Law & Business: Governance of Public/Private Finance
B55.****
NYU Stern School of Business
NYU School of Law
Wagner School of Public Service
Hon. Richard Brodsky, JD
Fellow: Wagner School of Public Service
Adjunct: NYU Stern School of Business
Email: RB170@nyu.edu
Fall Term 2011
Room: KMC *- **
Purpose
Traditional methods of capital flow between the private and public sector have undergone
tremendous change. For many years the financial and social needs of both sectors were adequately
addressed by traditional debt instruments, largely bonds and notes. Starting some years ago, there has
been a proliferation of new entities that now account for the bulk of public indebtedness. These entities
are given a variety of names: Public Authorities, Industrial Development Agencies, Economic
Development Offices, Local Development Corporations, Public/Private Partnerships, and most recently
and dramatically Sovereign Wealth Funds including TARP.
These entities have sprung up without serious examination of the reasons for their creation, their
governance, their policies and practices, and their consequences. This course will examine all forms of
these new entities, the law and reality of their operation, international, national and state efforts to
monitor and control them, and their impacts on financial markets and government policies.
Cases to be studied include the financing of the new Yankee Stadium, efforts by the IMF to rationalize
and regulate them, efforts by New York State to rein in and democratize their operations, the
application of the legal concept of fiduciary obligation to their operations, unintended legal and
financial problems, and the unresolved financial, ethical, legal, policy and political questions that
remain. The course will include required readings, notable guest speakers from both public and private
sectors, team case studies, and a final paper.
Law & Business of Public/Private Finance
B55.****
Session #1:
The Movement of Capital Between The Private And Public Sectors
A. The Creation Of New Entities and Policies Overview of the creation and purposes
of Public Authorities, Industrial Development Agencies, Local Development Corporations,
Public/Private Partnerships, Sovereign Wealth Funds and related entities.
Readings: Excerpts from New Law Reins In New York State's Public Authorities - NYTimes.com
Dec 11, 2009; Municipal Use of Local Development Corporations and Other Private Entities:
Office Of The New York State Controller; What Is A Sovereign Wealth Fund? SWF Institute
B. Legal, Financial and Ethical Problems and Challenges
Readings: Excerpts from The Rise Of Sovereign Wealth Funds- International Monetary Fund;
NThe So-called Sovereign Wealth Funds- European Commission; Report: New York State
Commission on Public Authority Reform
Guest Speaker: Lieutenant Governor Richard Ravitch.
Session #2:
The New Yankee Stadium
A. Structure and Governance
B. Outcomes
C .Legal, Financial and Ethical problems and Challenges
Readings: Excerpts from Bond Prospectus New York City Industrial Development Agency;
“THE HOUSE THAT YOU BUILT” An Interim Report Into The Decision By New York City To
Subsidize the New Yankee Stadium, Committee On Corporations, Commissions And Authorities,
New York State Assembly
Guest Speaker: New York Daily News Columnist Juan Gonzalez
Session #3:
Sovereign Wealth Funds
A. Structure and Operation, United States (TARP) and
Internationally (Libya, Norway)
B. Santiago Principles
C. C. Legal, Financial and Ethical Problems and Challenges
Readings: Excerpts from Santiago Principles (Generally Accepted Principles and Practices),
International Working Group of Sovereign Wealth Funds, Sovereign Wealth Funds and the
Santiago Principles: Where Do They Stand? Carnagie Endowment
Session #4:
State Entities
A. Authorities, IDA's, and LDC's
B. Pension Funds
C. Public/Private/Partnerships
D. New York's Authority Reform Legislation
Speaker TBD
Readings: Excerpts from OECD Guidelines On Pension Fund Asset Management,
Organization For Economic Cooperation and Development; Cuomo: Drop sole trustee system
from NY state fund, Crains, New York; PARA As An Internaitonal Model, Brodsky/Millstein
Session #5:
The Fiduciary Obligation of Private and Public Finance Entities
A. History And Meaning Of Fiduciary Obligation
B. Application To Public and Private Entities
Readings: Excerpts from Semper pro Populus: Fiduciary Duties and Public Service , Western
City; The Recurrent Crisis In Corporate Governance, Millstein/MacAvoy
Guest Speaker: Ira Millstein
Session #6:
Recap And Discussion
Readings: TBD
Other possible guest speakers include New York State Comptroller Tom DiNapoli, New York City
Controller John Liu, representatives of major financial institutions, former ESDC Chairs Pat Foy and
Avi Shick, and others.