Contemporary Authors

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Hill, Claire A.

March 20, 2017 by admin

WORK TITLE: Better Bankers, Better Banks
WORK NOTES: with Richard W. Painter
PSEUDONYM(S):
BIRTHDATE:
WEBSITE:
CITY: Minneapolis
STATE: MN
COUNTRY:
NATIONALITY:

https://www.law.umn.edu/profiles/claire-hill * http://press.uchicago.edu/ucp/books/author/H/C/au21263465.html * https://www.ali.org/members/member/424833/

RESEARCHER NOTES:

Posted in 403 | Comments Off on Hill, Claire A.

PERSONAL

Female.

EDUCATION:

University of Chicago, B.A., M.A.; American University, J.D.; Columbia University, LL.M., J.S.D.

ADDRESS

  • Office - University of Minnesota Law School, Walter F. Mondale Hall, 229 19th Ave. South, Minneapolis, MN 55455.

CAREER

Lawyer, professor, and writer. Practiced corporate law at Milbank, Tweed, Hadley & McCloy, New York, NY, and Dickstein Shapiro, Washington, DC; University of Minnesota Law School, Professor and James L. Krusemark Chair in Law, director of the Institute for Law and Rationality, associate director of the Institute for Law and Economics. Previously taught at the law schools of Boston University, George Mason University, Northwestern University, Georgetown University, and Chicago-Kent.

MEMBER:

American Law Institute, elected member.

WRITINGS

  • (As editor, with Brett H. McDonnell) Research Handbook on the Economics of Corporate Law, Edward Elgar (Northampton, MA), 2012
  • (As editor, with Steven M. Davidoff) Law and Economics of Mergers and Acquisitions, Edward Elgar Publishing (Cheltenham, England), 2013
  • (With Richard W. Painter) Better Bankers, Better Banks: Promoting Good Business through Contractual Commitment, University of Chicago Press (Chicago, IL), 2015
  • (As editor, with Brett H. McDonnell) Economics of Corporate Law, Edward Elgar Publishing (Cheltenham, England), 2016
  • (With Brian J.M. Quinn and Steven Davidoff Solomon) Mergers and Acquisitions: Law, Theory, and Practice, West Academic Publishing (St. Paul, MN), 2016
  • (As editor, with Steven Davidoff Solomon) Research Handbook on Mergers and Acquisitions, Edward Elgar Publishing (Cheltenham, England), 2016

Author of book chapters and journal articles.

SIDELIGHTS

Claire A. Hill is professor and James L. Krusemark Chair in Law at the University of Minnesota Law School, where she is also director of the Institute for Law and Rationality and associate director of the Institute for Law and Economics. She teaches corporate law, mergers and acquisitions, contracts, and a seminar in law and economics. In corporate law practice, Hill has worked at Milbank, Tweed, Hadley & McCloy in New York and Dickstein Shapiro in Washington. In an interview with Todd Nelson online at Finance & Commerce, Hill described her desire to branch out from practicing law into writing: “I wanted to explore issues, sometimes in depth, rather than just focusing on what the client wanted and quickly moving on. I also became interested in how people learned to draft and negotiate contracts.”

Hill and coeditor Brett H. McDonnell published the Research Handbook on the Economics of Corporate Law in 2012. In twenty-four essays on economic analysis, the book provides an introduction to corporate law with information on directors, officers, shareholders, and employees; insider constituencies that monitor and deter misbehavior; and the roles of gatekeepers, credit rating agencies, accountants, and research analysts.

Better Bankers, Better Banks

In 2015 Hill collaborated with Richard W. Painter to publish Better Bankers, Better Banks: Promoting Good Business through Contractual Commitment. The authors examine what is acceptable and responsible risk in bank lending, based on history, social and economic contexts, bottom line, and regulation and legal restraints. They contend that a culture of bad behavior evolved and has become acceptable, beginning in the 1980s when banks moved from being partners with their customers to large corporations with no liability when handling other people’s money and solely geared toward increasing profits. Even though banks have paid enormous fines for wrongdoing, it is the bank’s corporation, not the individual bankers, who have paid up, providing no incentive for bankers to change their ways.

Despite regulatory reforms, banks still face conflicts of interest, privatization of returns, and socialization of risks. The authors contend that to fix banking problems, bankers themselves need to be personally liable with their own assets for some of the company’s losses due to excessive risk-taking and illegal behavior. Incentives and motives of bankers must change, and bankers should develop “covenant banking,” in which bankers’ own compensation goes up with good decisions and down with bad ones. Writing in Choice, I. Walter talked about the authors’ assessment, saying: “They anchor their logic in the great traditions of business and banking partnerships and do indeed make a compelling argument.” USA Today reviewer Glenn Harlan Reynolds explained: “I do think that—across many sectors of our society—our problems come from having people in charge who don’t feel the pain when their various schemes go bad.”

Mergers and Acquisitions and Research Handbook on Mergers and Acquisitions

With cowriter Brian J.M. Quinn and Steven Davidoff Solomon, Hill published Mergers and Acquisitions: Law, Theory, and Practice in 2016. A guide for law students preparing for practice, the book explains deal documentation, how negotiations proceed, relevant law, transacting norms, federal and state law, and antitrust, national security, and Foreign Corrupt Practices Act (FCPA) issues. The authors also discuss the latest materials on developments in the transacting world. The book features questions designed to help students understand the law and underlying policy and provides problem-solving cases to get students familiar with transaction structuring.

In 2016 Hill coedited with Steven Davidoff Solomon the Research Handbook on Mergers and Acquisitions. Aimed at scholars, practitioners, judges, and legislators, the handbook analyzes the state of mergers and acquisitions, or M&A. Contributors examine M&A through the lens of history, theory, economy, legal doctrine, and empirical work to provide discussion of the history of M&A, the structure of modern transactions, takeover defenses, litigation, appraisal, federal and state law, start-ups, shareholder activism, and the role of M&A in corporate governance.  

BIOCRIT

PERIODICALS

  • Choice, June, 2016, I. Walter, review of Better Bankers, Better Banks: Promoting Good Business through Contractual Commitment, p. 1518.

  • Reference & Research Book News, August, 2012, review of Research Handbook on the Economics of Corporate Law; December, 2013, review of Law and Economics of Mergers and Acquisitions.

ONLINE

  • Finance & Commerce, http://finance-commerce.com/ (November 18, 2016), Todd Nelson, author interview.

  • LSE Review of Books, http://blogs.lse.ac.uk/ (February 3, 2016), Mehmet Kerem Coban, review of Better Bankers, Better Banks.

  • New York Times Book Review, https://www.nytimes.com/ (February 6, 2016), Gretchen Morgenson, review of Better Bankers, Better Banks.

  • University of Minnesota Law School Web site, https://www.law.umn.edu/ (May 16, 2017), author faculty profile.

