BU Now » TARP

Pay Czar eyes TARP firms’ pay

Dick Taffe — Tue, 23 Mar 2010 15:22:44 +0000

U.S. “Pay Czar” Ken Feinberg is writing all 419 firms that took taxpayer bailout money — not just the big seven taking TARP bucks — seeking to review their executive compensation, and maybe asking for some bucks back. Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law, says the deep review is appropriate and fair.

“Whether or not his legal mandate extends to the particulars of the grants made, his capacity to ‘name and shame’ should be exercised to the fullest in any instances where executives were rewarded for the very acts that endangered their companies.”

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

Small banks slow at bailout payack

Dick Taffe — Thu, 18 Mar 2010 20:54:01 +0000

While most of the huge banks which got taxpayer bailouts last year have paid back their TARP loans, hundreds of community banks haven’t. Robert Bench, a former deputy Comptroller of the Currency and now a senior fellow at BU Law’s Morin Center for Banking and Financial Law, says it’s no surprise. Too many real estate development and commercial real estate loans and inability to raise capital, he says.

“The ‘Volcker Rule’ seeks to redirect the largest banks back to serving the broader financial needs of America. Perhaps we also need new rules for more diversification of loan portfolios at community financial institutions.”

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

Citigroup CEO says things ‘different’

Dick Taffe — Thu, 04 Mar 2010 19:40:01 +0000

Citigroup CEO Vikram Pandit told a Congressional panel that the bank is “fundamentally different” since it took $45 billion in taxpayer bailout money last year. But Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law, says Congress should be asking why taxpayers were’t given more effective oversight of Citigroup after the bailout.

“Rather than grilling Mr. Pandit on how he runs Citigroup, the Congressional TARP panel should be asking Treasury officials, past and present, why the U.S. did not demand representation on the Citigroup board of directors. As long as the taxpayers are the largest shareholders of the company, this is the most effective way to provide oversight in the public interest.”

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

TARP $$ for small-biz lending

Dick Taffe — Tue, 02 Feb 2010 21:25:06 +0000

President Obama has proposed using $30 billion from the TARP bank bailout program to create a small-business lending fund to spur job growth. Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law, said he has been suggesting such a fund but that bankers may be skeptical that it may come with crippling red tape.

“If the Treasury were given a ‘do over’ on the original TARP program, it would look something like President Obama’s new small business lending fund.”

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

What about the bailed-out banks’ warrants?

Dick Taffe — Wed, 10 Jun 2009 13:38:27 +0000

With 10 large banks repaying the public billions in bailout money, it divorces the government from running the banks. But Treasury still owns stock warrants in those banks, which could become valuable over time. School of Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law, thinks the warrants should be sold on the open market — the sooner the better.

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

Finance Prof. Mark Williams comments on TARP funds

Jo Breiner — Wed, 10 Jun 2009 12:54:11 +0000

TARP fraud: A culture “hostile to law”

Dick Taffe — Tue, 21 Apr 2009 20:52:18 +0000

With word of federal probes under way into alleged fraud involving banking bailout funds, School of Law Professor Tamar Frankel, an authority on securities law and legal ethics, says those receiving TARP funds should be subject to ongoing examinations.

“‘It’s the culture, stupid.’ Law not only limits innovations, it also controls competition on innovative antisocial behavior. We have created a culture that is hostile to law. Our culture attributes to lawmakers and regulators corrupt practices and intent. This justifies the same behavior by those subject to the laws and regulations.

“The fact that examinations started soon after taxpayers’ money was doled out is a good sign. The better would have been examinations before money was given. To be sure, time pressure made installment of such examinations impossible. But now they are possible and should be established — not once, but as a matter of course, long-term and often.

“At the same time, the examiners should be shielded from temptation as well. A balance must be achieved or our financial system will not revive.”

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

Next step for TARP-assisted banks

Dick Taffe — Mon, 06 Apr 2009 17:07:27 +0000

School of Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law and former counsel to the Fed Board of Governors, says CEOs of TARP-assisted banks must start clearing their toxic assets or get out.

“Asked (Sunday) whether the government would force banks to sell their toxic assets and begin lending again, Treasury Secretary Geithner was noncommital. CEOs of TARP banks need to be instructed by their regulators that if they do not participate in the balance sheet-clearing program they will be treated the same as GM CEO Waggoner.

“In anticipation of the toxic asset sales: (1) banks need to begin the process of adjusting the value of their loans and investments to reflect marketplace reality; and (2) regulators (FDIC, FED, and OCC) must signal their intention to enforce the Prompt Corrective Action provisions of the law.”

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