Thursday, November 13, 2008
Yves Smith (YS) has a 31 October 2008 post at her Naked Capitalism about how investment banks were apparently "undone" by the 2005 bankruptcy law changes they lobbied for. "'The changes were introduced to promote the orderly unwinding of transactions but they ended up speeding up the bankruptcy process,' said William Goldman, a partner at DLA Piper, the law firm. 'They wanted to protect the likes of Lehman and Bear Stearns from the domino effect that would have ensued had a counterparty gone under. They never thought the ones to go under would have been Lehman and Bear'." Here's a link to the post: http://www.nakedcapitalism.com/2008/10/investment-banks-hoist-on-2005.html.
There may be some justice in the world. I never considered when reading about the 2005 bankruptcy bill that it might have the effect YS describes. I remember Elizabeth Warren (EW), Harvard Law School professor, blasting the bill because of its anti-consumer and pro-bank provisions and agreeing with EW's analysis of the bill's provisions.