This article presents arguments and evidence suggesting that the bankruptcy abuse reform (BAR) of 2005 may have been one contributor to the destabilizing surge in subprime foreclosures. Before BAR took effect, overly indebted borrowers could file bankruptcy to free up income to pay their...

This study examines the resolution of Lehman Brothers Holdings Inc. in the U.S. Bankruptcy Court in order to clarify the sources of complexity in its resolution and to inform the debate on appropriate resolution mechanisms for financial institutions. The authors focus on the settlement of...

All men are created equal, but all liabilities are not. Some liabilities are more equal than others. These "financial liabilities" are products of financial firms. These products shift risk (insurance or derivatives) or provide liquidity (bank deposits or repurchase agreements). Since these...

The failure and near-collapse of some of the largest dealer banks on Wall Street in 2008 highlighted the marked vulnerability of the industry. Dealer banks are financial intermediaries that make markets for many securities and derivatives. Like standard banks, dealer banks may derive the funding...

The author focuses on the relative emphasis that the structure of regulatory capital places on formulas and on supervision. The two are not viewed as mutually exclusive, but as elements to which capital policy implicitly assigns relative weights. He shows that in U.S. regulatory practice, these...

The author provides a few practical comments on capital adequacy from an insurance company perspective. In doing so, he presents two views on capital adequacy and capital allocation in the insurance industry. The first view is the regulatory perspective, that is, the motivations behind...