  • USA Today, http://www.usatoday.com/ (October 29, 2015), Glenn Harlan Reynolds, review of Better Bankers, Better Banks.*

  • Research Handbook on the Economics of Corporate Law Edward Elgar (Northampton, MA), 2012
  • Law and Economics of Mergers and Acquisitions Edward Elgar Publishing (Cheltenham, England), 2013
  • Better Bankers, Better Banks: Promoting Good Business through Contractual Commitment University of Chicago Press (Chicago, IL), 2015
  • Economics of Corporate Law Edward Elgar Publishing (Cheltenham, England), 2016
  • Mergers and Acquisitions: Law, Theory, and Practice West Academic Publishing (St. Paul, MN), 2016
  • Research Handbook on Mergers and Acquisitions Edward Elgar Publishing (Cheltenham, England), 2016
1. Economics of corporate law LCCN 2015959662 Type of material Book Personal name Hill, Claire A., editor. Main title Economics of corporate law / edited by Claire A. Hill, Professor and James L. Krusemark Chair in Law, University of Minnesota Law School, USA and Brett H. McDonnell, Professor and Dorsey & Whitney Chair in Law, University of Minnesota Law School, USA. Published/Produced Cheltenham, UK : Edward Elgar Publishing, [2016] Description 2 volumes : illustrations ; 26 cm. ISBN 1785361481 9781785361487 (2 volume set) CALL NUMBER KF1416 .H55 2016 Copy 1 Request in Law Library Reading Room (Madison, LM242) CALL NUMBER KF1416 .H55 2016 Copy 2 Request in Law Library Reading Room (Madison, LM242) 2. Mergers and acquisitions : law, theory, and practice LCCN 2016479490 Type of material Book Personal name Hill, Claire A., author. Main title Mergers and acquisitions : law, theory, and practice / Claire Hill, Professor and James L. Krusemark Chair in Law, University of Minnesota Law School; Brian JM Quinn, Associate Professor of Law, Boston College Law School; Steven Davidoff Solomon, Professor of Law, University of California, Bereley School of Law. Published/Produced St. Paul, MN : West Academic Publishing, [2016] ©2016 Description xxvii, 805 pages ; 26 cm. Teacher's manual: 185 pages ; 29 cm ISBN 9780314289063 0314289062 9781683281399 (pbk. : teacher's manual) CALL NUMBER KF1477 .H49 2016 Copy 1 Request in Law Library Reading Room (Madison, LM242) 3. Research handbook on mergers and acquisitions LCCN 2016938591 Type of material Book Main title Research handbook on mergers and acquisitions / edited by Claire A. Hill, Professor and James L. Krusemark Chair in Law, University of Minnesota Law School, USA; Steven Davidoff Solomon, Deal Professor, the New York Times, Professor, University of California, Berkeley, School of Law, USA. Published/Produced Cheltenham, UK : Edward Elgar Publishing, [2016] Description xvi, 480 pages : illustrations, 25 cm. ISBN 1784711470 9781784711474 (cased) (eBook) CALL NUMBER KF1477 .R47 2016 Copy 1 Request in Law Library Reading Room (Madison, LM242) CALL NUMBER KF1477 .R47 2016 Copy 2 Request in Law Library Reading Room (Madison, LM242) 4. Better bankers, better banks : promoting good business through contractual commitment LCCN 2015002748 Type of material Book Personal name Hill, Claire A., author. Main title Better bankers, better banks : promoting good business through contractual commitment / Claire A. Hill and Richard W. Painter. Published/Produced Chicago : The University of Chicago Press, 2015. Description 279 pages ; 24 cm ISBN 9780226293059 (cloth : alkaline paper) Shelf Location FLM2016 032913 CALL NUMBER HG1573 .H55 2015 OVERFLOWJ34 Request in Jefferson or Adams Building Reading Rooms (FLM2) CALL NUMBER HG1573 .H55 2015 Copy 1 Request in Reference - Business Reading Room (Adams, 5th Floor) 5. Law and economics of mergers and acquisitions LCCN 2013935043 Type of material Book Main title Law and economics of mergers and acquisitions / edited by Steven M. Davidoff, Associate Professor of Law and Finance, Michael E. Moritz College of Law, Ohio State University, USA and Claire A. Hill, Professor and James L. Krusemark Chair in Law, Director, Institute for Law and Rationality, University of Minnesota Law School, USA. Published/Produced Cheltenham, UK : Edward Elgar Publishing, [2013] Description 2 volumes (xvi, 1620 pages) : illustrations ; 25 cm. ISBN 9781781954713 (hbk. : set) 1781954712 (hbk. : set) Links Table of contents only http://www.loc.gov/catdir/toc/fy14pdf04/2013935043.html CALL NUMBER KF1477 .L384 Copy 1 Request in Law Library Reading Room (Madison, LM242) CALL NUMBER KF1477 .L384 Copy 2 Request in Law Library Reading Room (Madison, LM242) 6. Research handbook on the economics of corporate law LCCN 2011942540 Type of material Book Main title Research handbook on the economics of corporate law / edited by Claire A. Hill, Brett H. McDonnell. Published/Created Cheltenham, UK ; Northampton, MA : Edward Elgar, c2012 Description ix, 486 p. ; 25 cm. ISBN 9781848449589 (hbk. : alk. paper) 1848449585 (hbk. : alk. paper) CALL NUMBER K1315 .R46 2012 Copy 1 Request in Law Library Reading Room (Madison, LM242) CALL NUMBER K1315 .R46 2012 Copy 2 Request in Law Library Reading Room (Madison, LM242)
  • From Publisher -

    Claire A. Hill is professor and the James L. Krusemark Chair in Law at the University of Minnesota Law School, where she is also director of the Institute for Law and Rationality and associate director of the Institute for Law and Economics.
    Affiliation: University of Minnesota
    Hometown: Minneapolis, MN

  • American Law Institute Web site - https://www.ali.org/members/member/424833/

    Professor Claire A. Hill
    University of Minnesota Law School
    Minneapolis, MN
    Education
    University of Chicago
    American University, Washington College of Law

    Claire Hill holds the James L. Krusemark Chair in Law at the University of Minnesota Law School. She teaches corporate law, mergers and acquisitions, contracts, and a seminar in law and economics. She is an Associate Reporter on ALI’s Principles of Corporate Compliance project.

    Professor Hill is also the founding director of the Law School’s Institute for Law and Rationality, and is the associate director of its Institute for Law and Economics. She has taught at the law schools of Boston University, George Mason University, Northwestern University, Georgetown University (where she was a Sloan Visiting Professor), and Chicago-Kent (where she was a Freehling Scholar).

    Prior to her academic career, she practiced corporate law at several law firms, including Milbank, Tweed, Hadley & McCloy in New York and Dickstein Shapiro in Washington, DC. Professor Hill has published numerous articles, and has been interviewed on television and radio programs on the subject of rating agencies.

    EDUCATION: University of Chicago, B.A. and M.A.; American University, Washington College of Law, J.D.; Columbia Law School, LL.M. and J.S.D.

    Areas of Expertise
    Business Law (Commercial Law)
    Commercial Law
    Contracts Law
    Corporate Governance (Commercial Law)

  • Law School, University of Minnesota Web site - https://www.law.umn.edu/profiles/claire-hill

    Claire Hill

    James L. Krusemark Chair in Law

    University of Chicago, B.A., M.A.
    American University, J.D.
    Columbia University, LL.M., J.S.D.

    Office: 418
    Mondale Hall, 229 19th Avenue South
    Minneapolis, MN 55455

    P: 612-624-6521
    E: hillx445@umn.edu

    Professor Claire A. Hill joined the Law School faculty in 2006 after a year as a visiting professor. She teaches corporate law, mergers and acquisitions, contracts, and a seminar in law and economics. She is the founding director of the Law School’s Institute for Law and Rationality, and the associate director of its Institute for Law and Economics. She is also an affiliated faculty member of the University’s Center for Cognitive Sciences.

    Professor Hill received her B.A. and M.A. in philosophy from the University of Chicago, her J.D., summa cum laude, from American University, Washington College of Law, and an LL.M and J.S.D. from Columbia University School of Law, where she was an Olin Fellow.

    Before becoming a law professor, she practiced corporate law at several law firms including Milbank, Tweed, Hadley & McCloy in New York and Dickstein Shapiro in Washington D.C. She has taught at the law schools of Boston University, George Mason University, Northwestern University, Georgetown University (where she was a Sloan Visiting Professor), and Chicago-Kent (where she was a Freehling Scholar). At the Law School she was the 2007-08 Julius E. Davis Professor, 2008-09 Vance K. Opperman Research Scholar, and 2009-11 Solly Robins Distinguished Research Fellow before being appointed the James L. Krusemark Chair in Law in 2011.

