On October 17 and 18, 2013, BCLBE and Crowell & Moring LLP co-sponsored a two-day seminar entitled “Managing Tax Audits and Appeals.” The seminar was held at Le Meridien hotel in San Francisco, and featured Crowell & Moring attorneys as well as three esteemed guest speakers.
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Banking Law Fundamentals: “How Did We Get Here and Where Have We Gotten” – A Paradigm For Assessing the Future of Banking
Edward J. McAniff, one of the nation’s leading banking lawyers, shared his insights on navigating the banking regulatory landscape in a series of lectures at the Banking Law Fundamentals (BLF) seminar hosted by Berkeley Center for Law, Business and the Economy from September 25-27.
The lectures stemmed from a common notion that it is impossible to anticipate and recognize what consequences regulatory changes will have on the banking industry without looking through the prism of our past. Throughout the seminar McAniff convincingly and eloquently demonstrated that the only framework capable of explaining this complex and fascinating body of law is one that is built upon awareness of how the U.S. banking regulation came to be in its present confused state. The structure of regulation is then best understood as a reflection of the interplay between the nature of banking activities, themes underlying the American culture, and historical developments.
At the outset McAniff acknowledged that the astonishing complexity of rules governing banks, comprising the most intensive and extensive body of U.S. regulation, is in part due to the critical role that banks play in operating the economy. “Banks are central to the economy – they provide liquidity, transfer wealth immediately, act as intermediaries, the Fed uses them to distribute the national debt… Clearly there is no way to run a modern economy without a banking system.” However, while the significance of banks can justify the need for regulation of on their activities, themes prevalent in American history explain its illogical, internally inconsistent, fragmentized, and reactionary structure.
On September 25, the Berkeley Center for Law, Business, and the Economy (BCLBE) and Berkeley Business Law Journal (BBLJ) co-sponsored the talk: “Change in Financial Services Regulation? You Can Bank on it!” Featuring two prominent legal practitioners with a combined 70 years in the field, the discussion revealed the challenges and rewards of navigating the complex world of financial regulation. Sara Kelsey and Karol Sparks gave valuable advice and told their life stories.
Sara Kelsey described her unorthodox and impressive journey through the fast-evolving world of financial regulation. Dubbed the “Forrest Gump” of the banking bar, she evolved from a teargas-dodging Berkeley undergraduate into the General Counsel of the Federal Deposit Insurance Corporation (FDIC). Kelsey’s accomplishments illustrate the power of her motto: “always read the statute with fresh eyes – don’t listen to anyone else.”
Kelsey boldly advocated for the approval of one of the largest mergers in history while at Skadden Arps in the 1990’s, forming Citigroup from Travelers Group and Citicorp. While nearly everyone thought the merger was illegal and insane, Kelsey’s precise understanding of the Glass-Steagall Act and the Bank Holding Company Act gave her confidence that Citigroup would have a 2-5 year window for divestment of its prohibitive assets. In addition, the national political environment suggested imminent legislation that would cause major regulatory change. The gamble paid off in 1999 with the passage of the Gramm-Leach-Bliley Act, removing barriers between banking, securities, and insurance companies.
On September 23, 2013, the Berkeley Center for Law, Business and the Economy (BCLBE) hosted a lunchtime talk on banking law given by Wells Fargo & Company’s Chief Regulatory Counsel, John D. Wright. Wright’s talk was part of Banking Law Fundamentals, BCLBE’s comprehensive, 2-1/2 day introduction to banking law for attorneys, consultants, regulators, and bank professionals, hosted at UC Berkeley’s International House from September 23-25.
Wright presented an overview of post-Dodd Frank financial institutions’ “new normal,” characterized by a “highly operationalized, risk-averse, bureaucratized culture.” According to Wright, “the golden age for lawyers and consultants has finally dawned.”
Wright, who has worked with financial institutions for 25 years, described the major events that led to the current state of affairs. As an associate practicing securities and banking law at Brobeck, Phleger & Harrison in San Francisco, he often analyzed Wells Fargo’s commercial loan files. At that time, law firms were the primary directors of banks’ legal work.
Wright joined Crocker Bank in early 1980, at the beginning of the next 20 years’ deregulatory winds, which culminated in the Gramm-Leach-Bliley Act of 1999. The resulting consolidation among financial institutions greatly expanded the role of banking lawyers and sparked the growth of large in-house legal departments.
