Article
How Well Does Bankruptcy Work When Large Financial Firms Fail? Some Lessons from Lehman Brothers
Federal Reserve Bank of Celveland Economic Commentary
(2011)
Abstract
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.
Keywords
- bankruptcy,
- contagion,
- qualified financial contracts
Disciplines
Publication Date
October 26, 2011
Citation Information
Thomas J. Fitzpatrick IV and James B. Thomson. "How Well Does Bankruptcy Work When Large Financial Firms Fail? Some Lessons from Lehman Brothers" Federal Reserve Bank of Celveland Economic Commentary (2011).