That a firm's initial equityholders often emerge from Chapter 11 bankruptcy proceedings with more value than the absolute priority rule (APR) would suggest is now a generally accepted fact. The form in which this value is distributed, however, is less well understood. In particular, why do the...

Detecting and measuring discrimination in the pricing of mortgage loans present unique challenges for bank regulators. This Commentary outlines how loans are priced in the mortgage market and the difficulties involved in comparing the prices charged to different borrowers.

A demonstration that violations of the absolute priority rule exacerbate credit rationing problems by reducing the payment lenders receive in default states.

The author argues that runs, which are generally considered undesirable, also have a beneficial effect--improving lenders' monitoring incentives. Lenders' ability to run on the firm helps control its moral hazard problem, while the first-come, first-served aspect of asset distribution keeps...

An analysis showing that allowing creditors to "run" on a firm in financial distress is socially valuable, since it compensates them for monitoring the firm's condition; in contrast, strict adherence to absolute and proportionate priority rules allows lenders to free ride on the monitoring...

An argument that informational asymmetries explain why the original shareholders of some firms emerge from Chapter 11 bankruptcy proceedings with stock in the reorganized company, while others receive warrants. By proposing a reorganization plan in which they receive warrants, the original...

In this paper, we consider the role of statistical analysis in fair-lending compliance examinations. We present a case study of an actual fair-lending examination of a large mortgage lender, demonstrating how statistical techniques can be a valuable tool in focusing examiner efforts to either...