Turn of the millennium events such as “Y2K” and 9/11 further expanded the banking lawyer’s role into operations risk management. With this expansion came the breakdown of the former rigid separation between banks’ lawyers, compliance officers, and risk managers. Wright described the role of the chief regulatory counsel today as heavily focused on enterprise risk management, and consequently, as similar to a consultant’s role. At the same time, law firms representing financial institutions have moved away from strategic advice-giving, and toward the more specialized areas of litigation, regulatory enforcement, and transactional work.
By far the most significant recent change has been the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Read the rest of this entry »
Is it even worth it to go to law school? The thought came before law school, and it wriggles into those moments when all that work and stress and money pile up. It could come any time: at 4 AM when you are trying to finish that last chapter; out for drinks with friends in the workforce who blithely pay for happy hour drinks without wincing at thoughts of crushing student loans; or when you discover that you didn’t get your first pick for a ‘big law’ summer associate position. Myths and misconceptions have swirled amongst the legal community and the general public, as law professors, students, and others question the value of a law degree, leading in part to plummeting application numbers for law schools around the country.
On Thursday, September 12, 2013, Berkeley Law hosted Seton Hall University business law Professor Michael Simkovic in the first event in a lunchtime series sponsored by the Berkeley Center for Law, Business and the Economy and the Berkeley Business Law Journal. Mr. Simkovic was previously an attorney at Davis Polk & Wardwell in New York concentrating in bankruptcy litigation as well as a strategy consultant at McKinsey & Company, where he specialized in legal, regulatory and business issues affecting financial services companies. Professor Simkovic persuasively presents a different (and thankfully more positive) outlook for those considering whether to pursue a law degree.
At the outset, Professor Simkovic tackled empirical claims that law school offers a poor return on investment. He pointed out serious flaws in data sets being presented by those who claim that investing in a law degree is a low-value investment proposition. For example, earnings in early years are not necessarily strong predictors of subsequent earnings because law degree holders—as opposed to those holding a bachelor’s degree—see steep growth in salary over a short period of time during their first few years of work. It is also important not to conflate the recent dip in the general market with a dip solely in law. In other words, while things may look worse in the legal market than they did ten years ago, it is important contextualize with broader market conditions.
Today, April 8th at 12:45 in Boalt Hall, Room 100, join BCLBE for an information session about next semester’s business law courses at Berkeley Law. Executive Director of BCLBE, Ken Taymor, along with several other Boalt faculty will preview Fall 2013 classes and highlight new course offerings. This is an opportunity for students to learn how the various business course offerings can help prepare them for professional practice. Miranda-Lin Bailey (Boalt ’04) from Aera Energy also will participate in the discussion and share her perspective on what coursework to pursue before graduation and why.
Registration is available here.
On Thursday, April 11th at 12:45 in Boalt Hall, Room 110, attorneys from Paul Hastings will present the differences between litigation and transactional work. Moderator Samantha Eldredge will discuss with the panel of Paul Hastings attorneys the differences in work, style, and necessary skills. The event is cosponsored by the Career Development Office and BCLBE.
On Monday, April 15th at 12:45 in Boalt Hall, Room 110, Nathan Bush, a Partner in the Beijing and Singapore office of O’Melveny & Myers, will present on the first five years of Chinese antitrust enforcement under the Antimonopoly law and the future of Chinese competition policy under the new Xi Jinping government. The law is China’s first comprehensive competition statute. Since it took effect on August 1, 2008, China has emerged as a significant antitrust jurisdiction as its competition authorities have blocked or imposed conditions on worldwide mergers, fined foreign cartels, and even challenged the commercial practices of some state-owned enterprises.
CLE credit is available. Registration is available here.
Earlier this month, the Berkeley Center for Law, Business and the Economy hosted its latest conference on the “Russian Market: Legal and Business Perspectives.” The Network extensively covered the series of speakers and panel talks, with special attention to its IP and innovation topics. This post considers international investment in the Russian market.
