On October 30-31, the Clarke Business Law Institute’s Program on the Law and Regulation of Financial Institutions and Markets held a cutting-edge academic conference at the Cornell Club in Manhattan. Titled “Rethinking the Public-Private Balance in Financial Markets and Regulation,” the conference brought together leading scholars of financial regulation from Cornell Law School, Columbia Law School, Duke Law, Georgetown Law, George Washington Law, University of Oxford Faculty of Law, Vanderbilt Law School, the Wharton School, and many others.
The global financial crisis of 2008–2009 and its aftermath dramatically reshaped and reinvigorated academic and policy debate on the goals and tools of effective financial regulation. One of the key “big-picture” themes to have emerged from, and unified, post-crisis policy discussions is the need for an explicit reassessment of the relationship between public and private interests in the financial marketplace. By revealing the dangers of financial innovation and growth based on privatized profits and socialized risks, the crisis brought that relationship into sharp relief.
This relationship was the focus of the two-day Cornell Law School event. Several distinguished academics and rising young stars in the field contributed innovative new papers or books to the wide-ranging conversation. For example, Cornell Professors Robert Hockett and Saule Omarova, who organized the conference, presented their newly developed paradigm of the financial system as a public-private “franchise,” in which financial institutions act as private franchisees dispensing an essentially public resource—in America, the full faith and credit of the United States. Anna Gelpern (Georgetown Law) and Erik Gerding (University of Colorado Law) presented their research on the role governments play in creating the so-called “safe assets” that are central to the smooth functioning of the global financial market. Morgan Ricks (Vanderbilt Law) laid out his proposal for redesigning the monetary system in a way that explicitly recognizes its hybrid public-private nature and minimizes the likelihood of financial panics. Adding historical dimension to the discussion, Peter Conti-Brown (Wharton) presented a chapter from his forthcoming book on the Federal Reserve’s structure and role as the “Supreme Court of Finance.”
Other papers presented at the conference covered such diverse but important subjects as the systemic risk implications of cryptocurrencies (Hilary Allen of Suffolk University Law School), legal and regulatory dilemmas posed by algorithmic trading (Yesha Yadav of Vanderbilt Law), the unique mechanisms of derivatives market efficiency (Dan Awrey of Oxford Law), public-private collaboration in preventing technologically detectable white collar crime (Stavros Gadinis of Berkeley Law), and the nature of financial innovation as a subject of regulation (Cristie Ford of the Peter A. Allard School of Law, University of British Columbia).
Presenters enjoyed the benefit not only of one another’s comments and suggestions, but also of the responses from some of the preeminent scholarly authorities in the field, including Lynn Stout (Cornell Law School), Don Langevoort (Georgetown Law), Heidi Mandanis Schooner (Columbus School of Law, Catholic University), Pat McCoy (Boston College Law), Robert Thompson (Georgetown Law), and Art Wilmarth (George Washington Law). Lawrence Baxter (Duke Law) summed up the significance of the event well when he noted that the conference papers reflect a fundamental transformation in the scholarly analysis of financial markets and regulation, away from the old unexamined assumptions and toward a deeper, more comprehensive and dynamic understanding of modern finance.
Cornell Law School’s Clarke Business Law Institute plans to remain at the center of that change.