THE COMING DELUGE? REGULATION IN
THE AFTERMATH OF THE CREDIT CRISIS

Each year in its Annual Survey, the Columbia Business
Law Review selects a major business law topic and presents
a group of notes exploring the relevant legal and economic
developments in the area. Not surprisingly, perhaps, this
year's Survey topic focuses on the legal and commercial
implications of the renewed appetite in Washington, D.C.,
and around the nation, for the regulation of business. As
foreclosures soared and jobs disappeared in the wake of
financial distress widely perceived as being caused by
reckless governance and foolish strategies on Wall Street,
many demanded new rules to govern these institutions. The
notes included in the Survey explore a variety of issues
directly impacted by new and proposed regulatory reforms.
From calls for a return to Depression-era banking practices
to tools available to state and local governments for the
enforcement of tax laws and the collection of sorely needed
revenues to say-on-pay shareholder proposals, the authors of
the 2010 Survey analyze the diverse implications of a
changing business law landscape in which power has
appeared to shift from New York to Washington.

In the first note, Glass-Steagall Through the Back Door:
Creating A Divide in Banking Functions Through the Use of
Corporate Living Wills, Roshni Banker discusses how debate
on banking regulatory reform in the wake of the financial
crisis has centered on proposals to bring back features of the
Glass-Steagall Act of 1933 which imposed a separation
between the investment and commercial banking activities of
financial institutions. The note examines why current
proposals to resurrect Glass-Steagall may not adequately
address the modern boundary problem in banking
regulation, and ultimately advocates that greater attention
should be given to the use of corporate living wills to
incentivize the private-sector creation of a Glass-Steagall-
like divide.



COLUMBIA BUSINESS LAW REVIEW

In the second note, Subduing the Vultures: Assessing
Government Caps on Recovery in Sovereign Debt Litigation,
Elizabeth Broomfield explores recent proposals to cap the
amount of recovery available through litigation over
sovereign debt purchased on the secondary market. Over the
past two years, sovereign debt has captured international
attention as questions of sustainability and default plague
both developed and developing countries. As these concerns
escalate, vulture funds have faced increasing criticism for a
strategy of purchasing discounted sovereign debt on the
secondary market in order to pursue litigation for the full
face value of the newly acquired claims. The desire to
prevent such profiteering at the expense of the world's
poorest countries has prompted responses from creditor
governments such as the United States and the United
Kingdom. This note analyzes the merits of these recent
proposals.

In the third note, Enforcement of State and Local Tobacco
Taxes after Hemi Group, C.B. Buente discusses the methods
state and local governments have to address the challenges
they face in collecting cigarette excise taxes. This note
examines regulatory failures that have led to rampant
evasion and harmed state and local budgets, as well as the
regulatory approaches these governments may take in trying
to improve compliance. This note concludes that state and
local governments cannot rely on federal enforcement
programs but should instead make their own investments in
regulatory improvements and investigation to improve the
collection yield.

In the fourth note, Structuring Say-on-Pay: A
Comparative Look at Global Variations in Shareholder
Voting on Executive Compensation, Jeremy Ryan Delman
discusses how a renewed focus on executive compensation
growing out of the global economic calamity has led to calls
for shareholder votes on executive pay. This note argues
that while such votes do not address the underlying causes of
the financial crisis, they are nevertheless a necessary reform
because, if properly structured, they can align executive
compensation with shareholder interests. After reviewing

422 [Vol. 2010



No. 2:421]

say-on-pay regulations in other countries, this note suggests
that making shareholder votes not merely advisory but
binding on boards may be appropriate in this country
because of the difficulties U.S. shareholders face in replacing
directors.

In the final note, The Freedom of Information Act
Exemption 4 Tested: Protecting Corporate Reputation in the
Post-Crash Regulatory Environment, Kathleen Vermazen
Radez considers the increasingly active role of federal
regulators in the aftermath of the recent economic
collapse. As government regulators adopt a more assertive
posture, institutions subject to government review run the
risk that confidential business and financial information will
become subject to public disclosure under the Freedom of
Information Act ("FOIA"). The Court of Appeals for the
Second Circuit recently ruled on a pair of cases raising the
issue of corporate confidentiality and reputational harm.
The court's ruling left open an important question: whether
it is possible under FOIA for agencies and courts to
appropriately account for corporate reputational harm in an
era of increased government regulation without undermining
FOIA itself. This note examines the current jurisprudence
on reputational harm within FOIA, and proposes solutions to
help courts better determine whether the reputation in
question is that of the corporation or the regulating agency.

Roshni Banker
Elizabeth Broomfield
C.B. Buente
Jeremy Ryan Delman
Kathleen Vermazen Radez
Survey Authors

Bryant P. Lee
Survey Editor

SURVEY 423