Found 34 article(s) for author 'Mark Roe'

The Examiners: Mark Roe on GM’s Liability

The Examiners: Mark Roe on GM’s Liability. Mark Roe, May 28, 2014, Opinion. “It’s up to the courts to decide whether old or new GM is liable for faulty ignition-switch claims. But what do you think? From a legal, practical or ethical point of view, should it be? Can GM run from its bad cars? GM’s faulty ignition switches killed people. As a matter of ethics and public relations, GM should stand behind its cars. But does bankruptcy law require it to do so? Technically, no. Bankruptcy law says that an “old GM” was sold to a “new GM” and the “new GM” excluded product liability from the debts it picked up in the sales agreement. But it’d…” Link verified August 21, 2014

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Bonded Bankers

Bonded Bankers. Mark Roe, May 16, 2014, Opinion. “Since the global financial crisis, regulators have worked hard to make the world’s big banks safer. The fundamental problem is well known: major banks have significant incentives to take on excessive risk. If their risky bets pay off, their stockholders benefit considerably, as do the banks’ CEOs and senior managers, who are heavily compensated in bank stock. If they do not pay off and the bank fails, the government will probably pick up the tab. This confluence of economic incentives to take on risk makes bank managers poor guardians of financial safety…” Link verified June 19, 2014

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Structural Corporate Degradation Due to Too-Big-To-Fail Finance

Structural Corporate Degradation Due to Too-Big-To-Fail Finance. Mark Roe, April 9, 2014, Paper. “Corporate governance incentives at too-big-to-fail financial firms deserve systematic examination. For industrial conglomerates that have grown too large to be efficient, internal and external corporate structural pressures push to resize the firm. External activists press the firm to restructure to raise its stock market value. Inside the firm, boards and managers see that the too-big firm can be more efficient and more profitable if restructured via spin-offs and sales…” Link verified June 19, 2014

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The Examiners: Mark Roe on the Outlook for Corporate Restructuring

The Examiners: Mark Roe on the Outlook for Corporate Restructuring. Mark Roe, March 27, 2014, Opinion. “Interest rates that remain near zero and debt maturities that have been pushed out to 2017 and 2018 have helped drive Chapter 11 filings to historic lows. Has this difficult environment put corporate restructuring on life support? With interest rates near to zero for several years, weak firms can refinance their way out of problems that otherwise would have forced a financial restructuring and a Chapter 11 filing. It’s all part of the extended bailout of the economy that the Fed has engineered since 2008…” Link verified June 19, 2014

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How to Use a Bank Tax to Make the Financial System Safer

How to Use a Bank Tax to Make the Financial System Safer. Mark Roe, March 25, 2014, Opinion. “A tax on the balance sheets of big banks—first proposed by US President Barack Obama in 2010 but later shelved—is back on the political agenda. Last month Dave Camp, Republican chairman of the House of Representatives Ways and Means Committee, put forward a proposal for tax reform that included a 0.035 per cent levy on bank assets more than $500bn. This would hit large institutions such as Bank of America, Citigroup and Goldman Sachs…” Link verified June 19, 2014

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The Regulatory Confidence Cycle

The Regulatory Confidence Cycle . Mark Roe, March 16, 2014, Opinion. “Unfortunately, too many reports on the transcripts miss the big picture. Criticizing the Fed for underestimating the dangers from the underground rumblings that were about to explode makes it seem that particular players just got it wrong. In fact, underestimating financial risk is a general problem – the rule, not the exception…” Link

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Corporate Short-Termism – In the Boardroom and in the Courtroom

Corporate Short-Termism – In the Boardroom and in the Courtroom. Mark Roe, March 14, 2014, Paper. “A long-held view in corporate circles has been that furious rapid trading in stock markets has been increasing in recent decades, justifying corporate governance and corporate law measures that would further shield managers and boards from shareholder influence, to further free boards and managers to pursue their view of sensible long-term strategies in their investment and management policies. Here, I evaluate the evidence in favor of that view…” Link verified June 19, 2014

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Breaking Bankruptcy Priority: How Rent-Seeking Upends the Creditors’ Bargain

Breaking Bankruptcy Priority: How Rent-Seeking Upends the Creditors’ Bargain. Mark Roe, February 25, 2014, Paper. “Bankruptcy reallocates value in a faltering firm. The bankruptcy apparatus eliminates some claims and alters others, leaving a reduced set of claims to match the firm’s diminished capacity to pay. This restructuring is done according to statutory and agreed-to contractual priorities, so that lower-ranking claims are eliminated first and higher ranking ones are preserved to the extent possible. Bankruptcy scholarship has long conceptualized this reallocation as a hypothetical bargain among creditors…” Link verified June 19, 2014

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Another Way to Make Finance Safer

Another Way to Make Finance Safer. Mark Roe, December 3, 2013, Opinion. “Since the financial crisis erupted in 2008, policymakers have sought to make the world’s banks safer, mainly via detailed instructions: use more capital, avoid specified risky activities, provide more transparency, and punish reckless behavior. But this approach to financial regulation, while laudable, requires officials to make, or shape, banks’ most important strategic decisions: capital levels, liability structure, and the scope of their business activities. And, while regulators often target bank executives’ incentives, they often leave intact the organization’s…” Link verified March 28, 2014

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