    Professor Hill’s research interests include corporate governance, capital structure, structured finance, rating agencies, secured debt, contract theory, law and language, and behavioral economics. She has published numerous articles on these and other topics; her articles have appeared in law reviews as well as journals in finance and psychology. Her work also has been featured on various business blogs. Securities Law Review, an annual edited volume of noteworthy scholarship in the field, included her articles in its 1998, 2005, and 2011 volumes, and the Queen’s Law Journal gave her its 2007 David Watson Memorial Award for significant contributions to legal scholarship for “The Law and Economics of Identity.” She has been interviewed on television and radio programs on the subject of rating agencies.

    Courses
    Business Associations/Corporations

    Fall 2017
    Fall 2016
    Fall 2015
    Fall 2014
    Fall 2017
    Fall 2016

    Law and Economics Workshop

    Spring 2018
    Spring 2017
    Spring 2015

    Mergers and Acquisitions

    Fall 2016
    Fall 2015
    Spring 2015

    Contracts

    Fall 2017

    Course details available for the current and previous two academic years.
    Publications
    Books

    Economics of Corporate Law (Edward Elgar, 2016) (co-editor) with Brett McDonnell
    Amazon | MNCAT
    Mergers and Acquisitions: Law, Theory, and Practice (West Academic, 2016) with Brian JM Quinn & Steven Davidoff Solomon
    Amazon | MNCAT
    Research Handbook on Mergers and Acquisitions (Edward Elgar, 2016) (co-editor) with Steven Davidoff Solomon
    Amazon | MNCAT
    Better Bankers, Better Banks: Promoting Good Business through Contractual Commitment (University of Chicago Press, 2015) with Richard W. Painter
    Amazon | MNCAT
    | SSRN
    Law and Economics of Mergers and Acquisitions (Edward Elgar, 2013) (co-editor) with Steven M. Davidoff
    Amazon | MNCAT
    Research Handbook on the Economics of Corporate Law (Edward Elgar, 2012) (co-editor) with Brett McDonnell
    Amazon | MNCAT

    Book Chapters

    Introduction, in Economics of Corporate Law (Claire A. Hill & Brett H. McDonnell, eds., Edward Elgar, 2016) with Brett McDonnell
    SSRN
    Short and Long Term Investors (and Other Stakeholders Too): Must (and Do) Their Interests Conflict?, in Research Handbook on Mergers and Acquisitions (Claire A. Hill &Steven Davidoff Solomon, eds., Edward Elgar Publishing, 2016) with Brett McDonnell
    SSRN
    International Financial Regulation: First, Do No Harm, in Festschrift zu Ehren von Christian Kirchner: Recht im okonomischen Kontext (Wulf Alexander Kaal, Matthias Schmidt, Andreas Schwartze, eds., Mohr Siebeck, 2014) with Brett McDonnell
    Where Next For Behavioral Law And Economics? A Suggested Approach, in Festschrift zu Ehren von Christian Kirchner: Recht im okonomischen Kontext (Wulf Alexander Kaal, Matthias Schmidt, Andreas Schwartze, eds., Mohr Siebeck, 2014)
    What Mistakes Do Lawyers Make in Complex Business Contracts, And What Can and Should be Done About Them?: Some Preliminary Thoughts, in Revisiting the Contracts Scholarship of Stewart Macaulay: On the Empirical and the Lyrical (Jean Braucher, John Kidwell & William C. Whitford, eds., Hart Publishing, 2013)
    Why Are Non-US Contracts Written in US Legalese? Some Preliminary Thoughts and a Research Agenda, in Law and Language (Michael Freeman & Fiona Smith, eds., Oxford University Press, 2013)
    Fiduciary Duties: The Emerging Jurisprudence, in Research Handbook on the Economics of Corporate Law (Claire A. Hill & Brett H. McDonnell, eds., Edward Elgar, 2012) with Brett McDonnell
    Introduction: The Evolution of the Economic Analysis of Corporate Law, in Research Handbook on the Economics of Corporate Law (Claire A. Hill & Brett H. McDonnell, eds., Edward Elgar, 2012) with Brett McDonnell
    SSRN
    The Promise and Limits of Financial Engineering in Emerging Markets, in Financial Innovations and the Welfare of Nations: How Cross-Border Transfers of Financial Innovations Nurture Emerging Capital Markets (Laurent L. Jacque & Paul M. Vaaler, eds., Kluwer Academic Publishers, 2001)
    SSRN

