How well does bankruptcy work when large financial firms fail? Some lessons from Lehman Brothers

Thomas Fitzpatrick () and James Thomson

Economic Commentary, 2011, issue Oct

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; Financial risk management (search for similar items in EconPapers)
Date: 2011
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