Microcredit Part 2

Microcredit Part 2

Application of Microcredit in the United States

Introduction:

In my last segment, I introduced the concept of microcredit and explained it’s basic foundations. As I explained before, micro-credit is one such way in which stimulating development from below in the societal totem pole also serves to advance democracy and human rights.[1] Now I will put the system into perspective and confront the issues and problems of applying such a system to the United States. The United States in any given year has 10% to 17% living below the poverty threshold as determined by the US Census. [2] This number translates to about 30-40 million individuals. Furthermore, most Americans (58.5%) will spend at least one year below the poverty line at some point between ages 25 and 75.[3] These statistics seem to suggest that a microcredit system established in the United States would be very successful. Read the rest

Regulation E: Are the problems with overdraft protection properly addressed?

I. Introduction

                In 1984, in the earliest days of the debit card, legal commentators were already considering the need for the legislature to curtail the banking practice of “Insufficient Fund Check Charges,” now colloquially referred to as overdraft fees. [1] The battle against overdraft fees failed in the 1980s when the courts largely agreed that overdraft fees were a competitively-priced "service" and therefore not subject to rules against unconscionability or penalties. [2] The battle against such fees, however, is ongoing. Twenty five years later, the latest battle in the war against overdraft fees came to a victorious end when the Federal Reserve Board, at the behest of President Obama, created a new regulation limiting the practice in significant ways. [3] This article will begin by summarizing the overdraft protection scheme typically used by banks. It will then consider the arguments against these practices, and finally, consider whether the Federal Read the rest

2008/9 Financial Crisis: A Lot to Learn On Bailouts and Too Big To Fail Companies In Order To Draft New Regulation

I.                 Introduction

Some basic financial concepts and the facts surrounding the 2008/9 economic crisis constitute the first stage of this article.

The analysis of certain characteristics and effects of the Bailouts and of having Too Big To Fail Companies in the market is what follows.

Finally, I will go into different opinions and strategies addressing main issues that are a challenge for the regulation to be enacted in order to prevent these kind crises and deal with the legacy of the bailouts. What to do with Too Big To Fail Companies is part of that approach.

It is a side goal of this article to make the topic in question and the issues arising from it, accessible not only to those with a background in law and finance but especially to people without it.

 

II.               Concepts: MoneyMarketsBubbles

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Microcredit – Part 1

Introduction  

The Nobel Peace Prize for 2006 was awarded to Muhammad Yunus and the Grameen bank for the expansion of microcredit. [1] As the Nobel committee said, “lasting peace cannot be achieved unless large population groups find ways in which to break out of poverty.” [2] Micro-credit is a way in which development can be stimulated in a matter that also serves to advance democracy and human rights. [3] 

 

Microcredit is a topic that has been fairly underexplored in regards to business law. In this multipart essay, I will first introduce the foundations and workings of microcredit. Then, I will explore how microcredit can be applied to the poor in present day society in the United States and the barriers that stand in its way. A big constraint to the expansion of microcredit programs is the absence of a legal framework. However, before a comprehensive legal framework Read the rest

Deficient in Deficiencies: The Potential Effects of the Refusal to Uphold Full-Recourse, Residential Real Estate Loans

I. Introduction

Foreclosures have taken on a new significance in the last few years as a result of the financial crisis. This has the led the finer points of the foreclosure proceedings to become extremely important for many lenders, and for many borrowers in default. One potentially important practice is the oft-rumored, but rarely documented routine of certain judges to simply refuse to grant any deficiency judgments in personal foreclosures. Cases have been brought before higher courts across the country, leading to judges being rebuked for ill-advised activism in refusing to properly entertain requests for deficiency judgments. [1] In light of the record number of foreclosures taking place in the last two years [2], a lack of deficiency judgments may prove to have a significant effect on banks and may lead to a change in the practices of many banks. The purpose of this article is to question what effects Read the rest

The Struggle for an Equal Opportunity to Bank

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The United States is founded on the premise of equal
protection. Equal protection is the scheme of legislated equality which
encompasses notions of fairness, goodness, fraternity and social justice. It’s
about maintaining a social stratification system which encourages any person to
achieve their fullest potential by preventing the worst forms of social
distinctions to arise. For years, members of our society, our elected officials
and governing bodies have fought vigorously to implement programs and laws that
promote
Read the rest

Looking East: The Road to Recovery

I.   Introduction

The current global recession has experts around the world searching for a solution in a place never looked to before.  For the first time, Asian economies are leading the way out of a global economic slump.  While the United States and Europe have pioneered past recoveries from world recessions, recovery seems to have already begun in Asia with China at the forefront.  Massive government stimulus and expansionary fiscal policies have spurred growth in Asia with other strong economic indicators seemingly providing a foundation to a full-fledged recovery.  Despite a drop in exports, Asian economies have offset the decline in this major source of revenue by slashing interest rates, keeping savings levels high, increasing infrastructure demand and harnessing the potential for expansion in domestic consumer demand.  Many Asian nations are net creditors [1], with significant current account surpluses supplied by capital inflows over Read the rest

An Option You Shouldn’t Pass Up

          The nationwide credit crisis has made the “American Dream” unattainable to most citizens. As lenders instituting rigorous requirements making qualifying for mortgages nearly impossible. The record breaking foreclosures and unemployment have added fuel to the fire, putting pressure on homeowners to reduce their asking prices. Many owners have been forced to sell at far below market value, accepting a large loss on properties that when purchased had high potential for profitability. However, the resurgence of lease-option agreements, especially in areas where foreclosure rates are high, has sparked hope for many sellers and buyers. [1]

          A lease-option agreement, also called a rent-to-buy option, combines a traditional lease between a landlord and tenant with the option or right to purchase the leased home. [2] The agreement stipulates that “the buyer take possession of the goods with the first payment and takes ownership with the final payment.”[3] With a lease-option, the Read the rest

Nationalized Treasure

I. Introduction

On February 27, 2009, the United States government announced that it was taking measures that could result in it taking as much as a 36% equity stake in Citigroup, Inc.[1] This would make the federal government the largest shareholder in Citibank.[2] By converting $25 billion in preferred shares into common stock, the federal government hoped that the move would stabilize Citibank in a tumultuous market.[3] As a result of this move, a number of people have voiced a growing concern over the federal government taking further steps to nationalize other major financial institutions.[4]

Through taking a 36% stake in Citigroup, the federal government did not fully nationalize Citibank.  As a result, Citibank is now caught between the private markets and governmental interests. While nationalization could seriously undermine confidence in the financial system, as Bank of America Chief Executive Officer Kenneth Lewis suggests,[5] this scenario poses some unique … Read the rest

The Lending Tree: How to Snag a Small Business Loan from a Bank

I. Introduction

Unless a new business owner is a millionaire or has an angel investor, a small business loan is almost always a necessity to get the business off the ground. The amount of labor that goes into starting a small business is a feat in and of itself.  However, without the financial backing of a small business loan issued from a bank, all other efforts at starting the business may be fruitless. This article will discuss how to obtain a small business loan from a bank by discussing the preparation that goes into receiving a small business loan from a bank and discussing how to manage debt.

II. Loan Meeting

Before receiving a small business loan from a bank, the new business hopeful will have to present his or her case to a lending officer from the bank. [1] While the presentation to the lender may be a … Read the rest