    Journal Articles

    The Rhetoric of Negative Externalities, 39 Seattle University Law Review 517 (2016)
    HeinOnline: UMN, Others | Open Access | Westlaw
    | SSRN
    Judge Jed Rakoff and Law’s Penumbra, 1 Journal of Financial Regulation 159 (2015)
    The Agency Cost Paradigm: The Good, the Bad, and the Ugly, 38 Seattle University Law Review 561 (2015) with Brett McDonnell
    HeinOnline: UMN, Others | Open Access | Westlaw
    How “Is” Became “Ought”; or, What Do Bankers Really Want?, 11 University of St. Thomas Law Journal 382 (2014)
    HeinOnline: UMN, Others | Open Access | Westlaw
    Limits of Disclosure, 36 Seattle University Law Review 599 (2013) with Steven M. Davidoff
    HeinOnline: UMN, Others | Open Access | Westlaw
    | SSRN
    Reconsidering Board Oversight Duties after the Financial Crisis, 2013 University of Illinois Law Review 859 (2013) with Brett McDonnell
    HeinOnline: UMN, Others | Open Access | Westlaw
    Bankers Behaving Badly? The Limits of Regulatory Reform, 31 Review of Banking and Financial Law 675 (2012)
    HeinOnline: UMN, Others | Open Access | Westlaw
    Of the Conditional Fee as a Response to Lawyers, Bankers and Loopholes, 1 American University Business Law Review 42 (2011-2012) with Richard W. Painter
    HeinOnline: UMN, Others | Open Access | Westlaw
    A Positive Agenda for Behavioral Law and Economics, 3 Cognitive Critique 85 (2011)
    SSRN
    Compromised Fiduciaries: Conflicts of Interest in Government and Business, 95 Minnesota Law Review 1637 (2011) with Richard W. Painter
    HeinOnline: UMN, Others | Open Access | Westlaw
    | SSRN
    Limits of Dodd-Frank’s Rating Agency Reform, 15 Chapman Law Review 133 (2011); adapted version in 31 Banking & Financial Services Policy Report 13 (May 2012)
    HeinOnline: UMN, Others | Open Access | Westlaw
    | SSRN
    Sanitizing Interested Transactions, 36 Delaware Journal of Corporate Law 903 (2011) with Brett McDonnell
    HeinOnline: UMN, Others | Open Access | Westlaw
    | SSRN
    Why Didn’t Subprime Investors Demand a (Much Larger) Lemons Premium?, 74 Law and Contemporary Problems 47 (2011)
    Open Access | Westlaw
    Berle’s Vision Beyond Shareholder Interests: Why Investment Bankers Should Have (Some) Personal Liability, 33 Seattle University Law Review 1173-1199 (2010) with Richard W. Painter
    HeinOnline: UMN, Others | Open Access | Westlaw
    | SSRN
    Concepts, Categories, and Compliance in the Regulatory State, 94 Minnesota Law Review 1151 (2010) with Kristin Hickman
    HeinOnline: UMN, Others | Open Access | Westlaw
    | SSRN
    Justification Norms Under Uncertainty: A Preliminary Inquiry, 17 Connecticut Insurance Law Journal 27 (2010)
    Westlaw
    | SSRN
    What Cognitive Psychologists Should Find Interesting about Tax, 17 Psychonomic Bulletin & Review 180 (2010)
    Who Were the Villains in the Subprime Crisis, and Why It Matters, 4 Entrepreneurial Business Law Journal 323 (2010) (Symposium on The Credit Crash of 2008: Regulation within Economic Crisis)
    HeinOnline: UMN, Others | Open Access | Westlaw
    | SSRN
    Why Did Rating Agencies Do Such a Bad Job Rating Subprime Securities?, 71 University of Pittsburgh Law Review 585 (2010) (Symposium on the Past, Present, and Future of the SEC)
    HeinOnline: UMN, Others | Open Access | Westlaw
    | SSRN
    Bargaining in the Shadow of the Lawsuit: A Social Norms Theory of Incomplete Contracts, 34 Delaware Journal of Corporate Law 191 (2009)
    HeinOnline: UMN, Others | Open Access | Westlaw
    | SSRN
    Executive Compensation and the Optimal Penumbra of Delaware Corporate Law, 4 Virginia Law & Business Review 333 (2009) with Brett McDonnell
    HeinOnline: UMN, Others | Open Access | Westlaw
    | SSRN
    Rationality in an Unjust World: A Research Agenda, 35 Queen’s Law Journal 185 (2009) (Symposium on Emerging Paradigms of Rationality)
    HeinOnline: UMN, Others | Westlaw
    | SSRN
    Why Did Anyone Listen to the Rating Agencies after Enron?, 4 Journal of Business & Technology Law 283 (2009)
    HeinOnline: UMN, Others | Open Access | Westlaw
    | SSRN
    Commentary: The Trajectory of Complex Business Contracting in Latin America, 83 Chicago-Kent Law Review 179 (2008) (Symposium on Law and Economic Development in Latin America: A Comparative Approach to Legal Reform)
    HeinOnline: UMN, Others | Open Access | Westlaw
    Negative Dimensions of Identity: A Research Agenda for Law and Public Policy, 9 Minnesota Journal of Law, Science & Technology 643 (2008) (Symposium on Self and Other: Cognitive Perspectives on Trust, Empathy and the Self) with Avner Ben-Ner
    HeinOnline: UMN, Others | Open Access | Westlaw
    Reducing the Negative Consequences of Identity: A Potential Role for the Nonprofit Sector in the Era of Globalization, 79 Annals of Public and Cooperative Economics 579 (2008) with Avner Ben-Ner
    SSRN
    The Myth of Discovery, 9 Minnesota Journal of Law, Science & Technology 743 (2008) (Symposium on Self and Other: Cognitive Perspectives on Trust, Empathy and the Self)
    HeinOnline: UMN, Others | Open Access | Westlaw
    | SSRN
    The Rationality of Preference Construction (and the Irrationality of Rational Choice) 9 Minnesota Journal of Law, Science & Technology 689 (2008) (Symposium on Self and Other: Cognitive Perspectives on Trust, Empathy and the Self)
    HeinOnline: UMN, Others | Open Access | Westlaw
    | SSRN
    Anti-Anti-Anti-Paternalism, 2 New York University Journal of Law & Liberty 444 (2007) (Symposium on Legal Paternalism)
    HeinOnline: UMN, Others | Open Access | Westlaw
    | SSRN
    Creating Failures in the Market for Tax Planning, 26 Virginia Tax Review 943 (2007) with Philip A. Curry & Francesco Parisi
    HeinOnline: UMN, Others | Open Access | Westlaw
    | SSRN
    Disney, Good Faith, and Structural Bias, 32 Journal of Corporation Law 833 (2007) with Brett McDonnell
    HeinOnline: UMN, Others | Westlaw
    | SSRN
    Stone v. Ritter and the Expanding Duty of Loyalty, 76 Fordham Law Review 1769 (2007), reprinted in Corporate Governance: Directors’ Duties (K. Janardhanacharyulu, ed., Amicus Books, an imprint of Icfai University Press) with Brett McDonnell
    HeinOnline: UMN, Others | Open Access | Westlaw
    | SSRN
    Tax Lawyers are People Too, 26 Virginia Tax Review 1065 (2007) (commentary on Victor Fleischer, Options Backdating, Tax Shelters, and Corporate Culture, 26 Virginia Tax Review 1031 (2007)), reprinted in Monthly Digest of Tax Articles (2007)
    HeinOnline: UMN, Others | Open Access | Westlaw
    The Law and Economics of Identity, 33 Queen’s Law Journal 389 (2007)
    HeinOnline: UMN, Others | Westlaw
    | SSRN
    A Cognitive Theory of Trust, 84 Washington University Law Review 1717 (2006) with Erin Ann O'Hara
    HeinOnline: UMN, Others | Open Access | Westlaw
    | SSRN
    Beyond Mistakes: The Next Wave of Behavioural Law and Economics, 29 Queen’s Law Journal 563 (2004)
    HeinOnline: UMN, Others | Westlaw
    | SSRN
    How Do German Contracts Do as Much with Fewer Words?, 79 Chicago-Kent Law Review 889 (2004); also published in Ordinary Language and Legal Language (Barbara Pozzo, ed., Giuffre, 2005) (conference papers presented at the 2003 Conference of Comparative Law and Language, co-sponsored by the Associazione italiana di diritto comparato, the American Society of Comparative Law, and Milan University Faculty of Law) with Christopher King
    HeinOnline: UMN, Others | Open Access | Westlaw
    | SSRN
    Law and Economics in the Personal Sphere, 29 Law & Social Inquiry 219 (2004) (reviewing Richard Posner, Sex and Reason (Harvard University Press, 1992), Eric Posner, Law and Social Norms (Harvard University Press, 2000), Robert Frank, Luxury Fever (Free Press, 1999) & Margaret Brinig, From Contract to Covenant (Harvard University Press, 2000)) (review essay)
    HeinOnline: UMN, Others | Westlaw
    Regulating the Rating Agencies, 82 Washington University Law Quarterly 43 (2004), reprinted in 36 Securities Law Review 313 (2005)
    HeinOnline: UMN, Others | Westlaw
    | SSRN
    Rating Agencies Behaving Badly: The Case of Enron, 35 Connecticut Law Review 1145 (2003) (Symposium on Crisis in Confidence: Corporate Governance and Professional Ethics Post-Enron)
    HeinOnline: UMN, Others | Westlaw
    A Comment on Language and Norms in Complex Business Contracting, 77 Chicago-Kent Law Review 29 (2002) (Symposium: Theory Informs Business Practice) (symposium issue editor)
    HeinOnline: UMN, Others | Westlaw
    | SSRN
    Comment on Adler & Triantis: The Aftermath of North LaSalle Street, 70 University of Cincinnati Law Review 1297 (2002) (Fifteenth Annual Corporate Law Symposium: Corporate Bankruptcy in the New Millennium)
    HeinOnline: UMN, Others | Westlaw
    Is Secured Debt Efficient?, 80 Texas Law Review 1117 (2002)
    HeinOnline: UMN, Others | Westlaw
    | SSRN
    The Future of Synthetic Securitization: A Comment on Bell & Dawson, 12 Duke Journal of Comparative and International Law 563 (2002) (Symposium on International Securitization and Structured Finance)
    HeinOnline: UMN, Others | Open Access | Westlaw
    | SSRN
    Whole Business Securitization in Emerging Markets, 12 Duke Journal of Comparative and International Law 521 (2002) (Symposium on International Securitization and Structured Finance)
    HeinOnline: UMN, Others | Open Access | Westlaw
    | SSRN
    Why Contracts are Written in “Legalese,” 77 Chicago-Kent Law Review 59 (2002) (Symposium: Theory Informs Business Practice) (symposium issue editor)
    HeinOnline: UMN, Others | Westlaw
    | SSRN
    How Investors React to Political Risk, 8 Duke Journal of Comparative and International Law 283 (1998) (Symposium on International Issues in Cross-Border Securitization and Structured Finance)
    HeinOnline: UMN, Others | Open Access | Westlaw
    | SSRN
    Latin American Securitization: The Case of the Disappearing Political Risk, 38 Virginia Journal of International Law 293 (1998)
    HeinOnline: UMN, Others | Westlaw
    | SSRN
    Review Essay, 6 UCLA Entertainment Law Review 137 (1998) (reviewing Tyler Cowen, In Praise of Commercial Culture (Harvard University Press, 1998))
    HeinOnline: UMN, Others | Westlaw
    Securitization: A Financing Strategy for Emerging Markets, 11 Journal of Applied Corporate Finance 55 (1998)
    Why Financial Appearances Might Matter: An Explanation for “Dirty Pooling” and Some Other Types of Financial Cosmetics, 22 Delaware Journal of Corporate Law 141 (1997), reprinted in 30 Securities Law Review 89 (1998)
    HeinOnline: UMN, Others | Westlaw
    | SSRN
    Securitization: A Low-Cost Sweetener for Lemons, 74 Washington University Law Quarterly 1061 (1996), reprinted in part in Steven L. Schwarcz, Bruce A. Markell & Lissa L. Broome, Securitization, Structured Finance and Capital Markets (LexisNexis, 2004); adapted version in 10 Journal of Applied Corporate Finance 64 (Spring 1997), reprinted in The New Corporate Finance: Where Theory Meets Practice (Donald H. Chew, ed., Irwin/McGraw-Hill, 2d ed., 1999)
    HeinOnline: UMN, Others | Westlaw
    | SSRN

