An end to too big to let fail? The Dodd-Frank Act's orderly liquidation authority

One of the changes introduced by the sweeping new financial market legislation of the Dodd–Frank Act is the provision of a formal process for liquidating large financial firms—something that would have been useful in 2008, when troubles at Lehman Brothers, AIG, and Merrill Lynch threatened to damage the entire U.S. financial system. While it may not be the end of the too-big-to-fail problem, the orderly liquidation authority is an important new tool in the regulatory toolkit. It will enable regulators to safely close and wind up the affairs of those distressed financial firms whose failure could destabilize the financial system.Bank failures ; Financial Regulatory Reform (Dodd-Frank Act)

Stripdowns and bankruptcy: lessons from agricultural bankruptcy reform

One type of financial reform being proposed to deal with the aftermath of the housing crisis is allowing bankruptcy judges the authority to modify residential mortgages in a way referred to as a stripdown. The reform is seen by some as a partial solution to the rise in foreclosures and as a Pandora’s box by others. But the debate is not new one. The 1980s farm foreclosure crisis sparked similar proposals and concerns. Congress decided to enact legislation that contained a stripdown provision, resulting in the creation of Chapter 12 in the bankruptcy code. The effects of Chapter 12 stripdown authority after its enactment shed light on the efficacy of allowing bankruptcy judges similar authority for housing loans.Foreclosure ; Bankruptcy ; Agricultural credit ; Mortgage loans

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

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.Bankruptcy ; Financial risk management

Reconsidering the application of the holder in due course rule to home mortgage notes

In this paper we investigate the history of negotiable instruments and the holder in due course rule and contrast their function and consequences in the 1700s with their function and consequences today. We explain how the holder in due course rule works and identify ways in which the rule’s application is limited in some consumer transactions. In particular, we focus on laws limiting application of the rule to some home mortgage loans. We investigate Lord Mansfield’s original justification for the rule as a money substitute, the lack of explicit justification of the rule by the drafters of the Uniform Commercial Code in the 1950s, the contemporary justification of the rule as a means of increasing the availability and decreasing the cost of credit, and the concerns of legislators and regulators about lack of consumer knowledge, bargaining power, and financial resources which caused them to limit the application of the holder in due course rule to some consumer transactions. We conclude that changes in policy justification, parties to negotiable instruments and the structure of the home mortgage market call for a reconsideration of the continuing appropriateness of holder in due course protection for assignees of home mortgage notes. We suggest further analysis based on economic theory and review of empirical research in order to formulate policy recommendations.Mortgage loans ; Holder in due course

General practitioner empathy, patient enablement, and patient-reported outcomes in primary care in an area of high socio-economic deprivation in Scotland - a pilot prospective study using structural equation modelling

<b>Objective</b> The aim of this pilot prospective study was to investigate the relationships between general practitioners (GPs) empathy, patient enablement, and patient-assessed outcomes in primary care consultations in an area of high socio-economic deprivation in Scotland.<p></p> <b>Methods</b> This prospective study was carried out in a five-doctor practice in an area of high socio-economic deprivation in Scotland. Patients’ views on the consultation were gathered using the Consultation and Relational Empathy (CARE) Measure and the Patient Enablement Instrument (PEI). Changes in main complaint and well-being 1 month after the contact consultation were gathered from patients by postal questionnaire. The effect of GP empathy on patient enablement and prospective change in outcome was investigated using structural equation modelling.<p></p> <b>Results</b> 323 patients completed the initial questionnaire at the contact consultation and of these 136 (42%) completed and returned the follow-up questionnaire at 1 month. Confirmatory factor analysis confirmed the construct validity of the CARE Measure, though omission of two of the six PEI items was required in order to reach an acceptable global data fit. The structural equation model revealed a direct positive relationship between GP empathy and patient enablement at contact consultation and a prospective relationship between patient enablement and changes in main complaint and well-being at 1 month.<p></p> <b>Conclusion</b> In a high deprivation setting, GP empathy is associated with patient enablement at consultation, and enablement predicts patient-rated changes 1 month later. Further larger studies are desirable to confirm or refute these findings.<p></p> <b>Practice implications</b> Ways of increasing GP empathy and patient enablement need to be established in order to maximise patient outcomes. Consultation length and relational continuity of care are known factors; the benefit of training and support for GPs needs to be further investigate

Resolving large, complex financial firms

How to best manage the failure of systemically important financial firms was the theme of a recent conference at which the latest research on the issue was presented. Here we summarize that research, the discussions that it sparked, and the areas where considerable work remains.Banks and banking ; Bank supervision ; Systemic risk ; Financial risk management ; Financial crises - United States