Derivatives Safe Harbors in Bankruptcy and Dodd-Frank: A Structural Analysis

The Bankruptcy Code exempts financial derivatives and repurchase agreements from key provisions, such as the automatic stay. The primary rationale for this special treatment has been the fear that the failure of an important market participant could cascade if counterparties could not immediately exit their contracts. Reflecting on the recent financial crisis and the Lehman bankruptcy, some scholars have suggested that exempting these financial contracts from bankruptcy may have exacerbated other kinds of systemic risk and contributed to the decision to bail out systemically important financial institutions (SIFIs) address this flaw by enacting a Bankruptcy alternative, Title II of the Dodd-Frank Act, instead of addressing the problems in the Bankruptcy Code safe harbors that were the source of the systemic risk. This article demonstrates that the view that Title II replaces bankruptcy reform is mistaken. Title II actually increases both the need and opportunity to reassess the proper limits of the safe harbors. Without bankruptcy reform, the threat of irreversible damage if the SIFI files bankruptcy before intervention may force Title II to compete with bankruptcy in order to reach potential SIFIs first. However, the difficulty in evaluating whether some firm failures involve systemic risk incentivizes Title II decisionmakers to intervene in cases of doubt, leading to over-intervention, strain on resources and damage to Bankruptcy’s role as the default failure system. In addition, uncertainty over whether Title II will intervene will lead large firms to delay filing bankruptcy far past where resolution is optimal. However, with Bankruptcy reform, the Bankruptcy system would complement and mitigate weaknesses in the Title II safety net. In addition, Title II removes the primary justification for the safe harbors for financial derivatives and repurchase agreements, the fear of the consequences of the bankruptcy of a SIFI. In its wake, the safe harbors for derivative and repo creditors are at odds with powerful fairness and efficiency rationales behind default bankruptcy rules. Dodd-Frank may make Bankruptcy reform easier to achieve and more urgent.Harvard Law School 2013 Student Writing Prize: Irving Oberman Memorial Award -- Bankruptc

Restructuring Failed Financial Firms in Bankruptcy: Selling Lehman\u27s Derivatives Portfolio

Lehman Brothers\u27 failure and bankruptcy deepened the 2008 financial crisis whose negative effect on the United States\u27 economy lasted for several years. Yet, while Congress reformed financial regulation in hopes of avoiding another crisis, bankruptcy rules such as those that governed Lehman\u27s failure, have persisted unchanged. When Lehman failed, it lost considerable further value when its contracting counterparties terminated their financial contracts with Lehman. These broad terminations degraded Lehman\u27s overall value to its creditors beyond the immediate losses that caused its downfall. Lehman\u27s financial portfolio was thought to be running a paper profit of over $20 billion when it filed, and is said to have lost up to$75 billion as a result of the post-filing liquidation by Lehman\u27s counterparties of their deals with Lehman. How such a vast value loss can occur and how bankruptcy can ameliorate the problem are the subjects of this Article

Dephasing of Electrons on Helium by Collisions with Gas Atoms

The damping of quantum effects in the transport properties of electrons deposited on a surface of liquid helium is studied. It is found that due to vertical motion of the helium vapour atoms the interference of paths of duration $t$ is damped by a factor $\exp - (t/\tau_v)^3$. An expression is derived for the weak-localization lineshape in the case that damping occurs by a combination of processes with this type of cubic exponential damping and processes with a simple exponential damping factor.Comment: 7 pages, 2 figures, Revte

Dephasing Times in a Non-degenerate Two-Dimensional Electron Gas

Studies of weak localization by scattering from vapor atoms for electrons on a liquid helium surface are reported. There are three contributions to the dephasing time. Dephasing by the motion of vapor atoms perpendicular to the surface is studied by varying the holding field to change the characteristic width of the electron layer at the surface. A change in vapor density alters the quasi-elastic scattering length and the dephasing due to the motion of atoms both perpendicular and parallel to the surface. Dephasing due to the electron-electron interaction is dependent on the electron density.Comment: 4 pages, Revte

Exploring Cognitive States: Methods for Detecting Physiological Temporal Fingerprints

Cognitive state detection and its relationship to observable physiologically telemetry has been utilized for many human-machine and human-cybernetic applications. This paper aims at understanding and addressing if there are unique psychophysiological patterns over time, a physiological temporal fingerprint, that is associated with specific cognitive states. This preliminary work involves commercial airline pilots completing experimental benchmark task inductions of three cognitive states: 1) Channelized Attention (CA); 2) High Workload (HW); and 3) Low Workload (LW). We approach this objective by modeling these "fingerprints" through the use of Hidden Markov Models and Entropy analysis to evaluate if the transitions over time are complex or rhythmic/predictable by nature. Our results indicate that cognitive states do have unique complexity of physiological sequences that are statistically different from other cognitive states. More specifically, CA has a significantly higher temporal psychophysiological complexity than HW and LW in EEG and ECG telemetry signals. With regards to respiration telemetry, CA has a lower temporal psychophysiological complexity than HW and LW. Through our preliminary work, addressing this unique underpinning can inform whether these underlying dynamics can be utilized to understand how humans transition between cognitive states and for improved detection of cognitive states

A Comparison of Electron Transport Rate, Photosynthetically Active Radiation, Light-Adapted Fluorescence, and Dark-Adapted Fluorescence Between Stipa pulchra and Pennisetium setaceum

The purpose of this investigation was to provide an explanation into how the invasive species Pennisetium setaceum, Fountain Grass, is able to outcompete the native California grassland species Stipa pulchra, Purple Needle Grass. We used a light adapted and a dark adapted fluorometer to measure the photosynthetic radiation (PAR), leaf temperature, alpha (α), light adapted fluorescence (Fv’/Fm’), dark adapted fluorescence (Fv/Fm), and the electron transport rate (ETR) on young Fountain Grass and Purple Needlegrass. After collecting and analyzing the data, we concluded that the dark adapted fluorescence (Fv/Fm) was the only statistically significant measurement where the Fv/Fm of S. pulchra is higher than that of P. setaceum which suggests that S. pulchra’s quantum yield of photosystem II is higher and is therefore more efficient. With this result, we are able to state that Fv/Fm is not the reason why Fountain Grass outcompetes Purple Needlegrass

Analysis of spontaneous activity patterns in developing retina: algorithms and results

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