international acquiescence to the continued existence of ‘t00 big to fail’ banks; and second, the exultation of capital over risk management as the primary supervisory tool.”

Contact Cornelius Hurley at ckhurley@bu.edu, 617-353,5427 or on Twitter @ckhurley

Obama pushes for derivatives reform

Dick Taffe — Wed, 14 Apr 2010 20:28:51 +0000

President Obama says he wants more regulatory control over the trading of derivatives, the financial products that helped crash the economy, and says the Democrats’ efforts to re-regulate Wall Street will not lead to another taxpayer bailout. Former Federal Reserve Bank examiner Mark Williams, who teaches finance at the BU School of Management and is the author of “Uncontrolled Risk” about the fall of Lehman Brothers, says trading derivatives on an open market would actually strengthen the economy.

“The stakes are high for Wall Street versus Main Street. Keeping derivatives off-exchange means higher trading margins for a handful of Wall Street’s banks but comes at a cost to market participants and overall market stability.”

Contact Mark Williams, 617-358-2789, williams@bu.edu

Regulating Wall Street

Dick Taffe — Mon, 15 Jun 2009 14:58:15 +0000

Word is leaking about about the Obama administration’s plan to regulate Wall Street, to be announced Wednesday. School of Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law and a former Federal Reserve lawyer, can discuss the likely impact of the proposed changes.

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu

Pequot Capital Management hedge fund closes

Dick Taffe — Thu, 28 May 2009 15:57:09 +0000

Under the shadow of an insider-trading probe, pioneering hedge fund Pequot Capital Management is shutting down forever. School of Law Professor Tamar Frankel, an authority on securities law and legal ethics, says this is another lesson in why hedge funds should not be exempt from regulation.

Contact Tamar Frankel, 617-353-3773, tfrankel@bu.edu

Possible new consumer watchdog agency

Dick Taffe — Wed, 20 May 2009 13:55:01 +0000

Reports say the Obama administration is considering creating a new regulatory agency to protect consumers of a wide variety of financial products ranging from mortgages to hedge funds. School of Law Professor Cornelius Hurley, a proponent of regulatory streamlining who directs the Morin Center for Banking and Financial Law, can comment on the implications.

Meantime, School of Management Professor Michael Salinger, a former Federal Trade Commission director, is skeptical. “One of the risks of creating a regulatory authority for a single industry is that it ends up being captured by the industry,” he said. “A better solution would be to expand the staff of the FTC.”

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu, or Michael Salinger, 617-353-4408, salinger@bu.edu

Geithner calls for major overhaul of financial rules

Dick Taffe — Thu, 26 Mar 2009 19:19:14 +0000

Boston University Law School professors react to Treasury Secretary Geithner’s wide-ranging plan to overhaul financial regulation.

Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law and former counsel to the Fed Board of Governors:

“Secretary Geithner has kicked off the debate over regulatory reform starting with systemic risk. Regrettably, the proposals continue the Fed’s failed policy of ‘constructive ambiguity’ regarding too-big-to-fail firms. I applaud Geithner’s suggestion that TBTF firms have to be identified ahead of time. However, we now know that such firms and their uninsured creditors have an advantage that takes the form of the taxpayers’ safety net. The funding benefits of that safety net have to flow to the general treasury of the U.S., not to the bottom line of TBTF firms. Otherwise, we are doomed to re-live this cycle.”

Professor Tamar Frankel, an authority on securities law and author of “Trust and Honesty: America’s Business Culture at a Crossroad“:

“The market we have today does not signify freedom for investors, but freedom for a few very tightly controlled, very large concentrations of investors’ money. This is private power and like any power it requires counterveiling power. I just hope that the government exercises a counterveiling balance to the private power holders, rather than taking them over. And rather than rely on self reporting, which unfortunately may note be reliable any more, let government begin to rely on government examinations by experts.”

Robert R. Bench, senor fellow at the Morin Center for Banking and Financial Law and former deputy Comtroller of the Currency:

“Under this proposal, the game changes from “too big to fail’ to ‘big enough to qualify for FDIC liquidation,’ which should foster more market discipline on these institutions, in addition to the major increases in government supervision proposed by the Treasury. The administration is smart not to propose at this time any restructuring of the existing financial agencies. All agency personnel need to stay focused on managing the crisis and not on the game of bureaucratic musical chairs.”

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu

Contact Tamar Frankel, 617-353-3773, tfrankel@bu.edu

Contact Robert Bench, 617-353-5428, bobbench@bu.edu