    Documents and Reports

    Collateral for IMF Loans, in Expert Papers (Allan H. Meltzer, chairman, International Financial Institution Advisory Commission, 2000)

    Book Reviews

    Book Review, 18:2 Canadian Journal of Law and Society 150 (2003) (reviewing Rebecca Johnson, Taxing Choices: The Intersection of Class, Gender, Parenthood and the Law (University of British Columbia Press, 2002))
    HeinOnline: UMN, Others | Westlaw

    Editorials, Commentary & Letters

    They’ll Matter Less If We Make Them Matter Less, New York Times, Feb. 19, 2013 (Room for Debate on How to Prevent More Bond Rating Fiascoes)
    Open Access
    Ratings Proposal Is a Distraction From the Decline, New York Times, Feb. 6, 2013 (Room for Debate on European Downgrades)
    Open Access
    Why S.E.C. Settlements Should Hold Senior Executives Liable, New York Times, Dealbook, May 29, 2012 with Richard W. Painter
    Open Access
    A Simpler Rein Than The Volcker Rule, New York Times, Dealbook, Oct. 28, 2011
    Open Access
    Think Globally, Rate Locally, The European (July 22, 2011)
    Open Access
    Help banks, one last time, and help us all, Minneapolis Star Tribune, Dec. 4, 2010 (op-ed) with Prentiss Cox
    Reining in the Rating Agencies, New York Times, Dealbook, May 25, 2010
    Open Access

    Other Publications

    The Motivating Force of a Bonus Pool, and Other Objections, 108 Northwestern University Law Review Online 271 (Apr. 24, 2014)
    Open Access | Westlaw
    Expert Commentary on Rating Agencies, Dec. 6, 2011
    Open Access
    Introduction to the Symposium: Self and Other: Cognitive Perspectives on Trust, Empathy and the Self, 9 Minnesota Journal of Law, Science & Technology 637 (2008)
    HeinOnline: UMN, Others | Open Access | Westlaw
    Introduction, 77 Chicago-Kent Law Review 3 (2002) (Symposium: Theory Informs Business Practice) (symposium issue editor)
    HeinOnline: UMN, Others

  • Finance & Commerce - http://finance-commerce.com/2016/11/claire-hill/

    Claire Hill

    By: Todd Nelson November 18, 2016 3:35 am 0

    Title/Company: Professor and James L. Krusemark Chair in Law, University of Minnesota Law School

    Education: B.A., M.A., philosophy, University of Chicago; J.D., American University; LL.M., J.S.D., Columbia University

    Claire Hill left the practice of law for the academic world so she could focus on studying legal issues. Her research on corporate governance helped underpin the new book “Better Bankers, Better Banks,” which she wrote with another University of Minnesota law professor, Richard Painter.

    What’s the biggest turning point in your career and how did that lead you to what you are doing today?

    When I was a practicing lawyer, I gradually realized that I wanted to explore issues, sometimes in depth, rather than just focusing on what the client wanted and quickly moving on. I also became interested in how people learned to draft and negotiate contracts, something I felt that law school had not prepared me sufficiently well for — and something that I wanted to change for future law students.

    What are your job responsibilities today?

    My main responsibilities are teaching and research. I teach business associations/corporations, and mergers and acquisitions. In both courses, I try to meld theory and practice. I want the students to learn not just what the law says, but also why it says what it says. I also teach a seminar in law and economics. Students get to read, hear and critique senior scholars’ papers. The scholars often tell me they get better comments from my students than they do from their peers. Research takes about half of my time. The topics I am researching and writing about include banker responsibility, investor decision-making, risk management, and the intersection of corporate social responsibility and profit maximization. Finally, I also bring in speakers and host events.

    What’s your proudest community achievement?

    Bringing in fascinating speakers to the law school for lectures open to the public. The speakers have included important figures in law, such as Judge Jed Rakoff, but also public intellectuals in other fields, such as Jonathan Haidt and Tyler Cowen. During the talks and at the after-talk receptions, I feel as though connections are being made, and ideas are being hatched.

    What’s the best advice you received from a mentor, and what’s your best advice to women entering your field?

    Before I started teaching I was somewhat afraid of public speaking. My sister’s advice was “I’ve never known of anyone who went into teaching who didn’t get over stage fright very quickly.” I quickly found that rather than being scary, teaching is really fun as well as, of course, very rewarding.
    The advice I would give — to women, but really, to any student — is to try your hardest to discover where your strengths, interests and passions lie; they may not lie where you think.

Hill, Claire A.: Better bankers, better banks: promoting good business through contractual commitment
I. Walter
53.10 (June 2016): p1518.
Copyright: COPYRIGHT 2016 American Library Association CHOICE
http://www.ala.org/acrl/choice/about

Hill, Claire A. Better bankers, better banks: promoting good business through contractual commitment, by Claire A. Hill and Richard W. Painter. Chicago, 2015. 279p bibl index afp ISBN 9780226293059 cloth, $26.00; ISBN 9780226293196 ebook, $18.00

53-4469

HG1573

2015-2748 CIP

Banking is special. It channels the "air supply" of the global economy from those who have it to those who need it--from the beginning a critical role in improving social welfare. We want banks to be efficient, creative, and competitive. Bank failures can be equally special, with contagion spreading rapidly across geographies and markets and sweeping beyond the financial sector into the real sector of economies. And banks inevitably face plenty of conflicts of interest that must be managed. The contention is there is still plenty of "privatization of returns and socialization of risks" in the system even after recent regulatory reforms. What is needed to manage these sometimes conflicting goals is an alignment of interests. Eminent legal scholars Hill and Painter (both, Univ. of Minnesota Law School) focus on one aspect of this conundrum, the incentives that motivate the work of bankers. They basically propose the introduction of the word "malus" (personal liability) in bankers' vocabulary alongside their favorite term, "bonus." The authors call this "covenant banking," something others would call "skin in the game." They anchor their logic in the great traditions of business and banking partnerships and do indeed make a compelling argument. Fortunately things are gradually if imperfectly moving in their direction. Summing Up: *** Highly recommended. Upper-division undergraduate through professional readership.--I. Walter, New York University
Source Citation (MLA 8th Edition)
Walter, I. "Hill, Claire A.: Better bankers, better banks: promoting good business through contractual commitment." CHOICE: Current Reviews for Academic Libraries, June 2016, p. 1518. General OneFile, go.galegroup.com/ps/i.do?p=ITOF&sw=w&u=schlager&v=2.1&id=GALE%7CA454942880&it=r&asid=324fd462bff7fa035d74288012fae112. Accessed 27 Mar. 2017.

