Deconstructing the Financial Crisis

In the Classroom and in Her Writing, Professor Kathryn Judge Turns a Critical Eye to Financial Regulators to Better Understand What Led to the Financial Crisis and the Policy Reforms Since Adopted

New York, June 3, 2013—Columbia Law School Associate Professor Kathryn Judge’s impact on legal scholarship began in law school with a note on copyright she published in the Stanford Law Review as a third-year student. 

But Judge has been making a name for herself more recently in another dynamic area of the law by analyzing the financial regulatory institutions that failed to prevent one of the world’s greatest recessions. It’s a subject she has immersed herself in since she first came to Columbia Law School on a two-year fellowship in 2009. Judge joined the full-time faculty in the fall of 2011.
Associate Professor Kathryn Judge
The former U.S. Supreme Court clerk has written several important articles on financial regulation. One of her most recent, “Interbank Discipline,” is forthcoming in the UCLA Law Review and recently won top honors at The George Washington University Law School’s Center for Law, Economics and Finance’s Junior Faculty Workshop. The article, which Judge also has presented at other conferences and colloquia, including at the University of Virginia School of Law and Cornell Law School, draws attention to the role that banks play monitoring and disciplining other banks and addresses the policy implications of the rise in interbank discipline.
Judge said the shift to financial regulatory scholarship came naturally after she took a position at Merrill Lynch before law school and later as an associate at Latham & Watkins, where she focused on transactions. Little did she know at the time that the work she did on behalf of clients who specialized in securitization and in other aspects of mortgage financing would serve as the impetus for her early research on financial regulation.
“When I first came to Columbia Law School, I realized there was a significant disparity between how securitization structures had evolved in practice and certain assumptions underlying much of the academic literature,” she said.
In her 2012 article, “Fragmentation Nodes: A Study in Financial Innovation, Complexity, and Systemic Risk,” published in the Stanford Law Review, Judge drew attention to some of these disparities and shed new light on how particular features of securitization structures contributed to new forms of systemic risk. Highlighting such disparities and bringing institutional detail into focus has remained a cornerstone of Judge’s scholarship.
Drawn to business law because of its engagement with real-world problems, Judge thought she could contribute to the field of financial regulation.
“With a few very notable exceptions,” she explained, “the field had been largely ignored by leading legal academics for decades.”
Coming on the heels of the financial crisis, her timing couldn’t have been better. In addition to her scholarship on the issues, Judge and a cohort of other faculty at Columbia Law School have led the way in creating innovative new courses geared toward helping students understand the crisis and its causes. Judge designed and has twice taught one of the newest classes, the Architecture of Financial Regulation, in which students consider the spectrum of regulators in their actual and ideal forms.
“The crisis created an opportunity for us to realize the world had changed, and our understanding of the world had not caught up,” she said. “Financial architecture really matters, but it’s not something that was otherwise covered in law school curricula.”
Students are eager for the opportunity to learn in greater detail about the regulatory institutions that influence the world’s capital markets.
“One of the great things about Columbia Law School is it attracts students who are already really engaged in this area,” Judge said. “I’ve been consistently impressed with both the quality of the students and the level of effort and engagement I see from them.”
Judge also has become involved in other business law offerings outside the classroom. She serves on the board of directors of the Columbia Business Law Review, a student-run journal, and also serves on the editorial board and as a contributor to The CLS Blue Sky Blog, Columbia Law School’s Blog on Corporations and the Capital Markets.