The Corporate Law Gorilla Award for 2011

The last question in tonight’s Republican debate was, essentially, “what important threat to national security aren’t we talking about enough.”  This was a useful question — and it produced surprisingly illuminating answers.  (I’m with Newt– EMP!)   It reminded me of an occasional tradition here at Co-Op, the Gorilla Award.  As I explained in 2005, the award is named for this famous video demonstrating the phenomenon of “inattentional blindness.”  The gist was to recognize corporate law crises on the horizon.  2007’s lone entrant, Ben Barros, won by default and by retrospective acclimation:

“If the big bond insurers like MBIA and Ambac get downgraded because of the subprime mess, there could be a big ripple effect throughout the markets. A lot of investment-grade securities get their rating from the insurance policy (or “wrap”) that the bond insurers place on the issue. If the insurers get downgraded, a lot of debt instruments might also get downgraded. Among other things, entities that can only hold investment-grade instruments might be forced to sell lots of this stuff at the same time.”

The floor is open for nominations.  The criterion: what stuff is happening now that is likely to cause an important set of problems for corporate/financial regulatory law in the next 12-18 months, and which is not being talked about enough.  So, in my view, that excludes the European debt crisis, corporate political contributions, anything to do with credit swaps or mortgages, and (of course) the continued regulatory overhang from Dodd-Frank.  Basically, anything that comes to first to mind.  You can see why the Award is so prestigious — it requires out-of-the-box thinking!

What do you think?

You may also like...

3 Responses

  1. Vesh says:

    Capital flight leading to exploiting weak states.

    Europe is going to hell, which will drag the U.S. into a second recession, perhaps a real depression, given the already weak state of the economy. China is demonstrating distressing problems. There are few bright spots in the global investment market, and when they appear, they are awash with money that naturally quickly erodes the sorts of returns investors want. Where will the money go?

    I wonder to what extent we may already have gray- or black-market investment vehicles appearing. And if the ROI is behind Los Zetas (say), nation states are weakened more, and the banks are undercapitalized to the point where they’re begging broke states for cash, what happens?

  2. Vesh says:

    The answer, of course, is that law moves private, in to a mediation and enforcement role that doesn’t use what we’ve come to understand as traditional, namely, a monopoly of force held by nation states. Non-traditional actors have a seat at the table, money flows and oversight become a private intelligence matter, and the force of law becomes more dependent on principals than the backing of have become customary measures of the values of law.

  3. Lawrence Cunningham says:

    One or more of the big four auditing firms is crippled by lawsuits arising from botched audits. Many large companies cannot obtain audited financial statements from the private sector. Traders and investors go berserk. Government takes over the audit function. Public capital markets collapse.