Curriculum Guide · Courses

Professor Emma Jordan

J.D. Course 193 (cross-listed) | 4 credit hours

Banking Regulation today is at the cutting edge of federal power and regulatory experimentation. The financial collapse of 2008 was a near-death experience for federal banking regulators. We approach the subject with an intense focus on the dynamics of three critical pieces of the recent financial crisis: first, the development and growth of private markets for financial products; second, experimental regulatory strategies for controlling private risk taking and its effects on the integrated global financial system; third, the reemergence of areas of unique forms of hybrid power that combines private markets and government regulation.

This course examines the regulation of financial intermediaries. The stated goal of regulation is to ensure systemic stability and to pursue consumer protection. We will ask how well the balance between systemic stability and consumer protection had been maintained before the crisis of 2008. The course is devoted to federal regulation of banks, bank holding companies, financial holding companies and their affiliates. Topics include restrictions on activities of banks, holding companies and their affiliates, the history of and policy rationales for geographic restrictions on banking; special antitrust regulation of banks, debates about the role of capital adequacy requirements, community reinvestment requirements, bank supervision, and failed banks. With the market and legal changes of the past decade, the traditional market barriers between commercial banks and other financial institutions were largely dismantled. We will ask, did the federal response to the crisis produce a new paradigm for financial regulation? If it did not, why not?

The global financial crisis of 2008 provides a fertile laboratory for examining the fractured financial regulatory system, and the proposals for reform. The course will examine selected topics from the legislative agenda for reforming the financial regulatory system. These topics include among others, the role of subprime home mortgage lending and mortgage-backed securities in creating systemic risk, the consumer regulatory responsibilities of the Federal Reserve. We will identify some questions arising from the role of private credit rating agencies and securitizations in precipitation the financial collapse. and the competing claims of fairness, executive compensation and systemic risk, global financial responses.

The course begins with the basic overview of concepts applicable to financial intermediaries and ends with an assessment of the framework for future reform. We will pay special attention to the role of predatory consumer lending in sparking the collapse of banks. We will look at the fate of proposals to create a Consumer Financial Protection Agency, with independent rule making authority.

Students may not receive credit for both this course and Federal Regulation of Financial Institutions or Banking and Financial Institutions Regulation or The Financial Crisis - An Examination of Its Causes and Policy and Regulatory Responses.

All students are expected to attend class regularly.