eu law June 25, 2016Posted by Bradley in : eu , add a comment
This past semester I taught EU law for the first time since 2012 although it was a regular part of my teaching since I came to Miami for a long time until I began teaching contracts. Over the years I have written a number of articles which focus on or refer to EU law. I studied European Community Law before there even was a European Union. All of a sudden I belong to a country which is going to leave that Union. And although I can understand that some people might think that one can teach EU law generally – direct effect, supremacy, free movement without a sense of the domestic law context in which EU law operates, for me it was always important to have an idea about the relationship between EU law and a domestic legal system. And the one I knew about was the UK (well, England and Wales). So probably if I teach EU law in the future it will be a different sort of EU law course from the one I taught for many years.
This past semester I asked my students to read speeches by Lady Justice Arden and Lord Mance – provocative and interesting speeches with ideas about the future development of EU law. Ideas which will be lost.
day 1 after brexit vote June 24, 2016Posted by Bradley in : eu , add a comment
Market chaos (Mark Carney tries to calm the waters). Political chaos: Cameron resigns and the potential successors are intensely depressing. The UK is described (convincingly) as a “post-factual democracy”. The result was very close, but you can’t really tell from most of the reactions of the people who campaigned for Brexit. So there are inter-generational tensions: many young voters feel let down: over 70% of voters aged 18-24 supported remaining in the EU. And two very different views of what the UK is and should be: connected to and involved with the rest of the world, or stuck in a dream of once splendid isolation.
brexit – into uncharted territory June 24, 2016Posted by Bradley in : britishness, eu, governance , add a comment
The BBC says that 52% of UK voters voted to leave the EU and 48% voted to remain. Winners take all – or rather lose all and impose significant losses on everyone else. The pound fell to the lowest rate against the dollar since 1985. Keith Vaz said the result was terrible. Nigel Farage said it was a victory for real people, ordinary people, decent people (I suppose the 48% who voted for remain are not real, ordinary, or decent). But all those people who believed they were taking back control are about to discover that it was all an illusion and they are even worse off than they were before. If Scotland becomes independent and joins the EU I wonder if I could get a Scottish passport (my mother was born in Edinburgh)?
sec merrill lynch enforcement action June 23, 2016Posted by Bradley in : compliance , add a comment
Merrill Lynch does “wealth management and financial services.” Today the home page of this wealth management website states “Life. It’s a totally different beast.TM” I have no idea what that is supposed to mean. But probably most clients and prospective clients don’t expect that Merrill Lynch would be playing games with their money.
From the SEC’s Press Release:
Merrill Lynch violated the SEC’s Customer Protection Rule by misusing customer cash that rightfully should have been deposited in a reserve account. Merrill Lynch engaged in complex options trades that lacked economic substance and artificially reduced the required deposit of customer cash in the reserve account. The maneuver freed up billions of dollars per week from 2009 to 2012 that Merrill Lynch used to finance its own trading activities. Had Merrill Lynch failed in the midst of these trades, the firm’s customers would have been exposed to a massive shortfall in the reserve account…. Merrill Lynch further violated the Customer Protection Rule by failing to adhere to requirements that fully-paid for customer securities be held in lien-free accounts and shielded from claims by third parties should a firm collapse. From 2009 to 2015, Merrill Lynch held up to $58 billion per day of customer securities in a clearing account that was subject to a general lien by its clearing bank and held additional customer securities in accounts worldwide that similarly were subject to liens. Had Merrill Lynch collapsed at any point, customers would have been exposed to significant risk and uncertainty of getting back their own securities.
Not only did the firm breach customer protection rules, but (in violation of other rules) it provided in severance agreements that employees could not provide information to the SEC. Notably the SEC is also taking action against the firm’s Head of Regulatory Reporting at the time, Bill Tirrell (and there is to be a litigated proceeding). Tirrell has had a long career in compliance at Merrill Lynch. The SEC states that “Tirrell worked in MLPF&S’s Regulatory Reporting Department from November 1980 to April 2016.” SIFMA has this bio of Mr Tirrell:
Mr. William (Bill) Tirrell is a Managing Director at Bank of America Merrill Lynch and Head of US Broker Dealer/FCM Regulatory Reporting. Mr. Tirrell is a former President of SIFMA’s Financial Management Society and currently serves as an advisor to the FMS Board. Mr. Tirrell is a member of the FMS National Conference Committee and chairs SIFMA’s Capital Steering Committee and the Regulatory Capital and Margin Committee.
