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Companies in dire straits often roll the dice in a bid to stave off bankruptcy. The problem is that last-ditch efforts to raise new funds or restructure often come at the expense of bondholders. Full Article at Business Standard
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In a series of articles between July 13 to July 20, I warned investors away from the shares of small business lender CIT, insisting that they were the province of speculators who must be willing to lose everything, adding: "Personally, I expect CIT... Full Article at The Money Times
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CIT Group (CIT) filed for bankruptcy protection Sunday with broad support from its debtholders, but taxpayers will lose the $2.3B invested in CIT, marking the first definitive loss in the government’s rescue of the financial system. Full Article at BusinessPundit
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Oct. 29 (Bloomberg) -- Federal Deposit Insurance Corp. Chairman Sheila Bair, breaking with the Obama administration, said U.S. financial companies should prepay into a fund the government would use to unwind large failed firms. Full Article at Bloomberg.com
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It is now widely expected that, when a financial institution is deemed “too big to fail,” governments will intervene if it gets into trouble. But how far should such interventions go? Full Article at Times of India
Related Quotes
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Fixed income was a wonderful performer last year, so people continue throwing money at it, oddly, even though interest rates are bound to rise ... In their defense, they are moving money mainly out of cash, so at least they're getting something out of it.
SOURCE: Forbes -
Losses should be borne by the stockholders and bondholders of the holding company, and senior management should be replaced ... Consideration also should be given to imposing some haircut on secured creditors to promote market discipline.
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A prefunded FCRF has significant advantages over an ex- post funded system ... It allows all large firms to pay risk-based assessments into the FCRF, not just the survivors after any resolution, and it avoids the pro-cyclical nature of requiring repayment after a systemic crisis.
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If you don't reduce the excess collateral on existing secured debt, what is the benefit to unsecured investors?
SOURCE: People's Daily Online
