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American consumer credit regulation is in the midst of a doctrinal revolution. Usury laws, for centuries the mainstay of consumer credit regulation, have been repealed, preempted, or otherwise undermined. At the same time, changes in the structure of the consumer credit marketplace have weakened the traditional alignment of lender and borrower interests. As a result, lenders cannot be relied upon to avoid making excessively risky loans out of their own self-interest. Two new doctrinal approaches have emerged piecemeal to fill the regulatory gap created by the erosion of usury laws and lenders' self-interested restraint: a revived unconscionability doctrine and ability-to-repay requirements. Some courts have held loan contracts unconscionable based on excessive price terms, even if the loan does not violate the applicable usury law. Separately, for many types of credit products, lenders are now required to evaluate the borrower's repayment capacity and to lend only within such capacity. The nature of these ability-to-repay requirements varies considerably, however, by product and jurisdiction. This Article terms these doctrinal developments collectively as the "New Usury." The New Usury represents a shift from traditional usury law's bright-line rules to fuzzier standards like unconscionability and ability-to-repay. Although there are benefits to this approach, it has developed in a fragmented and haphazard manner. Drawing on the lessons from the New Usury, this Article calls for a more comprehensive and coherent approach to consumer credit price regulation through a federal ability-to-repay requirement for all consumer credit products coupled with product-specific regulatory safe harbors, a combination that offers the best balance of functional consumer protection and business certainty. [ABSTRACT FROM AUTHOR]

INTRODUCTION 245 I. THE SIREN SONG OF BANKRUPTCY 252 A. The Inadequacy of Chapter 11 for Resolving Financial Institutions 252 B. Calls for a Financial Institution Bankruptcy Process 255 C. [...], The idea of a bankruptcy procedure for large, systemically important financial institutions exercises an irresistible draw for some policymakers and academics. Financial institution bankruptcy promises to be a transparent, law-based process in which resolution of failed financial institutions is navigated in the courts. Financial institution bankruptcy presents itself as the antithesis of an arbitrary and discretionary bailout regime. It promises to eliminate the moral hazard of "too big to fail" by ensuring that creditors will incur losses rather than being bailed out. Financial institution bankruptcy holds out the possibility of market discipline instead of an extensive bureaucratic regulatory system. This Article argues that financial institution bankruptcy is a dangerous siren song that lures with false promises. Instead of instilling market discipline and avoiding the favoritism of bailouts, financial institution bankruptcy would likely simply result in bailouts in bankruptcy garb. It would encourage bank deregulation without the elimination of the moral hazard that produces financial crises. In particular, it would undermine the federal regulators' single most powerful tool for managing systemic risk, the living wills power, even while imposing a resolution process that is doomed to failure. A successful bankruptcy is not possible for a large financial institution absent massive financing for operations while in bankruptcy, and that financing can only reliably be obtained on short notice and in distressed credit markets from one source: the U.S. government. Government financing of a bankruptcy would inevitably come with strings attached, including favorable treatment for certain creditor groups. This would result in bankruptcies that resemble those of Chrysler and General Motors, which are much decried by proponents of financial institution bankruptcy as having been disguised bailouts. The central flaw with the idea of financial institution bankruptcy is that it fails to address the political nature of systemic risk. What makes a financial crisis systemically important is whether its social costs are politically acceptable. When they are not, bailouts will occur in some form because crisis containment inevitably trumps rule of law. Resolution of systemic risk is a political question, and its weight would warp the judicial process. Financial institution bankruptcy will merely produce bailouts in the guise of bankruptcy while undermining judicial legitimacy and the rule of law.

This Article demonstrates that the housing bubble was driven by second mortgages to a much greater extent than previously appreciated. A unique feature of American law allows homeowners to take [...]

Cryptocurrency exchanges play a key role in the cryptocurrency ecosystem, serving not only as central marketplaces for buyers and sellers to trade but also as custodians for their customers' cryptocurrency holdings. Exchanges, however, are thinly regulated for safety and soundness and face major insolvency risks from their own proprietary investments as well as hacking. This piece considers what would happen to customers' custodial holdings if a cryptocurrency exchange in the United States were to fail. Any custodial relationship can potentially be characterized as a debtor-creditor relationship between the custodian and customer, rather than an entrustment or bailment of property. U.S. law gives substantial protection to the custodial holdings of securities, commodities. or cash deposits by securities, commodities brokers, or banks. No such regime exists. however, for custodial holdings of cryptocurrencies. Instead, bankruptcy courts might well deem the custodial holdings to be property of the bankrupt exchange, rather than of its customers. If so, the exchange could use or sell the cryptocurrency, and the customers would merely be general unsecured creditors of the exchange, entitled only to a pro ram distribution oj the exchange's residual assets after any secured or priority creditors had been repaid. And even if the holdings were ultimately deemed property of the customers, the customers would still experience extended disruption to their access to their holdings. Cryptocurrencies are designed to address a problem of transactional credit risk-the possibility of "double-spending." The lesson here is that credit risk can arise not just from active transacting in cryptocurrency but also from passive holding of cryptocurrency. Because this passive holding risk turns on technical details of bankruptcy and commercial law, it is unlikely to be understood, much less priced, by most market participants. The result is a moral hazard in which exchanges are incentivized to engage in even riskier behavior because they capture all of the rewards while the costs are externalized on their customers. [ABSTRACT FROM AUTHOR]

