Conditionality and Constitutional Change

The burgeoning field of Critical Romani Studies explores the persistent subjugation of Europe’s largest minority, the Roma. Within this field, it has become fashionable to draw parallels to the U.S. Civil Rights Movement. Yet the comparisons are often one-sided; lessons tend to flow from Civil Rights to Roma Rights more than the other way around. It is an all-too-common hagiography of Civil Rights, where our history becomes a blueprint for other movements for racial equality.To correct this trend, this Essay reveals what American scholars can learn from Roma Rights. Specifically, this Essay argues that the European Union’s Roma integration policies illuminate a relatively unexplored dynamic of America’s post-Civil War Reconstruction: the influence of the Reconstruction Act of 1867 upon the Fifteenth Amendment. The Reconstruction Act imposed conditions upon the readmission of former Confederate states that were out of step with laws governing incumbent states within the Union. Most prominently, Southern states had to uphold the suffrage rights of freedmen, even though Northern states denied African-Americans the vote at almost every opportunity. Similarly, when the European Union (“EU”) expanded into post-Communist Eastern Europe, the Union required that accession candidates adopt minority protections that were stricter than the obligations of incumbent members.This Essay begins by framing the readmission of ex-Confederate states as conditionality, the process of negotiation over conditions for membership. Conditionality is closely associated with the eastern enlargement of the EU, another federal system that demanded more of candidates than of members. At times, the conditions for readmission and accession elevated the racial equality standards for all states. The U.S. appeared to pass the Fifteenth Amendment, for example, which guarantees the vote to all male citizens, to put to rest the uneven imposition of suffrage. Similarly, the EU incorporated “respect for minorities” into its constitutional order in response to charges of hypocrisy. The conditionality framework therefore shows how the internal and external competences of a federal government can influence one another, illuminating whether bold demands upon candidates can lift up the standards for all member states.However, Reconstruction failed so spectacularly that a “Second Reconstruction,” as the Civil Rights Movement is sometimes known, was needed to give full effect to the meaning of freedom. This Essay concludes by showing how the incongruence between readmission conditions and the constitutional framework undermined the Reconstruction Amendments. While some scholars have explored the influence of the Northwest Ordinance on the Thirteenth and Fourteenth Amendments, none have ever cast this relationship between the U.S. federal government’s internal and external governance as conditionality, that concept which has come to embody the challenge of sustaining reforms once an applicant becomes a full-fledged member

The Systemic Risk Paradox: Banks and Clearinghouses Under Regulation

Consolidation in the financial industry threatens competition and increases systemic risk. Recently, banks have seen both high-profile mergers and spectacular failures, prompting a flurry of regulatory responses. Yet consolidation has not been as closely scrutinized for clearinghouses, which facilitate trading in securities and derivatives products. These nonbank intermediaries can be thought of as middlemen who collect deposits to ensure that each buyer and seller has the wherewithal to uphold its end of the deal. Clearinghouses mitigate the credit risks that buyers and sellers would face if they dealt directly with each other. Yet here lies the dilemma: large clearinghouses reduce credit risk, but they heighten systemic risk since the collapse of one such entity threatens the entire financial system. While the systemic risks posed by large banks have been tackled by regulators, the systemic risks of these non-bank intermediaries have received less attention. In fact, clearinghouses have been cloaked with a regulatory mantle which encourages unchecked growth. This Article examines the paradoxical treatment of regulators toward the systemic risks of clearinghouses and banks. It explores two fundamental questions: Why does the paradox exist, and who benefits from it? Borrowing from antitrust, this Article offers a framework for ensuring that the entities which control a large clearinghouse (the big banks) do not abuse its market dominance

The Systemic Risk Paradox: Banks and Clearinghouses Under Regulation

Consolidation in the financial industry threatens competition and increases systemic risk. Recently, banks have seen both high-profile mergers and spectacular failures, prompting a flurry of regulatory responses. Yet consolidation has not been as closely scrutinized for clearinghouses, which facilitate trading in securities and derivatives products. These nonbank intermediaries can be thought of as middlemen who collect deposits to ensure that each buyer and seller has the wherewithal to uphold its end of the deal. Clearinghouses mitigate the credit risks that buyers and sellers would face if they dealt directly with each other. Yet here lies the dilemma: large clearinghouses reduce credit risk, but they heighten systemic risk since the collapse of one such entity threatens the entire financial system. While the systemic risks posed by large banks have been tackled by regulators, the systemic risks of these non-bank intermediaries have received less attention. In fact, clearinghouses have been cloaked with a regulatory mantle which encourages unchecked growth. This Article examines the paradoxical treatment of regulators toward the systemic risks of clearinghouses and banks. It explores two fundamental questions: Why does the paradox exist, and who benefits from it? Borrowing from antitrust, this Article offers a framework for ensuring that the entities which control a large clearinghouse (the big banks) do not abuse its market dominance

Clearing the Way to Renminbi Domination: CIPS, Antitrust, and Currency Competition

China watchers have decried the emergence of the Cross-Border Interbank Payment System (“CIPS”) as a turning point in the move to dethrone the U.S. dollar. This Article situates CIPS, which clears and settles Chinese renminbi transactions, with other financial market infrastructures, drawing lessons from how those entities have thrived or failed. In recent conversations, CIPS has been conflated with other infrastructures (e.g., the SWIFT payment messaging system) and currency trends (e.g., de-dollarization and sanctions evasion). However, a currency clearinghouse is very different than most financial institutions. For CIPS, the market-maker in the adjacent trading market is the Chinese government, a sovereign state that wields a monopoly over the renminbi. Although the global currency trading market exhibits competition, monetary sovereignty complicates the analysis of monopolization. This Article’s primary contribution is to present a coherent theoretical framework for CIPS by synthesizing the treatment of currency clearinghouses across law, finance, and economics. The Article concludes that CIPS cannot, by itself, guarantee widespread acceptance of the renminbi