In March 2016 he participated in a CFTC Roundtable on issues relating to futures commission merchants (at p. 58):
I think we’re starting to get fairly comfortable with the new regulations, and the implementation of those, and operationally and practically making those work.
why brexit matters June 21, 2016Posted by Bradley in : governance , add a comment
This is what I spent a chunk of today writing. It is here.
london as an independent city state? June 21, 2016Posted by Bradley in : financial regulation, governance , add a comment
brexit worries June 17, 2016Posted by Bradley in : governance, inequality , add a comment
I think this piece by John Harris is exactly right, and at the same time what he imagines is so, so wrong:
at the centre of where we find ourselves there is an undeniable irony, which may yet turn cold and cruel. If the revolt succeeds and Brexit wins, the party in power is likely to take a political turn that will lead us even further away from what the moment demands, while Labour will likely tumble further into division and introspection.
The EU has some problems, sure. It’s an elite, intellectual project and always was, despite years of attempting to reach out to citizens across the EU. At the same time the EU institutions have a sense of social solidarity that the UK EU-haters lack. And this story of the development of the Brexit idea by Matthew d”Ancona links it to ideas of flexible labour markets, freedom from red tape and British economic creativity that needs to be freed from EU shackles. Not a surprise. But, as Harris argues, these flexible markets free from regulation are not the sort of markets to give any hope at all to the people who seem likely to vote for Brexit.
early draft of my new financial stability paper May 26, 2016Posted by Bradley in : financial regulation , add a comment
summer writing May 16, 2016Posted by Bradley in : financial regulation , add a comment
Over the summer I am working on a new paper on financial stability, which is a development of a paper I wrote for a book edited by Pablo Iglesias-Rodriguez, Anna Triandafyllidou & Ruby Gropas with the title The Financial Crisis and Paradigm Shift: Legal, Economic and Political Perspectives forthcoming July 2016. My chapter is Changing Perceptions of Systemic Risk in Financial Regulation. The new paper is looking at climate change and Brexit as issues of financial stability and I am taking it to Law and Society at the beginning of next month. Meanwhile I also have produced a draft of a paper on Financial Stability, Financial Services and the Single Market .
payday loans: csr and regulation May 13, 2016Posted by Bradley in : consumers , add a comment
Google’s new policy on payday loan ads which will be banned defines the relevant loans as follows:
We will no longer allow ads for loans where repayment is due within 60 days of the date of issue. In the U.S., we are also banning ads for loans with an APR of 36% or higher. When reviewing our policies, research has shown that these loans can result in unaffordable payment and high default rates for users so we will be updating our policies globally to reflect that.
The policy doesn’t just seem to apply to the worst sort of payday loans. The NY Department of Financial Services says that payday loans are typically repayable within 2 weeks and can carry an interest rate of 400%. The Google announcement doesn’t say how Google will think about issues such as roll-over of loans (where loans originally repayable within a two week period end up being outstanding for longer because they are rolled over into new loans) or high fees which might not be characterized as part of an APR. A study by the FCA in the UK published in 2014 found that payday lending consumers were frequently surprised by roll-over or extension of the loans and the fact that this would raise the cost of the loans.
What’s different now is that an increasingly small number of technology firms control what an ever expanding number of people see online. And they’re willing to go beyond what is circumscribed in law to make their own decisions – maybe shaping society in areas where governments won’t act.
This article, and the Google announcement, seem to suggest that what Google is doing here is engaging in corporate social responsibility (CSR). But in fact payday lending is an area where Governments are becoming more active: payday lending is already illegal in a number of states (such as New York, although the rules in different states do vary) and it has been targeted by the CFPB: just this week the CFPB announced that it had taken Action Against Check Cashing and Payday Lending Company for Tricking and Trapping Consumers and last month the CFPB published a report which shows that online payday lending customers are at risk of being subject to overdraft and non-sufficient funds charges imposed by their banks and even of having their checking accounts closed. New rules on payday lending are expected soon. And other jurisdictions, such as the UK and Australia, regulate payday lending. So it’s really about getting ahead of (or alongside) regulation rather than CSR, isn’t it?