From the ancient Babylonian derivatives market to the U.S. onion-futures scandal of the 1950s to the Dodd-Frank Act, University of Chicago’s Todd Henderson and Cornell Law’s Lynn Stout found room for agreement in a lively debate, hosted by the Law School’s Federalist Society on April 9, on the role of derivatives trading in the recent financial crisis.
Their main point of contention concerned the Commodities Futures Modernization Act of 2000, which made derivatives trading legally enforceable under federal law, thus freeing it from the longstanding oversight of private exchanges. Stout asserted that this development was a principal culprit of the crisis, while Henderson pinned the blame specifically on housing speculation and argued against “un-inventing” a financial technology that has increased the efficiency of money flow.
Stout, Distinguished Professor of Corporate & Business Law, is an internationally recognized expert in the fields of corporate governance, securities regulation, financial derivatives, law and economics, and moral behavior. Her most recent book is The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations and the Public (Berrerr Koehler 2012).
Henderson is a Professor of Law and the Aaron Director Teaching Scholar at the University of Chicago Law School. Previously, he practiced appellate litigation at Kirkland & Ellis in Washington, D.C., and was an engagement manager at McKinsey & Company in Boston, where he specialized in counseling telecommunications and high-tech clients on business and regulatory strategy.