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The Dangers of the Current “Global Deregulatory Drive” in Financial Regulation: Written Testimony Submitted to the UK House of Lords Financial Services Regulation Committee
No full textThis written testimony was submitted to the UK House of Lords Financial Services Regulation Committee in response to the Committee’s “Call for Evidence” regarding the growth of private credit markets since the global financial crisis of 2007-09 (https://committees.parliament.uk/work/9235/growth-of-private-markets-in-the-uk-following-reforms-introduced-after-2008). This written testimony was tendered in conjunction with the author’s oral testimony before the Committee on July 23, 2025, and addresses the following points:
1. As past deregulatory episodes have shown, the current “global deregulatory drive” to loosen financial regulation is likely to endanger global financial markets by encouraging excessive risk-taking by large banks and further expansion of “shadow banking” activities by private equity funds, hedge funds, and other nonbank financial institutions.
2. Strong equity capital requirements, incorporated in robust leverage capital standards, are essential to maintain the stability of the banking system and to sustain lending by banks through the business cycle.
3. Community banks play a vital role in the U.S. economy by providing credit to consumers, farmers, and small businesses, and by supporting the civic life of smaller and rural communities. However, community banks need greater support from Congress and regulators to maintain their viability.
4. Large universal banks, working in conjunction with nonbank financial intermediaries (“shadow banks”), have promoted a rapid and perilous expansion of private-sector and public-sector debts since 2009. Universal banks are supporting the growth of risky private credit obligations arranged by private equity firms as well as highly leveraged trading positions established by hedge funds in sovereign debt markets.
5. Private equity funds face severe challenges and are exposing bank lenders and captive insurance companies to increasing risks. Private equity funds and private credit funds are currently seeking to sell highly leveraged and illiquid investments to retail investors as well as pension funds and investment funds that serve retail investors.
6. The enormous costs of rescuing universal banks, shadow banks, and financial markets since 2007 have imposed huge fiscal burdens on governments and left central banks with bloated balance sheets. It is very doubtful whether governments and central banks could arrange another series of large bailouts in response to a future crisis without precipitating severe and destabilizing sovereign debt crises.
7. My written testimony recommends the following reforms:
(a) Prohibiting nonbank financial institutions from offering “shadow deposits,” which are short-term, deposit-like financial claims that compete with bank deposits and are highly vulnerable to investor runs.
(b) Requiring large universal banks to hold significantly higher levels of equity capital to satisfy enhanced leverage capital requirements, and to undergo more rigorous stress tests to assess the viability and resilience of their business models,
(c) Supporting the formation of new community banks and reducing compliance burdens for those banks if they provide substantial amounts of relationship loans to small and medium-sized enterprises
(d) Implementing the Financial Stability Board’s recommendations for (i) enhanced reporting and disclosure requirements for hedge funds, private equity funds, and private credit funds; (ii) mandates requiring central clearing of government securities, repurchase agreements, derivatives, and other systemically important financial instruments; (iii) strong capital requirements for clearing facilities and robust margin requirements for their customers; and (iv) increased margin requirements, position limits, and concentration limits for significant financial instruments that are not centrally cleared.
(e) Adopting stronger reporting obligations, capital requirements, asset quality and diversification standards, and oversight procedures for life insurance and reinsurance companies that are controlled by private equity firms.
(f) Prohibiting – or establishing very strong presumptions against – offerings of private equity funds and private credit funds to retail investors or to investment funds and pension funds that serve retail investors.
(g) Restructuring financial institutions and financial markets by separating banks from securities broker-dealers and other firms engaged in capital markets activities, in accordance with principles derived from the Glass-Steagall Act of 193
When the Math Matters: Finding the “Glue” in Class Action Commonality Determinations
No full textThis Article is another offering in the “When the Math Matters” series, seeking to help readers understand use of mathematical and scientific concepts in legal contexts and unpack how to do things better. This Article focuses on the seminal case of Wal- Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011), describing how the analytical approach to identify whether a class could be certified for purposes of that litigation continues to resonate through recent cases in the federal courts. The Article explains the statistical analysis that lawyers must present to unpack a correlative analysis in similar cases, focusing on adverse impact employment discrimination as an exemplar and seeking to explain the multi-step methodology being used in the courts to address statistical analysis.