Gale Document Number: GALE|A454942880
Law and economics of mergers and acquisitions; 2v
28.6 (Dec. 2013):
Copyright: COPYRIGHT 2013 Ringgold, Inc.
http://www.ringgold.com/

9781781954713

Law and economics of mergers and acquisitions; 2v.

Ed. by Steven M. Davidoff and Claire A. Hill.

Edward Elgar

2013

1616 pages

$765.00

Hardcover

Economic approaches to law

KF1477

Davidoff (Ohio State U.) and Hill (U. of Minnesota) have selected 33 articles preciously published in law reviews and journals between 1984 and 2010 that elucidate the role of lawyers in assisting with corporate mergers and acquisitions. Volume one opens with the 1965 article by Henry Manne explaining the importance of mergers as a constructive control on managerial agency costs. Other papers characterize business lawyers as transaction cost engineers, discuss the allocation of power between directors and stockholders under Delaware law, evaluate whether shareholders benefit more from an auction or a negotiated sale, and debate the validity of poison pill defenses. The second volume describes responses to a hostile takeover, demonstrates how lock-ups reduce the chance that a company will be purchased by another buyer, examine the wave of private equity deal terminations during the financial crisis, and address differences between U.S. law and other national laws.

([c] Book News, Inc., Portland, OR)
Source Citation (MLA 8th Edition)
"Law and economics of mergers and acquisitions; 2v." Reference & Research Book News, Dec. 2013. General OneFile, go.galegroup.com/ps/i.do?p=ITOF&sw=w&u=schlager&v=2.1&id=GALE%7CA351467367&it=r&asid=44ff8211dd2112256e8721d546b5d233. Accessed 27 Mar. 2017.

Gale Document Number: GALE|A351467367
Research handbook on the economics of corporate law
27.4 (Aug. 2012):
Copyright: COPYRIGHT 2012 Ringgold, Inc.
http://www.ringgold.com/

9781848449589

Research handbook on the economics of corporate law.

Ed. by Claire A. Hill and Brett H. McDonnell.*

Edward Elgar Publishing

2012

486 pages

$260.00

Hardcover

Research handbooks in law and economics*

K1315

In presenting these 24 papers on economic analysis of corporate law, the editors (professors of law at the U. of Minnesota) have adopted the aim of previous volumes in the series of Research Handbooks in Law and Economics to serve as a reference that introduces important topics and to act as a provocateur by suggesting weaknesses and important areas for further exploration. The papers are organized into five sections examining the core constituencies affected by corporate law, including directors, officers, shareholders, creditors, employees, and the general public; the mechanisms by which some insider constituencies seek to monitor and deter misbehavior by corporate officers and directors; the role of gatekeepers, including lawyers, credit rating agencies, accountants, research analysts, providers of directors and officers insurance, and investment banks; jurisdiction; and new theoretical developments.

([c] Book News, Inc., Portland, OR)
Source Citation (MLA 8th Edition)
"Research handbook on the economics of corporate law." Reference & Research Book News, Aug. 2012. General OneFile, go.galegroup.com/ps/i.do?p=ITOF&sw=w&u=schlager&v=2.1&id=GALE%7CA298705906&it=r&asid=a183c8a045f8d8ff62b11235af2f5116. Accessed 27 Mar. 2017.

Gale Document Number: GALE|A298705906

Walter, I. "Hill, Claire A.: Better bankers, better banks: promoting good business through contractual commitment." CHOICE: Current Reviews for Academic Libraries, June 2016, p. 1518. General OneFile, go.galegroup.com/ps/i.do?p=ITOF&sw=w&u=schlager&v=2.1&it=r&id=GALE%7CA454942880&asid=324fd462bff7fa035d74288012fae112. Accessed 27 Mar. 2017. "Law and economics of mergers and acquisitions; 2v." Reference & Research Book News, Dec. 2013. General OneFile, go.galegroup.com/ps/i.do?p=ITOF&sw=w&u=schlager&v=2.1&it=r&id=GALE%7CA351467367&asid=44ff8211dd2112256e8721d546b5d233. Accessed 27 Mar. 2017. "Research handbook on the economics of corporate law." Reference & Research Book News, Aug. 2012. General OneFile, go.galegroup.com/ps/i.do?p=ITOF&sw=w&u=schlager&v=2.1&it=r&id=GALE%7CA298705906&asid=a183c8a045f8d8ff62b11235af2f5116. Accessed 27 Mar. 2017.
  • LSE Review of Books
    http://blogs.lse.ac.uk/lsereviewofbooks/2016/02/03/book-review-better-bankers-better-banks-promoting-good-business-through-contractual-commitment-by-claire-a-hill-and-richard-w-painter/
    Word count: 1512

    Book Review: Better Bankers, Better Banks: Promoting Good Business through Contractual Commitment by Claire A. Hill and Richard W. Painter
    blogs.lse.ac.uk/lsereviewofbooks/2016/02/03/book-review-better-bankers-better-banks-promoting-good-business-through-contractual-commitment-by-claire-a-hill-and-richard-w-painter/
    2/3/2016

    In Better Bankers, Better Banks: Promoting Good Business through Contractual Commitment, Claire A. Hill and Richard W. Painter provide an account of the changes to banking that encouraged the risk-taking that became a factor in the global financial crisis, and propose a solution: ‘covenant banking’. The authors’ suggestion of binding bankers to contracts that encourage accountability to stakeholders and increase personal liability for losses is an essential contribution to debates over the regulation of the financial sector. However, the wider structural factors that enable excessive risk-taking behaviour remain somewhat overlooked, writes Mehmet Kerem Coban.

    Better Bankers, Better Banks: Promoting Good Business through Contractual Commitment. Claire A. Hill and Richard W. Painter. University of Chicago Press. 2015.

    Better Bankers, Better BanksHistory is marked by many turning points which we may call critical junctures. The global financial crisis has been one example. The crisis underscored various deficiencies in the financial and banking sectors as well as with the regulatory regime defining legitimate social behaviour within them.

    Since the crisis, ordinary citizens are discussing how to regulate these sectors that have caused enormous social, economic and political consequences. Better Bankers, Better Banks: Promoting Good Business Through Contractual Commitment is not just another analysis of the causes of the crisis, but rather contributes to the debate on how to regulate the system. Claire A. Hill and Richard W. Painter have legal backgrounds, which makes the book rich in terms of court filings reporting systemic misbehaviour. They propose a ‘covenant banking’ whereby individual bankers (read: elite and highly-paid bankers) are liable to cover fees and sanctions and add capital to the bank in cases of insolvency. The authors reach this solution by showing changes in culture and business models that have led to greater focus on the material benefits that attract bankers compared to other-regarding motives of banking, a social practice whose primary traditional role is intermediation between savers and borrowers.

