Web Exclusive: Articles on Financial Reform by Professors Coffee and Gordon

Read the full story: Charging Forward

"The unique thing about the rating agencies up to now is that they’ve faced little competition and no liability, and have done no factual verification,” Professor John C. Coffee Jr. says. “The result was GIGO—Garbage In, Garbage Out. After [the] Dodd-Frank [legislation], they may face some competition, and they’ll have some liability, but not an extraordinary amount."

Download and view a PDF of  Professor Coffee's article "Ratings Reform: The Good, The Bad, and The Ugly" here.


While the new financial reform law creates a resolution authority, it does not pay for it, and winding down an institution isn't cheap. It requires a substantial outlay of cash in the short term. The questions is: Where is that money going to come from? Professor Jeffrey N. Gordon argues that "prefunding" is the right approach to, and in a recent article co-authored with Christopher Muller, called for the establishment of a $1 trillion Systemic Emergency Funding Authority.

Download and view a PDF of  "Confronting Financial Crisis: Dodd-Frank’s Dangers and the Case for a Systemic Emergency Insurance Fund" here.
 

Gordon and Muller also wrote about the topic this past March.

Download and view a PDF of "Avoiding Eight-Alarm Fires in the Political Economy of Systemic Risk Management" here.


Gordon has written a paper titled "Executive Compensation and Corporate Governance in Financial Firms: The Case for Convertible Equity-Based Pay," which argues that paying financial company executives solely in company stock actually magnifies the problem of systemic risk.

Download and view a PDF of that article here.