Course Information

Course Number

344A

Credits

1

JD Graduation Requirements

This course typically satisfies all or some of the following JD graduation requirements:
  • Writing

Legal, Accounting & Business Responses to the Subprime Crisis

The subprime crisis has had a far-reaching impact. It has caused the United States Federal Reserve Bank to extend its lending to non-bank investment banks. It has compromised the independent viability of venerable institutions such as Bear Stearns. It has had a social impact of as-yet-untold proportions. It has caused the rating agencies to be called into question. Sovereign wealth funds assumed critical importance as they became leading sources of uncommitted capital, while private equity funds curbed their plans due to constraints on capital availability. Scrutiny increased on the institutions that put together many of the structures that led to the explosion in available credit. Mortgage lenders, in turn, came under the microscope for making loans to individuals who would not have received loans just five years earlier, and many of those borrowers are left in much worse positions than they were before taking out their mortgages.

With credit tight, problems are faced by almost every participant in the capital markets—from the borrowers, the servicers and the banks to the security holders, the insurers and the central banks. This course will examine these and other issues, with a view for addressing the “so what” question.

The first semester will begin with a two-month, faculty-led summary of the historical and business context for the crisis.

In November, a list of paper topics will be assembled, and students will be assigned a topic from one of their top choices. Topics might include:

--Addressing Loan Disclosure (e.g., the Lo-Doc and Ninja (no income, no job or assets) loans)
--Did Lawyers Overlook Important Ethical Obligations?
--Did Rating Agencies Fail? Are There Better Alternatives to Rating Agencies?
--Role and Responsibility of Banks, Brokers and Other Intermediaries (new regulation or limitation of exemptions)
--Solutions for Subprime Borrowers in Trouble
--Should Independent Directors Be Worried?
--Can Moral Hazards Be Prevented?
--Accounting Standards Are Stricter, but Do We Need More?
--Are There More Ecumenical Solutions to Bubbles?

First drafts of papers will be due in January. Student presentations will follow throughout the Spring. Final drafts will be due late April. If the quality is sufficient, we will then package these papers with a historical/business piece and create the first of a series of Duke Capital Markets Center publications.


Please note that course organization and content may vary substantially from semester to semester and descriptions are not necessarily professor specific. Please contact the instructor directly if you have particular course-related questions.

Sections/Instructors

Bill Brown
Legal, Accounting & Business Responses to the Subprime Crisis 344A.01
Fall 2008
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This is a year-long course. It will count for a total of 3 credits, distributed as follows: 1 in the fall, and 2 in the spring.