Banking law, both in practice and scholarship, enjoyed its salad days in the late 1980's during the clean-up of the S&L mess.  But afterwards it moved to the periphery with dire consequences for our ability to anticipate and grapple with financial meltdowns.

After the S&L crisis, banking law in law firm practice declined in importance.  Consolidation in the banking industry took away the clients of banking lawyers in many regional markets.  Anecdotally, even banking lawyers in big firms in big markets began transitioning to other practice areas.

Changes in practice were reflected in changes in the legal academy.  It was likely hard to justify hiring many new banking law scholars if the demand for new graduates in banking law was down.  Banking law scholars continued to write and many (including some of those who received Cassandra awards from me last week) warned of trends that contributed to the crisis.  But their ideas did not receive the attention they were due.  In other words, they stayed big, but the pictures got smaller.

A similar story can be told in the regulatory arena as the government began to lose all the expertise it accumulated in resolving the S&L crisis.

Together, this was a huge loss intellectual capital that left the U.S. ill-equipped to anticipate and deal with financial crises.

On the academic side, one lesson is that law schools should continue to invest in certain kinds of scholarship and teaching even if there is a downturn in demand by students and employers (see my Death of Big Law School post).  Another lesson is that the academy should think hard about the role of fads, fashion, and sexiness in evaluating scholarship and the role that general interest, student-edited law reviews play.  Banking law wasn't sexy, but it sure remained important. 

Tying back to my earlier post on boredom and the crisis, sometimes we need to eat our intellectual vegetables.  Tax and accounting may not appeal to lots of students, but, as I noted before, there is enormous value created and destroyed in those areas in everyday practice.  And it is no coincedence that major financial crises and scandals often start in non-sexy areas.

Michael Malloy talks about how lawyers and legal scholars also need to resist intellectual intimidation when dealing with complex subjects of finance and risk management.  We are not going to be intimidated, are we?

Financial Crisis, Law Schools/Lawyering, Legal Scholarship | Bookmark

TrackBack URL for this entry:
https://www.typepad.com/services/trackback/6a00d8345157d569e20120a6a27afa970b

Links to weblogs that reference Banking Law in Winter: a Cautionary Tale about Sexiness: