Injecting Accountability into the U.S. and Global Financial Systems

Financial practitioners, including regulators, must radically improve governance to bolster both the financial system itself and the broader social contract. Poor financial sector governance undermines us all by relentlessly warping price signals, directing investment to sub-optimal uses, and periodically spawning full-blown crises.

Croatan Institute improves systemic governance in the global debt and derivative sectors by improving the regulatory and credit rating components of deal templates. Our method is to beat the financial lobby at its own game by producing best-practice technical work, placing it in the public record of regulatory and credit rating companies, and disseminating the work widely. We are a global authority on memorializing and calling out governance failures that adulterate debt and derivative contracts worldwide, proposing fixes, and analyzing other ESG exposures in the financial system.

Project Outputs and Programs

Senior Fellow Bill Harrington Submits ESG Counter-Proposal to International Organization of Securities Commissioners (IOSCO)

Bill’s counterproposal calls out the IOSCO negligence in conflating ESG analytics with credit ratings.

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IOSCO Should Back Off ESG Ratings & Data Providers

Senior Fellow Bill Harrington’s Croatan View on IOSCO and how its members must not direct ESG analytics providers on how to govern themselves.

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Senior Fellow Bill Harrington Warns SEC That Credit Ratings Have ZERO Climate & ESG Content

On June 14, Senior Fellow Bill Harrington submitted a 46-page public comment on deficient-to-nonexistent climate and ESG content in credit rating companies to the U.S. Securities and Exchange Commission.

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New Frontiers in Fixed-Income Engagement

Croatan Institute Senior Fellow Bill Harrington leads a discussion on new frontiers in bondholder engagement with a diverse group of leading financial activists and engaged fixed-income investors.

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Federal Reserve Trashes Dodd-Frank Restrictions on Credit Ratings

In the rush to help struggling companies and prop up debt markets during the COVID crisis, the Federal Reserve has undermined a major reform Congress made in response to the Great Recession: don’t rely on credit ratings.

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Croatan Forum: Plain Speaking Produces Sustainable Action

Croatan Institute will convene the Croatan Forum 2020 at The Rickhouse in Durham, NC on April 27-29, 2020.

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Debt and Democracy: Social Crisis and Systemic Risk a Decade after the Mortgage Meltdown

In this Croatan Forum session, panelists discuss what is needed to transform the financial sector into a contributor to a more robust economy and country.

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Can Green Bonds Flourish in a Complex-Finance Brownfield?

This working paper argues that some financial products labelled “green” or “ESG” embed features that undermine financial sustainability and are thus at odds with the sustainability principles implied in green and ESG product ratings.

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US Financial Regulators Balk at Examining Complex Finance

The main US regulator for complex finance — the US Commodity Futures Trading Commission (CFTC) — intentionally got many basic features of a complex type of derivative contract exceptionally wrong in its recent No-Action Letter from late October of last year on margin requirements for swaps used by “special purpose vehicles.”

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