While facing a crisis with investors running to pull their money out of Silicon Valley Bank[1], the Federal Reserve (Fed) rolled out a federal backstop called the Bank Term Funding Program (BTFP) on March 12th.[2] The program offers one-year loans to banks struggling to provide liquidity to investors.[3] The Fed Board, pursuant to section 13(3) of the Federal Reserve Act,[4] ordered all twelve reserve banks to free up the funding necessary for the program.[5] This post examines whether the BTFP encourages banks to make more risky decisions, as well as the “moral hazards”[6] that federal lawmakers and regulators must consider before…
Author: Christopher Guardaro
While it is widely known that Silicon Valley Bank’s (“SVB”) collapse in early March wreaked havoc in the tech startup and life-science industries, many overlook one industry that took a major hit: affordable housing.[1] The fall of the Bay Area financial institution had a wider reach than one may expect because the Bank had been a go-to bank for several startups in various fields, including affordable housing.[2] Its website still touts its deep involvement in affordable housing, displaying that “SVB has invested and loaned more than $2B for housing since 2002.”[3] According to its own website, the Bank had committed…
FTX exchange was the world’s third-largest cryptocurrency exchange in July 2021.[1] It was founded in 2018 by Sam Bankman-Fried, a former trader.[2] The trading products offered by FTX included “derivatives, options, volatility products, and leveraged tokens.”[3] On November 2022, FTX filed for bankruptcy.[4] The filing alarmed an estimated 9 million customers and investors about their potential financial losses.[5] Following the filing, on December 2022, Sam Bankman-Fried was indicted in the Southern District of New York with charges including wire fraud and conspiracy by misusing customer funds.[6] With the news that customers were unlikely to recover any money invested in FTX,…
In recent months, the digital asset industry has produced sensational headlines about JPEG rocks selling for millions of dollars, imploding Ponzi-schemes, and even Kardashian family securities law violations.[1] But beneath these headlines, there’s a battle being fought for the future of financial privacy. Governments around the world, including the United States’ government, have set their sights on the “shadowy super coders” pioneering new frontiers in cryptography and encryption-based technologies in order to prevent bad actors from using digital assets to facilitate crime.[2] Proponents of the technology, however, tout the potential for encryption-based technologies to preserve individual autonomy in a digital…
Chat GPT can co-write law review articles in record time[1] and pass law school exams, including multiple choice and essay questions.[2] However, its execution is far from perfect. Dean Andrew Perlman of Suffolk Law School, who co-wrote the law review article with Chat, said “the bot ‘isn’t ready for prime time,’” but does not seem too “far off.”[3] One issue with Chat, as its creators point, out is that it “sometimes writes plausible-sounding but incorrect or nonsensical answers,”[4] referred to as AI hallucinations.[5] Interested in this new technology, its impact on corporate law, and seeing some of these hallucinations for…
In late 2022, the Department of Labor (“DOL”) lifted the prohibition against the consideration of non-pecuniary factors by retirement plan fiduciaries when making investment and proxy voting decisions for certain pensions and employee contribution plans under the Employee Retirement Income Security Act (“ERISA”).[1] Shortly thereafter, the 2022 rule gave rise to litigation that was led by 25 Republican attorney generals.[2] In announcing the lawsuit, Texas Attorney General Ken Paxton stated that the new rule “prioritizes woke Environmental, Social and Governance investing over protecting the retirement savings of approximately two-thirds of the U.S. population.”[3] Plaintiffs fear the rule will cause ERISA…
The market in the 1920’s was flooded with fraudulent activities, dangerous investments, and easy credit.[1] A bubble formed due to “exponential growth in high-volume, low-quality securities investments,” leading to the stock market to crash, or the bubble burst.[2] When the stock market crashed in October 1929, so did public confidence in the U.S. stock market.[3] To restore the country’s faith in the economy, Congress, in the peak year of the Depression, passed the Securities Act of 1933.[4] The following year, it passed the Securities Exchange Act of 1934, which created the Securities and Exchange Commission (SEC).[5] With the creation of…
In January of 2022, technology giant Microsoft announced that it would pay $68.7 billion to acquire Activision Blizzard, the publisher of popular game franchises Call of Duty, World of Warcraft, and Candy Crush.[1] The acquisition is an all-cash deal set to be completed in June of 2023.[2] Activision shareholders will have the option to convert shares and will be entitled to receive about 24 percent above market price for their Activision shares.[3] This marks the biggest takeover to ever occur in the technology and gaming sectors.[4] However, the pending acquisition has recently drawn regulators’ attention, rendering the success of the…
When compared to the regulatory response, capital markets reacted quickly to changing environmental needs and trends.[1] The speed the markets moved resulted in the politicization of Environmental Social Governance (ESG) and the dilution of ESG’s intended mission.[2] Arguably, the intention behind ESG was to instill a more comprehensive understanding of sustainability. In addition to environmental factors, ESG also encompasses principals of health, safety, corporate social responsibility, etc.[3] However, ESG has largely been casted as a leading left-wing initiative because few understand the full scope of ESG’s objectives.[4] I will highlight the main political views surrounding ESG. ESG has been weaponized…
2021 was a record-breaking year for Big Law firms in terms of revenue.[1] When commenting on the successful year, one Big Law partner described it as “the most ridiculous year ever.”[2] Across the top 100 firms, revenue increased 14.8 percent in 2021.[3] Revenue per lawyer increased 12.5 percent.[4] Fifty-two of the top 100 firms brought in over a billion dollars in gross revenue![5] The increase in demand for work also resulted in an increase in pay and hiring for lawyers.[6] At the top firms, salaries for starting associates jumped from $190,000 to $215,000.[7] Lateral hiring skyrocketed too, as partner laterals…