The Financial Crisis: Hot Topics Panel, AALS Annual Meeting
Friday, January 9, 8:30-10:15 am.
A discussion of the causes, short-term solutions, and longer-term implications of the current financial crisis.
Moderator: Theodore P. Seto (Loyola Law School – LA)
Speaker 1: Lauren E. Willis (Loyola Law School – LA): The Role of Mortgages
Professor Willis has written extensively on problems in the subprime
mortgage market and consumer financial transaction regulation more
generally. In speaking engagements in the U.S., the E.U., and South
Africa, she has discussed regulation of the U.S. home mortgage market,
predatory lending, financial literacy education, behavioral
decisionmaking, and other consumer law topics. She was one of a select
group of law professors that conferred with members of the Federal
Reserve Board in crafting new mortgage regulations that will take
effect in 2009. Before joining the Loyola Law faculty, she practiced at
the Civil Rights Division of the U.S. Department of Justice, litigating
lending discrimination matters.
Professor Willis will discuss
the crisis at the retail level – the evolution from credit rationing to
risk-based pricing of mortgages, the effects of risk-based pricing on
consumers’ mortgage decisions, the financial and psychological
antecedents of borrower demand for mortgages posing a high risk of
foreclosure, and the marketing and sales practices that respond to and
create that demand. She will further explain why prior law governing
mortgage transactions and even law enacted to address subprime lending
problems were ineffective.
Speaker 2: William K. Black
(University of Missouri-Kansas City School of Law): The Role of
Securitization and Financial Instruments
Professor Black is an
Associate Professor of Economics and Law at UMKC. In October 2009, he
testified before the relevant Senate committee on the role of financial
derivatives in the ongoing crisis. Before joining the academy, he
served as litigation director of the Federal Home Loan Bank Board,
deputy director of the Federal Savings and Loan Insurance Corporation,
Senior Vice President and General Counsel of the Federal Home Loan Bank
of San Francisco, Senior Deputy Chief Counsel, Office of Thrift
Supervision, and deputy director of the National Commission on
Financial Institution Reform, Recovery and Enforcement. He is author of
The Best Way to Rob a Bank is to Own One: How Corporate Executives and
Politicians Looted the S&L Industry (University of Texas at Austin
Press 2005), has written extensively on financial sector issues, and
recently helped the World Bank develop an anti-corruption initiative.
Professor Black will cover the securitization of home mortgages and the
development of derivatives that contributed to the financial crisis.
He will describe the legal and regulatory actions that allowed for
these developments and will explain why the securitization of
heterogeneous subprime mortgages and the existence of an
over-the-counter credit default swap market are fundamentally
inconsistent with a stable financial system.
Speaker 3: Arthur E. Wilmarth, Jr. (George Washington University Law School): The Role of Financial Regulation
Professor Wilmarth is chair of the AALS Section on Financial
Institutions and Consumer Financial Services and a member of the
editorial board of the Journal of Banking Regulation. He has authored
numerous articles in the fields of banking law and American
constitutional history and co-authored a book on corporate law. In
2005, the American College of Consumer Financial Services Lawyers
awarded him its prize for the best law review article published in the
field of consumer financial services law during the previous year. He
has testified before committees of the U.S. Congress, the California
legislature, and the D.C. Council on bank regulatory issues.
Professor Wilmarth will speak on the role of large financial
conglomerates and the failure of the various regulators (especially the
OCC, the OTS, the Fed and the SEC) to control the risk-taking of those
conglomerates. He will cover the failure of capital regulation and the
evident failure of on-site examination teams at major financial
institutions.