Am I the Only Person Paying Taxes? The Largest Tax Loophole for the Rich - Exchange Funds

President Obama is faced with a national debt at over $11 trillion and needs to fund projects such as National Health Care with an ever-shrinking tax base. As the economy has slowed, so have tax revenues. It would then make sense for the government to reexamine tax carve-outs that only benefit the wealthy. In fact, President Obama is on record saying he wants to eliminate tax loopholes. After almost fifty years, the time is ripe to eliminate one of the few congressionally authorized tax loopholes—the$30 billion Exchange Funds. This Article addresses the social equity arguments and the tax and economic theories to solve the perceived problem. The Article thoroughly covers, through unique access to materials not available in traditional legal sources, including fund private placement memorandum, the basics of fund details, fund formations, and the tax rules, and suggests solutions to solve the social inequity. This Article not only proposes how to create legislation to tax the current arrangements but offers a solution utilizing the Code and Regulations to tax these vehicles

An analysis of spending behaviour under liquidity constraints with an application to financial hedging

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Protecting Financial Markets: Lessons From the Subprime Mortgage Meltdown

Why did the recent subprime mortgage meltdown undermine financial market stability notwithstanding the protections provided by market norms and financial regulation? This article attempts to answer that question by identifying anomalies and obvious protections that failed to work, and then by examining hypotheses that might explain the anomalies and failures. The resulting explanations provide critical insights into protecting financial markets

IMF concern for reputation and conditional lending failure: theory and empirics

The IMF is entrusted with the twofold task of enforcing conditionality and deciding whether or not to continue financial assistance. In this paper we examine the implications on IMF lending behaviour of the existence of uncertainty about its ability to monitor governments’ actions and to enforce conditionality. It is shown that the existence of an even small degree of uncertainty about the IMF ability as a monitor generates incentives for the IMF to take actions to protect its reputation as a good monitor. In turn, this desire for reputation distorts IMF incentive to interrupt financial assistance, i.e. programmes will be interrupted less often than it would be socially desirable. We have empirically investigated whether IMF disbursements are affected by the IMF own share of debt, which is taken as an indicator of the length of the relationship between a country and the IMF. The longer their relationship, the stronger IMF reputation will be affected in case it ultimately decides to interrupt the lending. Our results show that a higher IMF debt share does increase IMF disbursements.IMF programmes, conditionality, incomplete information, reputation, dynamic panel

Conflicts of Interest and Credible Information Provision by Specialized and One-Stop Banks

This paper is concerned with the general question of the provision of information by financial intermediaries to their customers. Specifically, it analyzes the different ways the market can be organized and its effects on pricing and the level of information investors obtain. We find that market structure depends on on the reputation costs, switching costs for customers, and the existence of market power. This provides a new justification for the presence of one-stop banks. We demonstrate these findings by embedding signaling within a model of multi-product price competition.One-stop Bank, Information Provision, Signaling