Lunch meeting with prof. Cynthia Williams 'Fixing Finance 2.0'

This lecture starts from the premise that further reform of finance is necessary, from the perspective of U.S. financial institutions, emphasizing the continuing prevalence of banks that are too big to fail (TBTF) and whose financial practices are too complex to understand and properly regulate. While the Dodd-Frank Act in the United States purported to solve these problems, few analyses of the effects of that statute consider the problems fully solved. To analyze, prof. Williams will briefly describe relevant theories from organizational psychology and cultural anthropology, and argue that the pathologies of too big to fail and executive compensation in finance (the bonus culture) can be more effectively addressed by including these theories in regulatory design. Rational-choice-theory, which has strongly influenced much thinking about regulation over the last three decades, is based on a narrow perspective on both the nature of the individual, as predominantly self-interested, and on the processes of law-compliance, the latter being construed as rational discounting of expected penalties. The continuing pattern of illegality notwithstanding billion-dollar settlements of TBTF banks shows the limits of penalty-driven efforts to encourage organizational commitment to law. In contrast, psychology has three decades of theory and evidence to show that individuals have multiple motives to create a deeper commitment to law. Conversely, looking at multiple motives can provide new ways to understand how compensation systems that encourage self-interest can undermine regulation.

Prof. Cynthia Williams holds Osler Chair in Business Law at Osgoode Hall Law School, York University, and is currently teaching in the new Masters Programme in Law, Markets and Behavior at the VU University Amsterdam. Professor Williams writes in the areas of securities law, corporate law, corporate responsibility, comparative corporate governance and transnational private business regulation, often in inter-disciplinary collaborations. Professor Williams helped found and is on the board of the Network for Sustainable Financial Markets, a global think-tank for academics and financial market participants, www.sustainablefinancialmarkets.net, and the Climate Bond initiative, www.climatebonds.net. Professor Williams has been an invited lecturer in China, Germany, Ireland, Israel, Italy, the Netherlands, Portugal, Scotland, South Korea, the UK and throughout North America. Professor Williams is the co-author with Professor Gording Smith of a widely-used casebook, Business Organizations: Cases, Problems and Case Studies (Wolters Kluwer 3d ed. 2012), and is working on a book criticizing shareholder wealth maximizing views of the corporate purpose. Her most recent articles discuss corporations' constitutional rights, limits on international corporate accountability, and the social reform of finance.

If you are interested in attending the lecture, please register before Tuesday the 17th of November by sending an e-mail to Marnix Wallinga