S. Issues on Global Regulatory Reform

The seminar focuses on U.S. and international regulatory reforms to the global financial system stemming from the 2008 Financial Crisis, whether those reforms have helped the global financial system to cope with the economic effects of COVID on the financial sector, and the regulatory changes prompted by new technologies and artificial intelligence.

The seminar includes guest speakers from Cleary Gottlieb and Davis Polk who, as experts in their fields, will discuss recent developments related to the most pressing current issues in global financial regulation. The course begins with an overview of the reforms stemming from the 2008 Financial Crisis, where major financial system reforms were agreed to at the G20. The Crisis prompted unprecedented governmental interventions in the US, the UK and other EU countries. However, the use trillions of dollars of taxpayer money to keep failing firms in business was extremely unpopular. It became evident that there were major holes in the existing regulatory structure which led to a global consensus that reform to the regulation of financial institutions, instruments and markets had to occur. Despite the consensus about the need for reform, there was, and continues to be, a multitude of opinions as to what this reform should look like. In the US, the 2010 Dodd-Frank Act was the most sweeping legislation affecting the US financial services industry since the Great Depression. Dodd-Frank’s extraterritorial reach is considerable and potentially troublesome. The EU has also had significant regulations, reforms, and developments, at both the commission and country levels. Although there is convergence on the issues reform measures must address, US and EU legislation vary significantly and there is no coordination mechanism in place to assume consistent implementation by national regulators. This class will examine the effect of the financial crisis on these existing regulatory structures. We will look at the legislation and approaches that have been and continue to be proposed and implemented in multiple jurisdictions and the reforms that have been recommended by international organizations such as IOSCO, the IMF and the G20, and how they have been enacted by various member states. The class will also cover the role and regulation of derivatives, asset-backed securities and other complex products, as well as the effects of insolvency rules, and the issues surrounding systemic risk regulations in the context of dealing with the issue of too big to fail and COVID. Underlying these discussions will be an examination of the global implications of national reform and the coordination of regulatory efforts across markets and jurisdictions.

Additionally, the course will explore regulatory challenges posed by new technologies. In particular, it will cover the development of cryptocurrencies, blockchain technology, stable currencies to be used by central banks in lieu of paper currency, and initial coin offerings and how U.S. and international policymakers are trying to regulate these technologies. Finally, the course will examine ongoing corporate governance developments with respect to among other matters executive compensation and policy-focused corporate governance. Because we will be focusing on broad policy issues, it is not necessary that students have taken courses in corporate law or securities regulation to participate. Papers will be required on topics to be agreed, with an emphasis on a comparative approach. Furthermore, starting the third week of class, students will work in pairs to prepare a presentation discussing that week’s readings, briefly analyzing their position on the regulatory regime for their topic. Class participation is encouraged and will be taken into consideration when assigning a grade. Any student with interest in this stimulating and exceptionally relevant subject matter is encouraged to enroll.