Negative pledge

Abstract: Negative pledge covenants have traditionally been treated as mere contract rights, but when supported by the right legal apparatus they can also be treated as property interests that are effective against third parties. UCC Article 9 provides a logical and intriguing means of conferring this property-like status: negative pledgees could perfect their covenants using the same mechanisms that secured parties use to perfect security interests. As a result, if a third party took security in violation of a perfected negative pledge covenant, that security would be subordinated to the rights of the negative pledgee. To prevent the perfected covenants from too strongly resembling security interests (thereby unnecessarily distorting the parties' bargain), negative pledgees would remain vulnerable, as under current law, to other unsecured creditors who execute earlier on a judgment. Using Article 9 to protect creditors that, under current law, one thinks of as unsecured may seem to invert the statute's purpose, but would actually further many of its most important animating precepts. It would also elegantly achieve much of what courts have been groping toward with over a century of unsatisfactory case-law. Insights from cognitive linguistics help to establish that perfected negative pledgees would indeed have property interests, making them natural candidates for Article 9's protections. Debtors would, for the first time, have a fully credible means of assuring an existing creditor that, if security were issued, the existing creditor would not thereby be harmed. Thus, debtors who were settled in their plans not to issue security would be freed from the burden of compensating creditors for an unnecessary risk. Viewed from another perspective, any debtor concluding that security, with the risk that it presents to creditors, was not a desirable tool for that debtor could, in effect, "opt out" of the regime that imposes the risk, simply by allowing its unsecured creditors to perfect negative pledge covenants against it. Much of Article 9 would thus be converted from a mandatory rule to a default rule. The longstanding debate over the merits of secured credit is thus recast, at least in part, as a matter for individual choice, rather than as the aggregate social question that prior scholars have assumed it must be.

Abstract: A computer implemented method infuses pledged amounts into an account of an issuer just in time for use. A computer program establishes pledge agreements that are associated with accounts of asset holders. Access to the asset-holders' accounts through the computer network is confirmed, and those assets are monitored to ensure availability of those assets. An instruction received from the issuer causes the pledge agreements to be processed, identification of particular asset-holder accounts, and instructions to transfer at least a portion of the assets to the issuer account. In turn, the transferor is credited with an asset of the issuer in accordance with the terms of the pledge agreement. Optionally, pledge agreements terms are ranked to identify and select specific pledge agreements for the transfer step. Methods in accordance with the invention can facilitate the organization of pledged amounts into tranches for just-in-time financing in a variety of transactions.

Abstract: This paper examines the No New Taxes Pledge, which has been signed by the President and 258 members of Congress. Although it is intended to restrict the size of government, the pledge probably hinders rather than helps efforts to restore fiscal responsibility. Evidence from trends in aggregate taxes and spending, the success or failure of budget rules, and the voting records of pledge signers casts doubt on the view that signing the pledge is an effective effort to starve the beast or an act of fiscal responsibility. If all of the signers uphold the pledge, it will prove impossible to repeal any part of the 2001, 2002, and 2003 tax cuts before President Bush leaves office, though the legislation could expire as scheduled even if all the signers supported extension. The pledge may also have implications for appropriate budget scoring rules. [© Brookings Institution]

Abstract: A method of collecting money or resources from a group of contributors includes accepting a pledge from a first contributor, authorizing the pledge, and converting the authorized pledge to a payment. The pledge provides pledge information including an amount of money pledged and a method of payment. The pledge is authorized by verifying the validity of the method of payment and verifying that the method of payment is able to provide the amount of money pledged. The pledge is converted to a payment when the sum of the amounts of money pledged by the authorized pledges is greater than or equal to the predetermined amount of money. The method is preferably designed for the fundraising field and, more specifically, for the online fundraising field. The method, however, may be alternatively used in any suitable environment and for any suitable reason.