Course Section | Columbia Law School

Section Description Provided by Instructor

It is over three years since the peak of the financial crisis and 18 months after the passage of the Dodd-Frank Act. A core policy goal of post-crisis regulatory reform, both in the US and internationally, is to prevent the recurrence of financial crisis, or at least to minimize its impact on the broader economy and to control the moral hazard arising from the socialization of losses and the privatization of gain that may be inescapable in a complex global financial system. This seminar will focus on several key areas of systemic risk where the regulators, both in the US and via the G-20, have made concrete progress in proposing or implementing regulations designed to lower systemic risk in the financial system.

In particular we will address four topics:

1. The effort to avoid financial institutions that are too big to fail through creation of an orderly liquidation regime, as facilitated through advance preparation of living wills.
2. The goal reflected in the Volcker Rule of avoiding the subsidization of proprietary risk-taking activity through the social safety net.
3. Enhanced supervisory oversight of systemically important financial institutions
4. The effect to reduce the systemic risks of interconnectivity and contagion arising from excessive exposure to counterparties in the derivatives trading markets.

For each topic we will consider the applicable statutory provisions and the relevant political economy concerns that affected their shaping; the recently promulgated or proposed regulations; and how various stakeholders would be affected by these rules and thus the positions they would advance in the regulatory process.

Students will be evaluated on the basis of team projects during the semester and a reflection paper.

Prerequisite: Regulation of Financial Institutions, Architecture of Financial Regulation, Issues in Global Regulatory Reform, Financial Institutions and Financial Crises or with permission of instructor.