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Full-Text Articles in Law
Resolving Large, Complex Financial Firms, Thomas Fitzpatrick, Mark Greenlee, James Thomson
Resolving Large, Complex Financial Firms, Thomas Fitzpatrick, Mark Greenlee, James Thomson
James B Thomson
How to best manage the failure of systemically important fi nancial fi rms was the theme of a recent conference at which the latest research on the issue was presented. Here we summarize that research, the discussions that it sparked, and the areas where considerable work remains.
How Well Does Bankruptcy Work When Large Financial Firms Fail? Some Lessons From Lehman Brothers, Thomas Fitzpatrick, James Thomson
How Well Does Bankruptcy Work When Large Financial Firms Fail? Some Lessons From Lehman Brothers, Thomas Fitzpatrick, James Thomson
James B Thomson
There is disagreement about whether large and complex financial institutions should be allowed to use U.S. bankruptcy law to reorganize when they get into financial difficulty. We look at the Lehman example for lessons about whether bankruptcy law might be a better alternative to bailouts or to resolution under the Dodd-Frank Act’s orderly liquidation authority. We find that there is no clear evidence that bankruptcy law is insufficient to handle the resolution of large complex financial firms.
Cleaning Up The Refuse From A Financial Crisis: The Case For A Resolution Management Corporation, James Thomson
Cleaning Up The Refuse From A Financial Crisis: The Case For A Resolution Management Corporation, James Thomson
James B Thomson
Systemic banking and financial crises invariably result in the transfer of a large volume of distressed financial assets into the hands of the government, which must later dispose of them. The fiscal and economic costs of the crisis and the speed of recovery depend on how effectively the government’s salvage operations can re-privatize these assets. To maximize the operations’ effectiveness, I propose that the government create a temporary resolution management corporation. Drawing on Kane’s (1990) asset-salvage principles, as well as the U.S. experience with special-purpose entities for managing and disposing of assets stripped from distressed financial firms’ balance sheets, I …