    Let us focus on a few important pillars on which the authors build this solution. Firstly, the sector has undergone changes in culture. Investment banks used to be partnerships between individual bankers; however, since the 1970s, they are public companies where partners do not have to assume personal liability in case of failure. This has been accompanied by a rising trend in external financing leading to ‘gambling’ with others’ money. Due to limited personal liability and more external financing, bankers have arguably changed the way that they interpret risk-taking and most probably redefined their risk preferences. What was neglected with this trend is that bankers (and banks) have more leverage with less equity and capital set aside, as Anat Admati and Martin Hellwig persuasively highlighted.

    Secondly, the moral hazard problem has become more acute in various forms, including the mystification of banking services and the advice that bankers provide as well as the misrepresentation of their practice and its consequences. LIBOR manipulation is a showcase for this deterioration of values and social norms (49-53). Another example is the Lewin-McCain Report on JP Morgan. Even though they were aware of the low-quality credit profile of potential borrowers, bankers chose to ignore this fact (43-44).

    Thirdly, the relationship between customers and clients and bankers has changed. Previously, relationship-based banking had prioritised the reputation of the bank and its bankers. However, since the advent of transaction-based banking, bankers lost the appetite to maintain their reputations. We should also note what the authors do not reflect, which is that transaction-based banking might have motivated borrowers to lose their loyalty to the bank with which they work. When both sides lose loyalty, each side will prioritise individual benefits without any regard to the interests of others. The consequence of bankers losing sight of the interests of others, such as taxpayers, homeowners, shareholders and stakeholders in society at large, is ‘reputation mining’, in the words of George A. Akerlof and Robert J. Shiller.
    Wall Street BullImage Credit: ‘Wall Street Bull’ (Sam valadi)

    Some structural changes also contributed to bankers ignoring the consequences of their fraudulent practices. These involve rising competition not only at the domestic level, but also internationally, as well as regulatory changes and competition. When changes in the structure, culture and business model coincide with greater focus on material gains in terms of money, status and self-esteem, a less cautious attitude toward risk-taking and a sector ethos defined by profit-seeking with high leverage and excessive risk-taking behaviour, the interests of others can easily be ignored, while limited liability allows individual bankers to privatise gains but socialise losses.

    The solution that Hill and Painter propose in the book is ‘covenant banking’. The logic behind this is boosting ownership in responsible banking and accountability to stakeholders among individual bankers. For the authors, highly-paid bankers earning more than $3 million per year could be liable in cases of insolvency or financial charges; personal liability is specified in their contracts to make the commitment credible, while enabling legal procedure if bankers do not comply with the terms and conditions of the contract. The second solution is for bankers who are earning less than around $1 million per year to be given some of their annual pay in the form of assessable stocks so that they are invested in the resiliency of the bank (note that the authors do not clearly state how they find the $3 million and $1 million thresholds to be appropriate). Hill and Painter argue that although government and regulators can play an essential role in introducing, implementing and supervising such contracts, banks can adopt contractual employment schemes for their own benefit as bankers would be incentivised to take fewer risks. In the meantime, by paying less in cash but more in the form of assessable stocks, banks could increase retained earnings that may add up to equity and/or capital. Hill and Painter note that there might be objections to the solution mainly due to potential challenges in adoption, implementation and feasibility.

    This solution is valuable insofar as changes in the banking sector and the ethos of profit-maximisation regardless of social and economic consequences – what the authors call ‘promotion focus vs. prevention focus’ – are considered. What could be further reflected upon is the bigger picture. Besides structural and cultural changes, a bigger picture would entail credit-debt growth as financial cycles have become much more credit-driven. From the perspective of individual households, as they feel more pressure on their purchasing power due to a lower pace of real wage growth, they become more dependent upon credit (see also Raghuram G. Rajan, Fault Lines: How Hidden Fractures Still Threaten the World Economy). Blaming bankers may not be the best way to address these systemic deficiencies, although attempts at boosting ownership and accountability, albeit imperfect, welcome further discussion on improving the regulatory framework. However, without addressing the major drivers of cultural change and business models that aim to adapt to particular macroeconomic and institutional conjunctures in the world, contractual commitments may not fully address the inner problem of excessive risk-taking and the rewards of such practices.

    Finally, what is also paradoxical about the authors’ solution is the claim that the law can crowd out morality. The solution seems like a legal mechanism to bind bankers to a more responsible banking, without considering the moral aspects, let alone concerns as to whether such commitments are credible. For example, contracts that bind bankers personally in cases of insolvency or coverage may not discourage them from taking excessive risks; instead, they may continue to do so and be paid highly. Bankers may leave money aside in case they have to step in to cover losses or fines. Consequently, without addressing major structural factors that lead bankers to take excessive risks, convenant banking could only remain as a minor and arguably negligible solution to bankers’ immorally excessive, risk-taking behaviour.

    Overall, Hill and Painter’s contribution should not be overlooked. The book is an essential contribution to the current debate on policy and institutional design in financial and banking sector regulatory frameworks at the micro-level, compared to Basel-type macro-level regulations.

    Mehmet Kerem Coban is a PhD Candidate and Deputy Editor-in-Chief of the Asian Journal of Public Affairs at the Lee Kuan Yew School of Public Policy, National University of Singapore. His PhD thesis focuses on the political economy of financial regulation in emerging markets. He obtained his Master’s Degree in Development Studies at the Graduate Institute of International and Development Studies, Geneva. His main research interests are international political economy, the political economy of development, financial liberalization and regulation and development aid. Email: m.keremcoban[at]u.nus.edu. Read more reviews by Mehmet Kerem Coban.

    Note: This review gives the views of the author, and not the position of the LSE Review of Books blog, or of the London School of Economics.

  • USA Today
    http://www.usatoday.com/story/opinion/2015/10/29/glenn-reynolds-give-bankers-skin-game-individual-liability-column/74750362/
    Word count: 819

    Glenn Reynolds: Give bankers skin in the game
    Glenn Harlan Reynolds 4:34 p.m. ET Oct. 29, 2015
    Gambling billions in a single trade might vanish if losses hit traders' personal wallets.
    635816546613967482-Reynolds

    (Photo: Richard Drew, AP)
    239 CONNECTTWEET 14 LINKEDIN 25 COMMENTEMAILMORE

    The financial crisis of 2008-09 is over but not gone. We passed laws and regulations that probably won’t help much. And despite a lot of harsh words aimed at Wall Street and the banks, President Obama pretty much let individual bankers escape unscathed — perhaps because Wall Street and the banks were among his biggest campaign contributors. (That phenomenon has led some to call him “President Goldman Sachs.”)

    But relying on regulators to control banks and Wall Street is likely to fail anyway. Leaving aside their extensive political influence, financial types are likely to stay ahead of regulators because 1) they’re usually smarter; and 2) they understand their industry better. Plus, they can change approaches faster than regulators can amend regulations.

    Even so, the apparent change in the financial community over the past few decades has been dramatic. The economic crisis brought the activities of investment bankers into the limelight, and suddenly it seemed the staid buttoned-up banker types of the popular imagination had been transformed into wild speculators risking billions on a single trade. What happened?

    According to Claire Hill and Richard Painter in their new book, Better Bankers, Better Banks:Promoting Good Business through Contractual Commitment, the reason is that the billions they’re risking on a single trade aren’t their own but somebody else’s. Hill and Painter want to do something about it by requiring that financial operators have their own assets at stake.
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    This isn’t a new idea. Until fairly recently, big investment banks such as Goldman Sachs or Salomon Bros. operated as general partnerships. In a general partnership, the partners are liable — individually — for debts of the firm. With potentially unlimited liability if things went wrong, the partners had an incentive to be comparatively cautious. (With corporations, on the other hand, shareholders aren’t on the hook for the firm’s debts. The most they can lose is the value of their shares.) Without unlimited liability, incentives are different. As Hill and Painter note, Salomon’s culture changed very rapidly after it became a corporate entity in which the partners, now called “managing directors,” weren’t personally at risk. Within a few years it went from a staid, conservative business to the anything-goes entity described in Michael Lewis’ Liar’s Poker.

