Comments on: Investment Banks Hoist on 2005 Bankruptcy Law Changes Petard

By: thomas j

thomas j — Sat, 01 Nov 2008 03:40:00 +0000

anon@10:08

You hit the nail on the head. That is the really story here.

A super no make that ultra priority was effectively granted to derivative obligations over all other creditors.

And all of these totally unregulated transactions are now being traded over the counter.

I like the discussion at the end re: potential applicability to non-financial firms.

And people wonder why corporate spreads are blowing out like jiffypop.

By: joe

joe — Sat, 01 Nov 2008 02:46:00 +0000

Great post and comments.

The holders of various "vehicles" are directly faced with greater risk and are thus facing huge losses.

Didn't they have it coming?

By: Anonymous

Anonymous — Sat, 01 Nov 2008 02:08:00 +0000

Am I missing something here? Didn’t this change effectively subordinate the senior debt of any corporation using derivatives? Has anyone told the holders of this debt? And given the possible volatility of derivatives holdings, how can a senior debt holder ever know the value of his investment?

This crap was unmitigated greed. It was Wall Street telling the world, “Screw you, it’s our sandbox.”

By: Anonymous

Anonymous — Sat, 01 Nov 2008 01:40:00 +0000

I am mystified by the continuing conviction that there is anything about the financial industry worth saving, including the Treasury Secretary.

Nationalize what is left. Get it over with.

By: Snow Wolf

Snow Wolf — Sat, 01 Nov 2008 00:15:00 +0000

I saw Peter Cundill in London a month or so ago and he reminded me “that financial ‘institutions’ are inherently unstable.”

By: xvonz

xvonz — Fri, 31 Oct 2008 23:41:00 +0000

boy george 1983:
“karma karma karma karma karma chameleon”

By: Anonymous

Anonymous — Fri, 31 Oct 2008 20:58:00 +0000

As North Carolina was shipping jobs offshore, both Republican Senators, Richard Burr and Elizabeth Dole, voted in favor of the 2005 law. The lobbying arm is the American Bankers Association. Elizabeth Duke, former president, is now a Fed governor. Dole is fighting for re-election.

Alan Greenspan and dimwit US Labor Secretary Elaine Chao have chirped health sciences: registered nurse, anesthetist, xray technician. Business Week magazine, 2006 ran an article about how bad the job “specialization” (Greenspan’s term) will be for the US GDP.

By: TulsaTime

TulsaTime — Fri, 31 Oct 2008 20:30:00 +0000

A question for the gentle readers. Even though AIG was ‘bailed out’ by the govt., is there anything to keep it from still going under, aside from the insane govt. desire to preserve the good works already done?

By: Anonymous

Anonymous — Fri, 31 Oct 2008 17:35:00 +0000

fed rates below 1% will hurt money market funds. http://ftalphaville.ft.com/blog/2008/10/31/17666/how-low-rates-break-the-buck/

Perhaps a plan by hank / ben to drive mm investors to deposit their money in banks, and help out the big dogs.

By: doc holiday

doc holiday — Fri, 31 Oct 2008 17:16:00 +0000

Women on top in Iceland
http://www.managementtoday.co.uk…en-top-iceland/

‘Now the women are taking over,’ a spectacularly non-PC government official told the FT. ‘It’s typical, the men make the mess and the women come in to clean it up.’ And the political will is clearly there for the pair to make sweeping changes to the way the banks operate. The paper suggests that Icelanders casting around for someone to blame for their current predicament have settled on young bonus-hungry male bankers, whose ‘eyes became bigger than their stomachs.’