José Gabilondo

Cuban Claims: Embargoed Identities and the Cuban-American Oedipal Conflict (El grito de la Yuma)

José Gabilondo — Fri, 20 Feb 2009 13:07:28 PST

Even more complex than these property claims are the competing truth claims about what happened in Cuba because of the Revolution, how it affected those who stayed and, more importantly for this essay, what it meant for those who left to start a new life in the U.S.

Reifying law-- rule block, government, the state, and transnational governance: Monetizing Diaspora: Liquid Sovereigns and the Interest Convergence Around Worker Remittances

José Gabilondo — Fri, 20 Feb 2009 13:04:08 PST

Leveraged Liquidity: Bear Raids and Junk Loans in the New Credit Market

José Gabilondo — Sat, 24 May 2008 13:13:49 PDT

As instability in the credit market has spread from sub-prime mortgages into commercial sectors, demand grows for a cogent account of what has happened and why. To that end, I emphasize the role of market and funding liquidity dynamics in the current credit crunch. After introducing the major themes in terms accessible to a nonfinancial reader, I draw on economist Hyman Minsky’s work on financial instability to analyze the special liquidity dynamics of leverage cycles. In particular, I focus on market structure factors vexing financial market regulators: the rise of nonbank lenders, the growth of floating-rate debt; the dynamics of secondary and derivative markets for credit; and the attitude shifts that come with financial euphoria. I then zero in on the corporate version of sub-prime borrowing that many U.S. corporations used to finance the recent wave of mergers, acquisitions, and other types of “shareholder-friendly” transactions: leveraged loans. These are secured, sub-investment-grade, floating-rate loans priced off LIBOR. I conclude with recommendations for how regulatory and financial models can better reflect the new realities of the credit market.

Irrational Exuberance About Babies: The Taste for Heterosexuality and Its Conspicuous Reproduction

José Gabilondo — Wed, 21 Nov 2007 17:11:47 PST

Building on a behavioral economics game that I play with students in our law school's Women and the Law course, I argue for the existence of a pre-natal taste for heterosexuality in would-be parents using feminist theory and socioeconomics. I also argue that legal doctrine about heterosexual marriage and reproduction reflect and perpetuate a similar heterosexuality premium or gay discount in the context of two recent state equal protection cases - Hernandez v. Robles (N.Y. 2006) and Morrison v. Sadler (Ind. 2005) - which exclude homosexuals from marriage. I draw heavily on Pierre Bourdieu's theory of social reproduction to examine how heterosexual offspring serve as status goods for middle and upper-middle class parents. Although sympathetic to gay and lesbian scholarship and queer perspectives, my argument rejects post-modern approaches on these issues in order to ground the inquiry in more conventionally modern terms.

Managing Liquidity Risk in a Changing Debt Environment: The Issuer's Perspective

José Gabilondo — Wed, 21 Nov 2007 16:57:39 PST

Some trends in global funding markets are leading to a new paradigm about liquidity risk in issuers: increased cross-border debt and equity flows; the growth of equity intermediaries like private funds, sovereign wealth funds, and “club” consortia; and the use of financial products which embed contingent liabilities in firms, liabilities which “spring” into maturity in market downturns. Working together, national regulators are moving towards an enterprise – rather than entity – view of liquidity risk and making clearer distinctions between market liquidity risk (to assets) and funding liquidity risk (to obligors). Current surges of commercial liquidity make this a timely issue for issuers (liquidity consumers), prospective investors and creditors (liquidity providers), and national regulators with system responsibilities for financial public goods, like the funding markets. Creative conflicts between the interests of issuers, investor and lenders, and regulators are a healthy part of a financial system, but this paper argues for more financial literacy about funding liquidity risk. After explaining this concept, the paper situates “event risk” in the context of funding liquidity. Recent bondholder losses in leveraged restructurings of firms (“event risk”) have raised questions about whether bond indenture covenants provide adequate protection against the risk of these losses. This paper argues that funding liquidity risk and its management are important aspects of event risk, which liquidity covenants might help to mitigate for issuers and others.

Asking the Straight Question: How to Come to Speech in Spite of Conceptual Liquidation as a Homosexual

José Gabilondo — Wed, 21 Nov 2007 16:49:46 PST

This essay suggests that critical heterosexuality studies may provide a more effective basis to challenge straight supremacy than have queer studies and gay and lesbian studies. The essay also suggests pedagogical tools for use in the legal classroom to make students more aware of internalized heternormativity.

Financial Moral Panic! Sarbanes-Oxley, Financier Folk Devils, and Off-Balance Sheet Arrangements

José Gabilondo — Wed, 21 Nov 2007 16:48:48 PST

Financial losses at Enron and other large firms have generated a financial moral panic in which corporate officers and auditors have been constructed as folk devils and financial predators. An argument developed by British sociologists and widely used by the Left, moral panic theory explains how scapegoating deviants for perceived threats to social interests (in this case economic security) is a red herring, obscuring the true (often overdetermining) causes of social and economic problems. Applying moral panic theory to financial legislation, I analyze the Sarbanes-Oxley Act (Act) of 2002. I emphasize that the technical issue overlooked by the Act was the ongoing myopia of financial reporting with respect to off-balance sheet arrangements. I argue that financial reporting law should encourage more complete reporting of a firm's effective capital structure. I also recommend more use of the cash flow statement as a financial report.

Sending the Right Signals: Using Rent-Seeking Theory to Analyze the Cuban Central Bank

José Gabilondo — Wed, 21 Nov 2007 16:42:09 PST

Despite federal constraints on Cuban area studies, academic interest in legal aspects of the Cuban economy is growing. This Article considers how central bank governance structure - specifically that of the Cuban Central Bank - operates as an investment signal to potential foreign investors with respect to the term of their potential investments. Although rejecting the conventional explanation that central bank independence signals low inflation expectations, the Article argues that central bank independence does send a favorable investment signal because independence shows official openness to opportunistic deal making (rent-seeking) with financial firms for a longer term than deals possible with a dependent central bank. The Cuban Central Bank is not independent and, hence, does not send a favorable term signal to financial firms considering investment. Recognizing the value of the right signals, this Article proposes that Cuba may replicate some of the signaling value of central bank independence through issuing collateralized government securities. Such a transaction would help Cuba to rehabilitate its market credibility deficit and mitigate the effect of its legal disabilities under U.S. and other law.