Regulating Systemically Important Financial Institutions
With governments worldwide facing profound fiscal imbalances and systemic financial failures, public-finance institutions – including finance ministries, government lenders, public pension funds, tax authorities, central banks, and financial regulators – are under intense pressure to increase transparency and improve their performance. Drawing on our experience working with government agencies across the globe, and in collaboration with our internal and external network of public-finance experts, we are creating unique knowledge in two areas critical to fiscal management: budgeting and tax administration. Our work in public finance covers a wide range of topics, from examining macroeconomic trends and performing expenditure analysis to assessing and quantifying risk, redesigning IT infrastructure, and exploring new methods of revenue generation. We have discovered that overhead functions typically account for twenty to thirty percent of governments’ operating expenses. Based on benchmarks from private and public organizations, we believe government agencies have the opportunity to save five to ten percent of their operating expenditures in overhead functions alone.
State-Owned Financial Institutions
Drawing on the firm’s depth of regulatory experience, we provide clients with integrated teams to advise on strategic planning and compliance decisions, including matters related to the changing regulatory landscape triggered by the Dodd-Frank legislation; the European Alternative Investment Fund Managers Directive and related reforms; the offering and marketing of funds, commodities and derivatives regulation; and broker-dealer, insurance and bank regulatory matters.
We are conversant with the wide variety of financial, tax, regulatory and commercial issues that these transactions present. As a result, we have developed considerable fluency in related disciplines — including tax, compensation and the applicable regulatory regimes — and a deep understanding of the underlying investment products. We represent sponsors and investors in the formation and capitalization of all types of private funds with all major investment strategies. We offer extensive experience in forming funds pursuing a range of traditional debt and equity strategies in both private equity and hedge markets, such as buyout, venture capital, fund of funds, infrastructure, co-investment, real estate, debt and distressed funds, as well as funds targeting particular geographies, multi-strategy funds, and special situations investment funds with unique economic and liquidity arrangements.
We represent clients organizing a wide range of cross-border private fund structures, including master-feeder structures, managed accounts, funds of one, trust structures and parallel fund structures. Our team approach reflects cross-disciplinary thinking, closely integrated within the firm’s practices globally, and our extensive database of private funds documentation provides our teams with current and detailed market trend information. Our investment approach is based on a disciplined due diligence process that measures risk while identifying the catalysts for increased value. We purposefully engage only in friendly transactions and work with talented management teams to achieve transformative results. Our specialized Portfolio Operations Group helps to maximize value by improving processes across varied elements of a business’s operations.
Tax-Exempt Bond-Financed Development
The tax status of municipal bonds is part of the larger policy debate on whether it is appropriate for the federal government to subsidize construction of infrastructure with primarily local benefit, and if so, whether exempting municipal bonds from federal taxation is the proper mechanism for providing that subsidy. Consensus has held that providing inexpensive financing to the states for projects that increase the public welfare is a proper role for the federal government. Disagreement exists, however, over the types of projects that can be properly labeled "public purpose." To a great extent, the present debate over tax policy revolves around this disagreement. States and localities have used tax-exempt financing extensively since the 1820s to finance roads, bridges, schools, and water and sewer systems.' Over time, the use of tax-exempt financing has expanded from traditional purposes to "industrial development" uses such as building sports stadiums and convention centers as well as lending money to private industry to pay for pollution control devices. As the use of these Industrial Development Bonds (IDBs) continued to grow, Congress began to consider limitations on tax-exempt debt. The policy impetus for restrictions, again, focused on whether and to what extent the federal government should subsidize private industry.