A Bright Future for the Hedge Fund Industry and its Impact on Policy Making

The Financial Times reports that hedge funds have transformed themselves and are increasingly influencing policy. My own work provides some empirical support for these observations. My study “Hedge Fund Manager Registration under the Dodd Frank Act” shows that hedge fund managers are only mildly affected by unprecedented registration and disclosure obligations under the Dodd-Frank Act and will be […]

Read more "A Bright Future for the Hedge Fund Industry and its Impact on Policy Making"

The Return of CDOs – Do We Need Dynamic Elements in Financial Regulation?

Despite the role of collateralized debt obligations (CDOs) in the financial crisis of 2007-08, CDOs and other high risk investment products may soon be available again and are likely to proliferate.  The WSJ reports that  J.P. Morgan Chase and Morgan Stanley bankers are assembling synthetic CDOs to satisfy demand for structured products by investors who seek high […]

Read more "The Return of CDOs – Do We Need Dynamic Elements in Financial Regulation?"

Dynamic Regulation of the Financial Services Industry

Governance adjustments via stable rules in reaction to financial crises are inevitably followed by relaxation, revision, and retraction. The economic conditions and the corresponding requirements for optimal and stable rules are constantly evolving, suggesting that a different set of rules could be optimal. Despite the risk of future crises, anticipation of future developments and preemption […]

Read more "Dynamic Regulation of the Financial Services Industry"

Evolution of Law: Dynamic Regulation in a New Institutional Economics Framework

The literature on New Institutional Economics (NIE) evaluates the relationship between public and private rulemaking in the evolution of law. This paper introduces the concept of dynamic regulation as an optimization process for the learning experience in the NIE framework. Dynamic regulation describes intra- and inter-jurisdictional feedback effects between different public rulemakers and between private […]

Read more "Evolution of Law: Dynamic Regulation in a New Institutional Economics Framework"

Political opportunism in Germany deepens the gap in trust and political cultures between northern and southern Europe

Before the Euro crisis it was considered politically incorrect, even xenophobic, to suggest that standards of probity in public life vary widely across Europe. For an institution dedicated to an “ever closer union” this notion is a problem. The bailout deal for Cyprus (right after balancing the German budget -while its southern neighbors are struggling […]

Read more "Political opportunism in Germany deepens the gap in trust and political cultures between northern and southern Europe"

Improving Debt Bonus Programs for Executives

UBS is the latest bank to issue a debt bonus in the form of contingent capital notes (CoCos) to its top executives. The UBS issuance follows similar programs set up by Barclays and Credit Suisse. This emerging trend has many beneficial implications but debt bonus programs for executives can be further optimized. Banks’ debt based […]

Read more "Improving Debt Bonus Programs for Executives"