    It’s easy to engage in risky schemes when success gets you a huge bonus, while failure just costs someone else some money. One solution would be to require investment banks to be organized as general partnerships. (There’s still such a requirement for law firms). But Hill and Painter think we don’t need to go that far.

    Their solution is something they call "covenant banking," in which bankers’ compensation is at risk for bad deals. Not only would they get bonuses when things go well, but they’d have to cough up past bonuses, and salary, when deals go badly for clients.

    Such an approach might be required by law, but Hill and Painter think that banks might want to do it voluntarily. As a client, wouldn’t you rather deal with a banker who stands to lose money if you do? Shareholders might even demand that their companies do business with such banks, as a way of hedging against risk. Wouldn’t it be safer to do business with people whose incentives align with your goals? (I always say I’d like my life insurance company to be in charge of my health care because it would cost them a lot of money if I died; my actual health care company, on the other hand, might save money if I kicked off quickly.)

    I’m not enough of an expert on banking and finance to say whether Hill and Painter have it right with covenant banking. But I do think that — across many sectors of our society — our problems come from having people in charge who don’t feel the pain when their various schemes go bad. As a theme for the coming decade, we could do a lot worse than requiring skin in the game. And, sad to say, we probably will.

    Glenn Harlan Reynolds, a University of Tennessee law professor, is the author of The New School: How the Information Age Will Save American Education from Itself, and a member of USA TODAY's Board of Contributors.

    In addition to its own editorials, USA TODAY publishes diverse opinions from outside writers, including our Board of Contributors.To read more columns like this, go to the Opinion front page.

  • New York Times Book Review
    https://www.nytimes.com/2016/02/07/business/fining-bankers-not-shareholders-for-banks-misconduct.html?_r=0
    Word count: 1348

    Fining Bankers, Not Shareholders, for Banks’ Misconduct

    Fair Game

    By GRETCHEN MORGENSON FEB. 6, 2016
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    The London headquarters of Barclays. The bank and Credit Suisse agreed to pay a combined $154.3 million to settle charges that they misrepresented their private stock trading services. Credit Olivia Harris/Reuters

    Ho-hum, another week, another multimillion-dollar settlement between regulators and a behemoth bank acting badly.

    The most recent version involves two such financial institutions, Barclays and Credit Suisse. They agreed last Sunday to pay $154.3 million after regulators contended that their stock trading platforms, advertised as places where investors would not be preyed on by high-frequency traders, were actually precisely the opposite. On both banks’ systems, investors trying to execute their transactions fairly were harmed.

    As has become all too common in these cases, not one individual was identified as being responsible for the activities. Once again, shareholders are shouldering the costs of unethical behavior they had nothing to do with.

    It could not be clearer: Years of tighter rules from legislators and bank regulators have done nothing to fix the toxic, me-first cultures that afflict big financial firms.
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    Regulators are at last awakening to this reality. On Jan. 5, for example, the Financial Industry Regulatory Authority, a top Wall Street cop, announced its regulatory priorities for 2016. Among the main issues in its sights, the regulator said, was the culture at these companies.

    “Nearly a decade after the financial crisis, some firms continue to experience systemic breakdowns manifested through significant violations due to poor cultures of compliance,” said Richard Ketchum, Finra’s chairman. “Firms with a strong ethical culture and senior leaders who set the right tone, lead by example and impose consequences on anyone who violates the firm’s cultural norms are essential to restoring investor confidence and trust in the securities industry.”

    But changing behavior — as opposed, say, to imposing higher capital requirements — is a complex task. And regulators must do more than talk about what banks have to do to address their deficiencies.

    Andreas Dombret is a member of the executive board of the Deutsche Bundesbank, Germany’s central bank, and head of its department of banking and financial supervision. In an interview late last year, he said he was determined to tackle the problem of ethically challenged bankers.

    “If behavior doesn’t change, banks will not be trusted and they won’t be efficient in their financing of the real economy,” he said. “A functioning banking system must be based on trust.”

    Mr. Dombret is a regulator who knows banking from the inside, having held executive positions at J.P. Morgan and Bank of America.

    Most companies have codes of ethics, Mr. Dombret said, but they often exist only on paper.

    Regulators could help encourage a more ethical approach by routinely monitoring how a bank cooperates with its overseers, Mr. Dombret said.

    “How often is the bank the whistle-blower?” he asked. “Not only to get a lesser penalty but also to show that it won’t accept that kind of behavior. We are seeing more of that.”

    Regulators may have other tools to curb dubious activities, he said. One idea is to increase the capital requirements of banks that are found to have violated rules and laws repeatedly. That not only enhances the safety of its operations but also imposes a real cost on future profits.

    “If there was a series of misconduct, would that require increasing capital or asking for more equity?” Mr. Dombret asked. “We have to think through how you would penalize misconduct.”
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    A different proposal comes in a new book by Claire A. Hill and Richard W. Painter, professors at the University of Minnesota Law School. In “Better Bankers, Better Banks,” they argue for making financial executives personally liable for a portion of any fines and fraud-based judgments a bank enters into, including legal settlements.

    The professors call this covenant banking. And it looks a lot like the kind of personal liability that was a fact of life among the top Wall Street firms when they were private partnerships.

    With their own money at risk, partners of Salomon Brothers, Lehman Brothers and Goldman Sachs were much more careful about their business dealings. When these firms became public companies funded more by outsiders’ money, that self-discipline diminished.

    “In the old days, because a partnership paid the fine, it would all come out of the partners’ pockets,” Mr. Painter said in an interview. “We’re not going to roll back the clock, but what we can do is come up with a contractual agreement in the compensation package that mimics some of that structure.”

    Their plan contains a crucial element, requiring the best-paid bankers in the company to be liable for a fine whether or not they were directly involved in the activities that generated it. Such a no-fault program, the professors argued, would motivate bankers not only to curb their own problematic tendencies but to be on the alert for colleagues’ misbehavior as well.

    This would help instill a culture, the law professors wrote, “that discourages bad behavior and its underlying ethos, the competitive pursuit of narrow material gain.”

    Putting such a covenant in place would also help eliminate the problem of banking regulators who become captured by the institutions they are supposed to police. “Those in the best position to choose conduct that is appropriate may not be regulators but, rather, bankers with a stake in the bank,” the professors wrote.

    If bankers aren’t willing to institute a system involving personal liability, regulators and judges could require it as part of their settlements or rulings, Ms. Hill said in an interview. “Something like covenant banking could be included in nonprosecution agreements, for example,” she said, or a judge overseeing a case in which a company is paying $50 million could require individuals to pay $10 million of that personally.

    A regulator could give a company the choice of a far lower fine if it were to be paid by managers, not shareholders. A company choosing to pay the higher fine and billing it to the shareholders would have some explaining to do, Mr. Painter said.

    While the idea of a covenant is centered on banking, it could easily expand to other businesses. But the focus on finance is justified, Ms. Hill said.

    “We don’t take the position that this should only be about banks,” she said. “But banks can do huge damage, and we have seen this ethos in the industry that cries out for responsibility.”

    Tighter regulations and billions in fines levied on financial firms have had little impact on banking culture, as the Barclays and Credit Suisse cases make clear. It’s high time to up the ante.

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