Bank corporate governance: a proposal for the post-crisis world

The corporate governance problems of banks are qualitatively and quantitatively different from those of other firms. The authors argue that a key factor contributing to this difference is the growing opacity and complexity of bank activities, a trend that has increased the difficulty of managing risk in financial firms. They also cite the governance challenges posed by the holding company organization of banks, in which two boards of directors—the bank’s own board and the board of the holding company that owns the bank—monitor the bank. This paradigm results in significant confusion about the role of bank holding company directors: While regulators focus on directors’ safety and soundness responsibilities, state corporate laws governing the conduct of managers focus on the conflicting goal of maximizing shareholder wealth. Reviewing the existing solutions to bank corporate governance problems, the authors argue that it is time to impose a more rigorous standard of conduct on bank directors. They contend that “post-crisis” bank directors should be held to high professional standards rather than the amateur standard that governs directors generally, and they propose “banking expert” requirements for risk committee members akin to the requirements that Sarbanes-Oxley imposes on audit committees. They further assert that all bank directors should be “banking literate,” possessing the specialized knowledge needed to monitor and control risk taking in complex banking institutions

\u3ci\u3eCitizens United\u3c/i\u3e as Bad Corporate Law

In this Article we show that Citizens United v. FEC, arguably the most important First Amendment case of the new millennium, is predicated on a fundamental misconception about the nature of the corporation. Specifically, Citizens United v. FEC, which prohibited the government from restricting independent expenditures for corporate communications, and held that corporations enjoy the same free speech rights to engage in political spending as human citizens, is grounded on the erroneous theory that corporations are “associations of citizens” rather than what they actually are: independent legal entities distinct from those who own their stock. Our contribution to the literature on Citizens United is that the case is as much a case about corporate law, as it is about the First Amendment. The major disagreement among the justices in Citizens United is about the applicability of settled First Amendment protections to a particular juridical entity, the corporation. In Citizens United, Justice Kennedy, writing for the majority opines that Congress may not take into account the distinctions between corporations and human beings in regulating political speech, and that corporations must be permitted the same freedom to speak as human beings. In dissent, Justice Stevens fails directly to challenge Justice Kennedy’s existential conception of the corporation notwithstanding the fact that that it constitutes the core of the majority opinion. This Article fills that void. We reject the Citizens United majority’s conception of the corporation as an “associations of citizens” and reaffirm its status as an artificial, metaphysical, and legal construct that exists separate and apart from its investors. The Citizens United view of the corporation as an association of individuals is inconsistent with the established conception of the corporation as a juridical entity with limited liability. This conception confuses the corporation with the general partnership form of business organization. In fact, the entire point of the incorporation process is to permit the creation of a legal entity that is not an association of individuals, but rather a discrete legal entity whose rights and obligations are distinct from those of it its creators, investors, managers, and other constituents. We base our argument that corporations are separate and distinct legal entities and that they are not “associations of citizens” as Citizens United asserts on three facts about the corporate form: (1) the treatment of corporations as separate legal entities is what distinguishes corporations from general partnerships and sole proprietorships and what justifies the legal notion of “limited liability” and other central characteristics of the corporate form, such as the ability to contract and to sue and be sued;(2) corporations do not have owners, they have investors who have contract-based, financial interests in the firms and limited management rights; and (3) corporations are not fiction, but fact only because the law makes them real and distinct entities with a legal identity.In Part I of this Article, we discuss the nature of the corporate form by describing its core attributes and explain that one must infer from the nature of the corporate form itself that the corporation is an entity, not an association of individuals. In Part II, we expand upon the analysis in Part I by examining certain settled legal characteristics that the Supreme Court has itself recognized to distinguish the corporation from other forms of business organization that can more plausibly be viewed as associations of individuals. We conclude Part II by noting a simple, empirical reality that cuts against Citizens United’s conception of the corporation as an “association of citizens”: stockholders are not owners of the corporation, but rather contract claimants. In Part III, we discuss the reality that in most other areas of its jurisprudence the Supreme Court embraces the traditional entity view of the corporation, and does not treat corporations as associations of citizens. Thus, Citizens United and its progeny are outliers, in tension with the Supreme Court’s decisional law in key areas like standing, tax law, criminal law, and other areas of constitutional law.Our analysis shows that in the great bulk of its jurisprudence, the Supreme Court adheres to our view of the