Tweet
Bankruptcy for Banks: A Sound Concept That Needs Fine-Tuning
http://www.nytimes.com/2016/08/17/bu...ning.html?_r=0
http://www.nytimes.com/2016/08/17/bu...ning.html?_r=0
In concept, bankruptcy for banks makes sense: Why should they get the benefits of government bailouts that industrial companies rarely receive?
... But the bill in play has several dangerous features that could make bailouts more likely, not less likely...
...Second, the bill broadly exempts bank executives from lawsuits and liability for pre-bankruptcy actions. ... Third, the bankruptcy bill contemplates only one kind of bankruptcy: one where all of the bank’s derivatives contracts and short-term funding, or repo, are fully paid off, with longer-term creditors being hit to support the short-term debt.
... But the bill in play has several dangerous features that could make bailouts more likely, not less likely...
...Second, the bill broadly exempts bank executives from lawsuits and liability for pre-bankruptcy actions. ... Third, the bankruptcy bill contemplates only one kind of bankruptcy: one where all of the bank’s derivatives contracts and short-term funding, or repo, are fully paid off, with longer-term creditors being hit to support the short-term debt.
Comment