Building on previous works in this series, this Article thus presents the analytical framework for lawyers successfully to engage in use of statistics for purposes of class certification to show commonality of the class, particularly in the context of adverse impact employment discrimination. The Article chooses to use adverse impact litigation as an example to understand the statistical analysis because statistics has been fundamental to success in adverse impact litigation for many years, such that the relevant methodologies are well-developed, and the Supreme Court has spoken at some level of detail in that context, explaining the kinds of statistical analysis the Court would consider valid in an extremely large class action like that presented in the Dukes case. Such class actions already arise in a dizzying array of legal contexts, and the Article will offer thoughts on directions to find commonality – the “glue” in the vernacular of the Dukes case – in class action litigation going forward
FEATURE COMMENT: Institutional Amnesia And The Neglect Of The Federal Acquisition Workforce
No full textPublic procurement regimes may be constrained by rules, but people - procurement professionals - animate the process. Despite spending over $750 billion last year on federal contracts, the U.S. Government continues to deprioritize the professional capacity of its acquisition workforce. This article bemoans and critiques the persistent failure to recruit, develop, and retain procurement personnel, a failure exacerbated by politically driven downsizing, inadequate investments in workforce development, and misplaced reliance on procedural reform—most recently evidenced by the so-called “Revolutionary FAR Overhaul.” Drawing on historical data, case studies, and recent Government Accountability Office reports, the authors document how decades of underinvestment have produced a fragile procurement infrastructure, incapable of effectively managing increasingly complex acquisitions. The article calls for a sustained, strategic, and statutory commitment to and investment in workforce capacity as the cornerstone of procurement reform
FEATURE COMMENT: President Trump And Tariffs—The Procurement Exception
Full text linkPresident Trump’s first administration was marked by very strong “Buy American” protectionism, focused closely on procurement. Since President Trump took office again on Jan. 20, 2025, the second Trump administration instead has focused, at least preliminarily, on tariffs as a policy and revenue-generating tool. This article reviews the Trump administration’s initial moves to impose new tariffs and their potential effect on procurement. The article explains that goods purchased by federal agencies are generally exempt from tariffs, as a matter of regulation, though how exactly that exemption will be applied is often unclear. The article reviews those and other policy issues which remain open for the procurement community, as President Trump looks increasingly likely to impose significant additional duties on goods coming into the U.S
Compensation Under the Microscope: Connecticut
Full text linkWith the exception of the District of Columbia, Connecticut has paid exonerees the highest annual amount of compensation for wrongful convictions in the country, almost four times the national average. Perhaps in part because of this, Connecticut is one of a few states that has attempted to limit the scope and generosity of its statute. It, however, later backpedaled on some of those limits.
Then, in a burst of activity in early January 2025, the Connecticut Claims Commissioner cleared a backlog of pending cases, awarding more than $36 million in compensation. The Connecticut statute has thus had three lives, having been passed in 2008 and amended twice eight years apart, in 2016 and 2024. Connecticut presents a particularly interesting example of the evolution of a progressive state compensation statute. In Connecticut, claims are decided by a single person – the Claims Commissioner – who has the authority to decide all claims against the state. As we shall see, the Commissioner resolved a substantial majority of claims during life number 1, the most generous one and the one in which the statute was most effective.
This article summarizes the Commissioner’s decisions made during that period when the statute had no compensatory floors or caps. Instead, it listed factors the Commissioner should consider in exercising his or her uncabined discretion to arrive at an award adequately compensating the wrongly convicted. Those decisions, almost all of which were written by one Claims Commissioner, reviewed the relevant factors for decision, applied the facts presented, used language that was very empathetic and, ultimately, arrived at compensation amounts associated with each factor with virtually no published reasoning or analysis
The Ten Commandments in Louisiana Public Schools: A Study in the Survival of Establishment Clause Norms
Full text linkIn June 2024, Louisiana enacted legislation requiring the prominent posting of the Ten Commandments on the wall of every public-school classroom. In Roake v. Brumley, a federal district court decided that the requirement violated the Establishment Clause. Judge DeGravelles’s lengthy opinion followed the Supreme Court’s 1980 decision in Stone v. Graham, which invalidated a highly similar Kentucky law. In late June 2025, in an opinion by Judge Ramirez, the U.S. Court of Appeals for the Fifth Circuit affirmed the district court in every significant respect. Texas recently enacted similar legislation, now under the cloud of Roake v. Brumley.