business corporation, which is that it is a distinct legal entity whose rights and obligations are subject to statutory constraint. In fact, by long tradition, starting under Chief Justice Marshall, corporations are the opposite of Lockean–Jeffersonian human beings endowed with inalienable rights that cannot be taken away by the government. By contrast, corporations have only those rights society gives them by statutory law, and any statutory law may take into account the unique nature of corporations in limiting their ability to act. We then point out in Part IV profound problems with Citizen United’s assertion that corporations are “associations of citizens.” Namely, that assertion comes without supporting legal authority and for good reason. Neither the law nor empirical fact supports the idea that stockholders are associated citizens, much less with any common political or social viewpoint. Part V then notes the stark difference in the Supreme Court’s approach when dealing with the free speech of labor unions. In the union context, the Supreme Court’s principal concern has been ensuring that no union member has his dues used for political speech without his express authorization, and has held that it is a First Amendment violation to use union dues for political speech.Just this year, in Janus v. American Federation of State, County, and Municipal Employees, Council 31 the Court went further and held that unions could not even collect fees for the costs due to the core costs of bargaining for higher wages from a workforce member who did not join the union. In McCain-Feingold, Congress embraced concerns like this and gave corporations the ability to engage in political speech by raising funds voluntarily from stockholders for this purpose. This means took into account the corporate law consensus that stockholders’ decision to invest in business corporations does not rationally involve any authorization for the corporation to use treasury funds for political speech, and that stockholders are of diverse political viewpoints and only have a shared interest in one thing, getting a good return on their investment. But, applying a starkly different viewpoint than it takes in cases like Abood and Janus, the Supreme Court struck down McCain-Feingold and trivialized the substantial leeway McCain-Feingold had given for corporations to speak. In analyzing this contradiction, we identify the market realities that make it even less plausible that 21st century American business corporations can be deemed “associations of citizens,” especially when most of their stock is owned by institutional investors, to whom American investors are in essence compelled to turn over their capital to save for college for their kids and retirement for themselves. And we conclude Part II by noting a simple, empirical realty that cuts against Citizens United’s conception of the corporation as an “association of citizens”: stockholders are not owners of the corporation, but rather contract claimants.Finally, in Part VI we comment on the lack of any source for the Citizens United majority’s view that the corporation is an association of individuals. In particular, we observe that corporations are creatures of state law, not federal law. As the Court observed in CTS Corp. v. Dynamics Corp., “[s]tate regulation of corporate governance is regulation of entities whose very existence and attributes are a product of state law.” Therefore, determinations about the nature of the corporation, such as whether the corporation is a distinct juridical entity or an association of individuals, should be made by reference to state law, not federal law. To further this point, we survey those forms of entities that might be more plausibly considered associational in form than corporations, and note that in the main, most of them are trending strongly toward the entity conception. After doing so, we address those corporations most rationally considered to be vehicles for the shared viewed points of those who form them: non-profit corporations. As to them, we highlight two features that buttress our core point. To wit, most non-profit corporations are member corporations and do not even have stockholders. And as important, these corporations do not fund their speech using the entrusted capital of their members or stockholders. Rather, they speak using funds they raise specifically for that purpose from donors—exactly the method that Congress left open to corporations in McCain-Feingold and that the Citizens United majority said constituted a total ban on corporate speech. We conclude by noticing an irony. It was the legislative branch, not the judicial branch that is supposedly more learned in the law, that was the one that understood corporate law when addressing political speech. Congress considered the nature of corporations when enacting McCain-Feingold and took into account that corporations are not associations of citizens, but separate, state-created entities formed for reasons that cannot be rationally attributed to the shared political or philosophical views of their investors. As such, Congress allowed corporations broad freedom to engage in political speech, but only by using funds voluntarily contributed for this purpose by stockholders to a corporate-controlled political action committee (PAC). By this means, Congress left ample room for the corporation to act as a collective vehicle for stockholders who wished to affiliate for that purpose, but protected other stockholders from being forced to subsidize speech that the mere decision to invest cannot plausibly be thought to endorse. By contrast, the Supreme Court ignored, or misunderstood, the traditional corporate law concept of the corporation and thereby subjected millions of American investors to suffer the involuntary use of their entrusted capital for speech that has no rational connection to their decision to buy stock. That is bad corporate law making bad constitutional law