Ethnically Segmented Markets: Korean-Owned Black Hair Stores

Races often collide in segmented markets where buyers belong to one ethnic group while sellers belong to another. This Article examines one such market: the retail of wigs and hair extensions for African Americans, a multi-billion-dollar market controlled by Korean Americans. Although prior scholarship attributed the success of Korean American ventures to rotating communal credit, this Article argues that their dominance in ethnic beauty supplies stems from collusion and exclusion. This Article is the first to synthesize the disparate treatment of ethnically segmented markets in law, sociology, and economics into a comprehensive framework. Its primary contribution is to forge the concept of ethnically segmented and misaligned (ESM) markets, where buyers and sellers are ethnically distinct from one another. ESM markets challenge entrenched paradigms in antitrust. In the wigs and extensions market, the endurance of Korean American retailers confounds conventional notions of market power, which is measured at the firm level. This market suggests that numerous in-group incumbents can compete intensely with one another but collaborate to stymie out-group insurgents

Can Chinese Migrants Bolster the Struggling Economies of Europe?

This article examines new Chinese migration into Europe during a period of economic stagnation - more specifically, the movement of Zhejiangese merchants in Southeast Europe. The Zhejiangese migration pattern is diversifying from a predominantly petty merchant phenomenon to include the sophisticated operations of large-scale investors. It is therefore in the interests of host countries to foster, rather than restrict, this progression toward institutionalization. As such, governments should shape immigration and antidiscrimination policies to harness the potential of these migrants

Death to Credit as Leverage: Using the Bank Anti-Tying Provision to Curb Financial Risk

Today, the need for nimble financial regulation is paramount. The Dodd-Frank financial reform bill has not prevented further scandals and will not stop banks from selling risky products. Yet one understudied law is a surprisingly versatile device that has the potential to temper financial risk: the Bank Holding Company Act’s Anti-Tying Provision. The Anti-Tying Provision prohibits banks from requiring borrowers to purchase additional products in order to obtain a loan. It applies antitrust principles to bank sales and lending practices. Under antitrust law, a seller cannot condition the availability of one item (the desired product) on the consumer’s purchase of another item (the tied product). Similarly, the Anti-Tying Provision limits when banks can condition the availability of credit on a borrower’s purchase of another product. In the last two decades, those limits have been eroded by numerous exceptions. This Article recasts the Anti-Tying Provision as a bulwark against financial risk. Specifically, this Article proposes narrowing the exceptions to the Anti-Tying Provision so as to reduce the types of investment products that can be tied to loans. Further, this Article argues that plaintiffs in bank tying actions need only prove the existence of a tying requirement, rather than actual coercion. Bolstered in these two ways, the Anti-Tying Provision can curtail sales of risky financial products to borrowers. An expanded role for the Anti-Tying Provision draws upon four theoretical underpinnings. First, this approach approximates the separation between commercial and investment banking that was central to the Glass-Steagall Act and is again resurgent with the Volcker Rule. Second, recent developments in antitrust scholarship suggest that credit can be manipulated as leverage and rate evasion. Third, borrower welfare is the proper framework from which to evaluate tying, so the effect of leveraging credit should be analyzed for its harm to borrowers, not its benefit to banks. Fourth, one lesson from the financial crisis is that antitrust law must be concerned with more than efficiency. By extension, the Anti-Tying Provision should be viewed as serving broad goals such as mitigating financial risk

Foreword: Twenty-Eighth Annual Corporate Law Symposium: Rethinking Compliance

The University of Cincinnati College of Law devoted its 28th Annual Corporate Law Center Symposium to compliance. It was a timely choice, coinciding not only with an explosion of sector regulation in recent years but also with shifting market realities for legal employment and legal education. The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) and the Patient Protection and Affordable Care Act are two prominent examples of major legislation that has added—and will continue to add—to compliance obligations for broad swathes of industries. Meanwhile, the financial crisis has spurred profound transformations in legal employment, including cutbacks in entry level hiring by large law firms and a concomitant surge of “JD plus” jobs in corporate compliance. In response, law schools have pirouetted (sometimes ungracefully) to establish compliance courses that position their graduates to compete for such jobs. In the face of these changes, however, there is the potential to remake both compliance programs and compliance education. Even as new regulations are written, companies can re-conceptualize compliance in more holistic and paradigm-bending ways—rather than hiring lobbyists to wage war with regulators. By engaging with a broader set of stakeholders than traditional corporate constituencies, for example, compliance programs can better follow the law—and perhaps even anticipate the risks that regulations intend to address. Further, by espousing ethical values in day-to-day operations, firms can bolster both their reputations. This starts not just at the board room, of course, but also in the academic training of the next generation of compliance officers even before they enter the workforce

After Georgia v. Ashcroft: The Primacy of Proportionality

This Note argues that the majority in Ashcroft have left courts with an unadministerable standard-not so much for reasons that Justice Souter articulated in his dissent, but rather because the Court provided no guidance on navigating around the myriad of factors in the convoluted totality analyses. Part I examines two cases after Ashcroft which represent different degrees of racial vote dilution: Shirt v. Hazeltine and Session v. Perry. Through other post-Ashcroft cases, Part II teases out the differences (i) between influence districts as injury and remedy and (ii) between a jurisdiction\u27s Section 5 and Section 2 obligations--details closely related to how proportionality is measured. Finally, Part III discusses substantive representation, the ideology that drove much of Ashcroft\u27s analysis. Framing it as a symptom of nonpolarized voting, this Note concludes that endorsement of substantive representation as a device to achieve colorblindness will obscure the causes of polarization