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Credit, Crises And Infrastructure: The Differing Fates Of Large And Small Businesses, Todd Baker, Kathryn Judge, Aaron Klein
Credit, Crises And Infrastructure: The Differing Fates Of Large And Small Businesses, Todd Baker, Kathryn Judge, Aaron Klein
Faculty Scholarship
This Essay sheds new light on the importance of credit creation infrastructure in determining who actually receives government support during periods of distress, and who continues to benefit after the acute phase of a crisis and the government’s formal support programs come to an end. The pandemic revealed, and the government’s response accentuated, meaningful asymmetries in the capacities of small and large businesses to access needed funding.
At first glance, it would seem that small businesses benefitted more than large ones from the government’s pandemic-support programs, as more government funds flowed into small businesses. Yet closer inspection of the range …
What Went Wrong? A Tragedy In Three Acts, John C. Coffee Jr.
What Went Wrong? A Tragedy In Three Acts, John C. Coffee Jr.
Faculty Scholarship
I am going to tell today a simple story of greed, rationalization, and sloth; it is a tragedy in three acts. The first act involves the collapse of what I will call the Great American Housing Bubble. The second act involves the failure of the gatekeepers, in particular; what happened at those credit rating agencies that could lead them to rate everything investment-grade? In the final act, I will turn to the collapse of the investment banks, the failure of securities regulation, and where that leaves us.
Although this is a tragedy, it is not a Shakespearian tragedy because Shakespearian …
Bondholder Coercion: The Problem Of Constrained Choice In Debt Tender Offers And Recapitalizations, John C. Coffee Jr., William A. Klein
Bondholder Coercion: The Problem Of Constrained Choice In Debt Tender Offers And Recapitalizations, John C. Coffee Jr., William A. Klein
Faculty Scholarship
The past decade saw the flourishing of risky, high-yield corporate debt, often called "junk" bonds. Too many companies took on too much debt, and the chickens are now coming home to roost as these bonds have begun to default with increasing frequency.The magnitude of the problem is potentially enormous; by one estimate, $318 billion of debt has either defaulted already or trades at yields indicating the market's skepticism that it will be repaid on maturity.
Facing the prospect of default, corporate issuers are seeking to restructure or recapitalize their financial structures at a correspondingly increased pace. The market force driving …