Panelists Michael Sanders and Ramsey Hanna discussed the Russian investment climate and the challenges of completing cross-border transactions. Specifically, Sanders and Ramsey analyzed the joint venture between RUSANO and Domain Associates to highlight the business culture challenges of completing cross-border investment transactions with Russian firms. In March 2012, RUSANO, a Russian open joint stock company, and Domain Associates (“Domain”), a U.S. venture capital firm, entered into an investment agreement. Pursuant to the agreement, the parties agreed to jointly invest in emerging life sciences technology companies, foster transfer of technology into Russia, and establish pharmaceutical manufacturing facilities in the country. Sanders and Ramsey noted the importance of building trust and confidence between RUSANO and Domain. That is, successfully negotiating the joint venture’s terms required developing good working relationships between the parties’ legal teams and those individuals charged with structuring their partnership.
Conducting business with firms from different markets is not without its challenges. Russian firms employ different negotiation tactics and the negotiation process can be lengthy and detailed. As the director of a US pharmaceutical firm wrote, “Russia is a great place to operate – you can really build a strong, profitable business here – but there are no shortcuts.” In negotiating the RUSANO-Domain joint venture, the parties dealt with the counter-effects of corruption. To be sure, there is tendency among Russian firms to focus on procedure and formalities. In the face of corruption and bribery, honest Russian firms strive for transparency and can be “methodical to a fault.” The “rigid business culture” in Russia can be contrasted with the more “nimble start-up culture” present among Silicon Valley firms.
In a follow up to a previous post, an interesting aspect of the “Russian Market: Legal and Business Perspectives” symposium was the panelists’ discussion of Russia’s treatment of domestic and foreign businesses—and argument that it is a large stop sign for many investors. Consequently, the oil-focused government has for years ignored one of its chief assets—the country’s young science and technology innovators. Educated in traditionally math-heavy state schools and inspired by the successes of Sergey Brin and Arkady Volozh, they too are ready to innovate. This undervalued science and technology talent has attracted many Indian and Chinese investors to explore Russia, and these investments have proven to be lucrative.
The panelists agreed that Russian entrepreneurs tend to generate highly original proposals. “Russians don’t usually pitch yet another social network idea,” observed Stephanie Marrus, Director of the Entrepreneurship Center at UCSF. Building on her comment, Axel Tillman, CEO of RVC-USA, shared an example of how a small team of Russian engineers, within days, developed a commercially-viable way of avoiding a costly energy distribution inefficiency in the elevator industry, which many others thought permanent and inevitable.
The panelists also discussed how Russian entrepreneurs tend to have a can-do attitude and a strong confidence in their own ability to overcome obstacles to innovation. While valuable in many respects, these tendencies, if unchecked, can result in delays and frustrations even for entrepreneurs themselves, as they attempt to accomplish unfamiliar business tasks on their own, often without consulting an expert even when one is available. The resulting delays can be highly damaging for the outlook of a business, both in the short- and long-term future.
By Joseph Santiesteban, J.D. Candidate 2013, U.C. Berkeley School of Law, with contribution by Professor Eric Talley, Rosalinde and Arthur Gilbert Professor of Law; Director, the Berkeley Center for Law, Business, and the Economy
In 2008-09, when the government spent $350 billion dollars bailing out corporations that it deemed systemically important, it confronted several issues. First, which companies should be bailed out? Second, what should the terms of the bailout be? And third, how should the program be funded. On March 20th at Berkeley Law’s weekly Law and Economics Workshop, Berkeley Law Professor Talley Eric Talley presented “A Model of Optimal Corporate Bailouts,” a paper he co-authored with UCLA Business School Professors Antonio Bernardo and Ivo Welch, which attempts to confront these issues with a theoretical model and compare their results to the Troubled Asset Relief Program (TARP).
The Network Lecture Series: Professor Nicholas C. Howson’s Insider Trading and China’s Administrative Law Crisis
Information is relevant to many exchanges. Those familiar with capital markets will appreciate the important role that information plays in capital trading. Securities regulators across the globe attempt to regulate the flow of information in markets to ensure efficiency and protect the interests of reasonable investors.
Prof. Nicholas Howson made a very interesting presentation regarding the nuances of Securities Law of the People’s Republic of China, 2006 (‘2006 Statute’) last Wednesday as a part of BCLBE’s lunch lecture series. His presentation addressed three broad subjects: 1) Section IV of the 2006 Statute concerning insider trading; 2) enforcement issues presented by the internal guidance issued under Article 74; and 3) general comments on the creation and reception of law in China.