Assessment of Narrow-Body Transport Airplane Evacuation by Numerical Simulation

This paper presents the results obtained with a new agent-based computer model that can simulate the evacuation of narrow-body transport airplanes in the conditions prescribed by the airworthiness regulations for certification. The model, described in detail in a former paper, has been verified with real data of narrow-body certification demonstrations. Numerical simulations of around 20 narrow-body aircraft, representative of current designs in various market segments, show the capabilities of the model and provide relevant information on the relationship between cabin features and emergency evacuation. The longitudinal location of emergency exits seems to be even more important than their size or the overall margin with respect to the prescribed number and type of exits indicated by the airworthiness requirement

Involvement of Noradrenergic Neurotransmission in the Stress- but not Cocaine-Induced Reinstatement of Extinguished Cocaine-Induced Conditioned Place Preference in Mice: Role for β-2 Adrenergic Receptors

The responsiveness of central noradrenergic systems to stressors and cocaine poses norepinephrine as a potential common mechanism through which drug re-exposure and stressful stimuli promote relapse. This study investigated the role of noradrenergic systems in the reinstatement of extinguished cocaine-induced conditioned place preference by cocaine and stress in male C57BL/6 mice. Cocaine- (15 mg/kg, i.p.) induced conditioned place preference was extinguished by repeated exposure to the apparatus in the absence of drug and reestablished by a cocaine challenge (15 mg/kg), exposure to a stressor (6-min forced swim (FS); 20–25°C water), or administration of the α-2 adrenergic receptor (AR) antagonists yohimbine (2 mg/kg, i.p.) or BRL44408 (5, 10 mg/kg, i.p.). To investigate the role of ARs, mice were administered the nonselective β-AR antagonist, propranolol (5, 10 mg/kg, i.p.), the α-1 AR antagonist, prazosin (1, 2 mg/kg, i.p.), or the α-2 AR agonist, clonidine (0.03, 0.3 mg/kg, i.p.) before reinstatement testing. Clonidine, prazosin, and propranolol failed to block cocaine-induced reinstatement. The low (0.03 mg/kg) but not high (0.3 mg/kg) clonidine dose fully blocked FS-induced reinstatement but not reinstatement by yohimbine. Propranolol, but not prazosin, blocked reinstatement by both yohimbine and FS, suggesting the involvement of β-ARs. The β-2 AR antagonist ICI-118551 (1 mg/kg, i.p.), but not the β-1 AR antagonist betaxolol (10 mg/kg, i.p.), also blocked FS-induced reinstatement. These findings suggest that stress-induced reinstatement requires noradrenergic signaling through β-2 ARs and that cocaine-induced reinstatement does not require AR activation, even though stimulation of central noradrenergic neurotransmission is sufficient to reinstate

Combining Phylogeography with Distribution Modeling: Multiple Pleistocene Range Expansions in a Parthenogenetic Gecko from the Australian Arid Zone

