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Daedalean Tinkering


Part I of this Review describes Skeel's account of corporate scandal, focusing on the central theme of excessive risk-taking. Part II examines Skeel's most original policy proposal-the creation of an investor insurance scheme to protect against excessive risk. Although the proposal takes up only a few pages of the book, it targets the books' core concern-the risk of corporate fraud. In evaluating the proposed investor insurance regime, this Review raises a set of objections based on cost and administrability and argues that an insurance regime would be duplicative of existing mechanisms that effectively spread the risk of financial fraud. Part III then discusses the broader environment of constraint and emphasizes the responsiveness of state courts to corporate crises. It argues that state judges have every incentive to respond to periods of scandal and that state law jurisprudence has evolved a set of highly flexible mechanisms for increasing or decreasing the legal oversight of corporate governance. Icarus in the Boardroom, in other words, emphasizes Icarus, but the perspective is Daedalean. This Review, by contrast, emphasizes the ability of existing institutions to respond to the problems Skeel identifies, resisting the impulse to tinker with the system and federalize ever-greater amounts of corporate governance.