Forum shopping has long been a feature of large case chapter 11 bankruptcy practice, with debtors picking the judicial district for their case. In recent years, however, debtors have also begun to engage in intra-district judge shopping--picking the individual judge who will hear the case. This Article documents the rise of judge shopping in big chapter 11 cases and shows how it has been facilitated--sometimes deliberately--by bankruptcy courts' local rules. The result has been an extraordinary concentration of big chapter 11 cases before a handful of judges: 55% of the large public company bankruptcy cases filed in 2020 were heard by just three of the nation's 375 bankruptcy judges. This Article argues that judge shopping has undermined the integrity of the chapter 11 system in three ways. First, judge shopping has a chilling effect on creditor behavior. Judge shopping undermines creditors' confidence that they can receive a fair adjudication, which incentivizes them to settle more cheaply with debtors and to not raise even meritorious objections. Second, judge shopping undermines the adversarial process. The concentration of cases before a few judges means that attorneys anticipate making future appearances before those judges. The repeat player dynamic encourages creditors' attorneys to pull their punches and not be zealous advocates for their clients because they fear that angering the judge will harm their future business. Third, judge shopping appears to be outcome determinative. This Article shows that approval of superspeed "drive-thru" bankruptcy plans that contravene clear statutory timelines has been almost exclusively by those three judges who have been landing most of the large, public company bankruptcy cases. In response to the problem of intra-district judge shopping, the Article calls for random case assignment of large chapter 11 cases. [ABSTRACT FROM AUTHOR]

In recent years, nondebtor releases have become a common feature of big-case Chapter 11 bankruptcy practice. Nondebtor releases involve the release of creditor claims against third-party nondebtors pursuant to a bankruptcy plan confirmation order. Some nondebtor releases are consensual, meaning that they are done with the assent of the releasing creditor, but some are not. This Essay argues that all nonconsensual nondebtor releases in bankruptcy are unconstitutional. The constitutional infirmities of nondebtor releases are layered: * all nondebtor releases--consensual and nonconsensual--are outside the scope of Congress's authority under an original understanding of the Bankruptcy Clause; • all nonconsensual nondebtor releases are inconsistent with due process's requirement of an adjudication; and • all releases of claims that have not yet ripened into actual litigation or that do not involve sufficiently immediate and real disputes are outside the scope of Article III jurisdiction. These layered constitutional restrictions do not preclude all nondebtor releases. Consensual releases of ripened claims are still possible pursuant to the organic powers of federal courts. In light of the concern about constitutional abuses, however, courts should apply strict scrutiny when reviewing the adequacy of consent and when determining whether there is federal subject-matter jurisdiction. [ABSTRACT FROM AUTHOR]

Purdue Pharma, the bankrupt drug manufacturer at the center of the opioid crisis, settled its civil and criminal liability for opioid harms with the Department of Justice in a deal that contained a "poison pill" that prevented creditors from objecting to any subsequent plan of reor-ganization for Purdue: if creditors exercised their rights and pushed for Purdue's liquidation, they would forfeit all of Purdue's value to the De-partment of Justice. This Article argues that Purdue illustrates how the procedural checks and balances that make Chapter 11 bankruptcy a fair and credi-ble system have broken down. Purdue represents the confluence of three trends in bankruptcy: (1) increasingly aggressive and coercive restruc-turing techniques like the poison pill that lock in the determination of subsequent decisions in the bankruptcy; (2) the lack of appellate review for many key bankruptcy issues; and (3) the rise of "judge-shopping," facilitated by bankruptcy courts' local rules that enable debtors to handpick their judge. While each of these trends is problematic in its own right, standing alone they do not undermine the fundamental fairness of the bankruptcy system. Their convergence, however, results in a broken legal system in which a single non-Article III judge of the debtor's choosing is the only real check on what the debtor can do in Chapter 11. This situation ena-bles debtors to push through overreaching restructuring transactions that benefit favored creditors and allies at the expense of disfavored creditors, like the opioid victims in Purdue. [ABSTRACT FROM AUTHOR]