Phylogenetic and geographic evidence suggest that many parthenogenetic organisms have evolved recently and have spread rapidly. These patterns play a critical role in our understanding of the relative merits of sexual versus asexual reproductive modes, yet their interpretation is often hampered by a lack of detail. Here we present a detailed phylogeographic study of a vertebrate parthenogen, the Australian gecko Heteronotia binoei, in combination with statistical and biophysical modeling of its distribution during the last glacial maximum. Parthenogenetic H. binoei occur in the Australian arid zone and have the widest range of any known vertebrate parthenogen. They are broadly sympatric with their sexual counterparts, from which they arose via hybridization. We have applied nested clade phylogeographic, effective migration, and mismatch distribution analyses to mitochondrial DNA (mtDNA) sequences obtained for 319 individuals sampled throughout the known geographic ranges of two parthenogenetic mitochondrial lineages. These analyses provide strong evidence for past range expansion events from west to east across the arid zone, and for continuing eastward range expansion. Parthenogen formation and range expansion events date to the late Pleistocene, with one lineage expanding from the northwest of its present range around 240,000 years ago and the second lineage expanding from the far west around 70,000 years ago. Statistical and biophysical distribution models support these inferences of recent range expansion, with suitable climatic conditions during the last glacial maximum most likely limited to parts of the arid zone north and west of much of the current ranges of these lineages. Combination of phylogeographic analyses and distribution modeling allowed considerably stronger inferences of the history of this complex than either would in isolation, illustrating the power of combining complementary analytical approaches

Digits Lost or Gained? Evidence for Pedal Evolution in the Dwarf Salamander Complex (Eurycea, Plethodontidae)

Change in digit number, particularly digit loss, has occurred repeatedly over the evolutionary history of tetrapods. Although digit loss has been documented among distantly related species of salamanders, it is relatively uncommon in this amphibian order. For example, reduction from five to four toes appears to have evolved just three times in the morphologically and ecologically diverse family Plethodontidae. Here we report a molecular phylogenetic analysis for one of these four-toed lineages – the Eurycea quadridigitata complex (dwarf salamanders) – emphasizing relationships to other species in the genus. A multilocus phylogeny reveals that dwarf salamanders are paraphyletic with respect to a complex of five-toed, paedomorphic Eurycea from the Edwards Plateau in Texas. We use this phylogeny to examine evolution of digit number within the dwarf−Edwards Plateau clade, testing contrasting hypotheses of digit loss (parallelism among dwarf salamanders) versus digit gain (re-evolution in the Edwards Plateau complex). Bayes factors analysis provides statistical support for a five-toed common ancestor at the dwarf-Edwards node, favoring, slightly, the parallelism hypothesis for digit loss. More importantly, our phylogenetic results pinpoint a rare event in the pedal evolution of plethodontid salamanders

Genetic Structure and Demographic History Should Inform Conservation: Chinese Cobras Currently Treated as Homogenous Show Population Divergence

An understanding of population structure and genetic diversity is crucial for wildlife conservation and for determining the integrity of wildlife populations. The vulnerable Chinese cobra (Naja atra) has a distribution from the mouth of the Yangtze River down to northern Vietnam and Laos, within which several large mountain ranges and water bodies may influence population structure. We combined 12 microsatellite loci and 1117 bp of the mitochondrial cytochrome b gene to explore genetic structure and demographic history in this species, using 269 individuals from various localities in Mainland China and Vietnam. High levels of genetic variation were identified for both mtDNA and microsatellites. mtDNA data revealed two main (Vietnam + southern China + southwestern China; eastern + southeastern China) and one minor (comprising only two individuals from the westernmost site) clades. Microsatellite data divided the eastern + southeastern China clade further into two genetic clusters, which include individuals from the eastern and southeastern regions, respectively. The Luoxiao and Nanling Mountains may be important barriers affecting the diversification of lineages. In the haplotype network of cytchrome b, many haplotypes were represented within a “star” cluster and this and other tests suggest recent expansion. However, microsatellite analyses did not yield strong evidence for a recent bottleneck for any population or genetic cluster. The three main clusters identified here should be considered as independent management units for conservation purposes. The release of Chinese cobras into the wild should cease unless their origin can be determined, and this will avoid problems arising from unnatural homogenization