U.S. corporate and bank insolvency regimes: an economic comparison and evaluation

In the U.S., the insolvency resolution of most corporations is governed by the federal bankruptcy code and is administered by special bankruptcy courts. Most large corporate bankruptcies are resolved under Chapter 11 reorganization proceedings. However, commercial bank insolvencies are governed by the Federal Deposit Insurance Act and are administered by the FDIC. These two resolution processes--corporate bankruptcy and bank receiverships--differ in a number of significant ways, including the type of proceeding (judicial versus administrative); the rights of managers, stockholders and creditors in the proceedings; the explicit and implicit goals of the resolution; the prioritization of creditors--claims; the costs of administration; and the timeliness of creditor payments. These differences derive from perceptions that "banks are special." This paper elucidates these differences, explores the effectiveness of the procedural differences in achieving the stated goals, and considers the potential economic consequences of the different structures.Bank failures ; Federal Deposit Insurance Corporation

A comparison of U.S. corporate and bank insolvency resolution

In the U.S., the insolvency resolution of most corporations is governed by the federal bankruptcy code and is administered by special bankruptcy courts. Most large corporate bankruptcies are resolved under Chapter 11 reorganization proceedings. However, commercial bank insolvencies are governed by the Federal Deposit Insurance Act and are administered by the FDIC. These two resolution processes—corporate bankruptcy and bank receiverships—differ in a number of significant ways, including the type of proceeding (judicial versus administrative); the rights of managers, stockholders, and creditors in the proceedings; the explicit and implicit goals of the resolution; the prioritization of creditors’ claims; the costs of administration; and the timeliness of creditor payments. This article elucidates these differences and explores the effectiveness of the procedural differences in achieving the stated goals.Bankruptcy ; Bank failures

Derivatives and systemic risk: netting, collateral, and closeout

In the U.S., as in most countries with well-developed securities markets, derivative securities enjoy special protections under insolvency resolution laws. Most creditors are “stayed” from enforcing their rights while a firm is in bankruptcy. However, many derivatives contracts are exempt from these stays. Furthermore, derivatives enjoy netting and close-out, or termination, privileges which are not always available to most other creditors. The primary argument used to motivate passage of legislation granting these extraordinary protections is that derivatives markets are a major source of systemic risk in financial markets and that netting and close- out reduce this risk. ; To date, these assertions have not been subjected to rigorous economic scrutiny. This paper critically reexamines this hypothesis. These relationships are more complex than often perceived. We conclude that it is not clear whether netting, collateral, and/or close-out lead to reduced systemic risk, once the impact of these protections on the size and structure of the derivatives market has been taken into account.Derivative securities ; Financial markets

Bank procyclicality, credit crunches, and asymmetric monetary policy effects: a unifying model

Much concern has recently been expressed that both large, procyclical changes in bank assets and "credit crunches" caused by bank reluctance to expand loans during recessions contribute to economic instability. These effects are difficult to explain using the standard textbook model of deposit expansion in which deposits are constrained only by reserve requirements. However, these effects follow easily if the model is expanded to include a second, capital constraint.Bank assets ; Monetary policy

U.S. Corporate and Bank Insolvency Regimes: A Comparison and Evaluation

In the U.S., the insolvency resolution of most corporations is governed by the federal bankruptcy code and is administered by special bankruptcy courts. Most large corporate bankruptcies are resolved under Chapter 11 reorganization proceedings. However, commercial bank insolvencies are governed by the Federal Deposit Insurance Act and are administered by the FDIC. These two resolution processes—corporate bankruptcy and bank receiverships—differ in a number of significant ways, including the type of proceeding (judicial versus administrative); the rights of managers, stockholders and creditors in the proceedings; the explicit and implicit goals of the resolution; the prioritization of creditors’ claims; the costs of administration; and the timeliness of creditor payments. These differences derive from perceptions that “banks are special.” This paper elucidates these differences, explores the effectiveness of the procedural differences in achieving the stated goals, and considers consequences of the different structures

Secondary Sex Ratio among Women Exposed to Diethylstilbestrol in Utero

BACKGROUND. Diethylstilbestrol (DES), a synthetic estrogen widely prescribed to pregnant women during the mid-1900s, is a potent endocrine disruptor. Previous studies have suggested an association between endocrine-disrupting compounds and secondary sex ratio. METHODS. Data were provided by women participating in the National Cancer Institute (NCI) DES Combined Cohort Study. We used generalized estimating equations to estimate odds ratios (ORs) and 95% confidence intervals (CIs) for the relation of in utero DES exposure to sex ratio (proportion of male births). Models were adjusted for maternal age, child's birth year, parity, and cohort, and accounted for clustering among women with multiple pregnancies. RESULTS. The OR for having a male birth comparing DES-exposed to unexposed women was 1.05 (95% CI, 0.95-1.17). For exposed women with complete data on cumulative DES dose and timing (33%), those first exposed to DES earlier in gestation and to higher doses had the highest odds of having a male birth. The ORs were 0.91 (95% C, 0.65-1.27) for first exposure at ≥ 13 weeks gestation to < 5 g DES; 0.95 (95% CI, 0.71-1.27) for first exposure at ≥ 13 weeks to ≥ 5 g; 1.16 (95% CI, 0.96-1.41) for first exposure at < 13 weeks to < 5 g; and 1.24 (95% CI, 1.04-1.48) for first exposure at < 13 weeks to ≥ 5 g compared with no exposure. Results did not vary appreciably by maternal age, parity, cohort, or infertility history. CONCLUSIONS. Overall, no association was observed between in utero DES exposure and secondary sex ratio, but a significant increase in the proportion of male births was found among women first exposed to DES earlier in gestation and to a higher cumulative dose.National Cancer Institute (N01-CP-21168, N01-CP-51017, N01-CP-01289

Phase Transitions in Chemisorbed Systems

Contains reports on six research projects.Joint Services Electronics Program (Contract DAAG29-83-K-0003

High permeability explains the vulnerability of the carbon store in drained tropical peatlands

Tropical peatlands are an important global carbon (C) store but are threatened by drainage for palm oil and wood pulp production. The store's stability depends on the dynamics of the peatland water table, which in turn depend on peat permeability. We found that an example of the most abundant type of tropical peatland—ombrotrophic domes—has an unexpectedly high permeability similar to that of gravel. Using computer simulations of a natural peat dome (NPD) and a ditch-drained peat dome (DPD) we explored how such high permeability affects water tables and peat decay. High permeability has little effect on NPD water tables because of low hydraulic gradients from the center to the margin of the peatland. In contrast, DPD water tables are consistently deep, leaving the upper meter of peat exposed to rapid decay. Our results reveal why ditch drainage precipitates a rapid destabilization of the tropical peatland C store