In this paper, we defend the result in Roake, with some proposed modifications. Central to our argument is demonstration of the continuing vitality of the Establishment Clause principles on which Stone rests. We explain that recent decisions, especially Kennedy v. Bremerton School District, have repudiated the “no endorsement” test, a widely disparaged extension of Establishment Clause concerns. But neither Kennedy nor any other decision has abandoned longstanding constitutional norms that require government actions to have a predominant secular purpose; not have the primary effect of advancing religion; and avoid excessive entanglement with religion. Lemon v. Kurtzman will no longer be shorthand for these norms, but they endure on the authority of the School Prayer Cases (among others). Along the way, we explain the impact of the Supreme Court’s decision in Catholic Charities Bureau, Inc. v. Wisconsin Labor & Industry Review Commission; clarify the limited role of “historical practices and understandings” in the application of Establishment Clause norms; and map the place of coercion in cases about school-sponsored religion
The Civil Jury Trial Clause of the Seventh Amendment
No full textThis essay discusses the Civil Jury Trial Clause—also known as the Preservation Clause—of the Seventh Amendment to the U.S. Constitution. I provide background on English civil jury practice in common-law courts in the late eighteenth century and distinguish it from equity practice in the Court of Chancery. The essay describes Blackstone’s praise for the civil jury as well as the role the civil jury played in the events leading up to the American Revolution. The question of a federal constitutional right to civil jury trial provoked heated disputes in the Philadelphia Convention and the ratification debates. The ratification debates featured arguments between prominent Anti-Federalists and Federalists, including Patrick Henry and James Madison in Virginia, and Brutus and Alexander Hamilton in New York. Hamilton made his strongest case against a federal constitutional right to a civil jury in The Federalist No. 83.
The essay gives a detailed account of the drafting of the Seventh Amendment in the First Congress and the development of the historical test following opinions by Justice Joseph Story. Under the historical test, federal courts decide whether a civil jury trial is required by the Seventh Amendment based on the practices of English courts in 1791, the year the Amendment was ratified. The essay examines the difficulties in applying the historical test. These problems became especially acute after the merger of law and equity in the Federal Rules of Civil Procedure in 1938, when pretrial discovery facilitated party settlement before trial, and more complicated cases could be sent to civil juries. Courts have also struggled with applying the Seventh Amendment after the advent of adjudication by administrative agencies. The “public rights” doctrine addresses this issue, but the U.S. Supreme Court’s decision in SEC v. Jarkesy (2024) has called that doctrine’s scope into question
AI and Doctrinal Collapse
No full textArtificial intelligence runs on data. But the two legal regimes that govern data—information privacy law and copyright law—are under pressure. Formally, each regime demands different things. Functionally, the boundaries between them are blurring, and their distinct rules and logics are becoming illegible.
This Article identifies this phenomenon, which I call “inter-regime doctrinal collapse,” and exposes the individual and institutional consequences. Left unchecked, the data acquisition status quo favors established corporate players and impedes law’s ability to constrain the arbitrary exercise of private power. Through analysis of pending litigation, discovery disputes, and licensing agreements, this Article exposes two dominant exploitation tactics enabled by collapse: Companies “buy” data through business-to-business deals that sidestep individual privacy interests, or “ask” users for broad consent through privacy policies and terms of service that leverage notice-and-choice frameworks. Both tactics systematically reward a cadre of well-resourced actors.
Doctrinal collapse also poses a fundamental challenge to the rule of law. When a leading AI developer can simultaneously argue that data is public enough to scrape—diffusing privacy and copyright controversies—and private enough to keep secret—avoiding disclosure or oversight of its training data—something has gone seriously awry with how law constrains power. To manage these costs and preserve space for salutary innovation, we need a law of collapse. This Article offers institutional responses, drawn from conflict of laws and legal pluralism, to create one
Beyond the Supply Chain: Artificial Intelligence’s Demand Side
No full textAI governance underscores the AI “supply chain” and the “many hands” involved in the production of AI systems. Even when it addresses downstream risks, the focus remains on AI\u27s producers. Although invaluable and important, this production-centered approach risks overlooking what happens when real people use AI tools.
This Essay identifies and theorizes AI governance’s missing half, which I call the “demand side.” The demand side begins after deployment of an AI model and refers to the distinct, emergent challenges that occur as people engage with AI tools over time. Focusing on information privacy as a concrete example, I analyze human interactions on the demand side and identify three types of challenges that arise in, out of, and via generative AI systems. This Essay’s demand-side framework and associated typology applies to a range of values and policy issues, from privacy, to bias, to transparency, and beyond. Unless we account for the contextual ways that humans interact with AI systems on the ground, our regulatory interventions will remain incomplete at best and pernicious at worst. The demand side offers a way forward
ERISA and the Failure of Employers to Perform their Fiduciary Duties: Evidence from a Survey of Health Plan Administrators
No full textEmployers purchase health benefits for more than 60% of the nonelderly population, making employers both important custodians of employee well-being and important actors in the healthcare ecosystem. Because employers typically have unilateral control over health and retirement benefits, the federal Employee Retirement Income Security Act (ERISA), enacted in 1974, imposes fiduciary obligations on employers when they manage or administer benefits. We provide evidence, from a novel survey of respondents who administer or oversee health benefits for their companies, that many employers appear to neglect even the most basic of their fiduciary obligations to their employees. This neglect may help explain the poor performance of employer plans in controlling costs and providing access to healthcare, and it suggests that many employers may be vulnerable to liability from ERISA lawsuits