Found 40 article(s) for author 'Mark Roe'

The Examiners: Mark Roe on the Outlook for Corporate Restructuring

The Examiners: Mark Roe on the Outlook for Corporate Restructuring. Mark Roe, March 27, 2014, Opinion. “Interest rates that remain near zero and debt maturities that have been pushed out to 2017 and 2018 have helped drive Chapter 11 filings to historic lows. Has this difficult environment put corporate restructuring on life support? With interest rates near to zero for several years, weak firms can refinance their way out of problems that otherwise would have forced a financial restructuring and a Chapter 11 filing. It’s all part of the extended bailout of the economy that the Fed has engineered since 2008…” Link verified June 19, 2014

Tags: , , ,

How to Use a Bank Tax to Make the Financial System Safer

How to Use a Bank Tax to Make the Financial System Safer. Mark Roe, March 25, 2014, Opinion. “A tax on the balance sheets of big banks—first proposed by US President Barack Obama in 2010 but later shelved—is back on the political agenda. Last month Dave Camp, Republican chairman of the House of Representatives Ways and Means Committee, put forward a proposal for tax reform that included a 0.035 per cent levy on bank assets more than $500bn. This would hit large institutions such as Bank of America, Citigroup and Goldman Sachs…” Link verified June 19, 2014

Tags: , , ,

The Regulatory Confidence Cycle

The Regulatory Confidence Cycle . Mark Roe, March 16, 2014, Opinion. “Unfortunately, too many reports on the transcripts miss the big picture. Criticizing the Fed for underestimating the dangers from the underground rumblings that were about to explode makes it seem that particular players just got it wrong. In fact, underestimating financial risk is a general problem – the rule, not the exception…” Link

Tags: , ,

Corporate Short-Termism – In the Boardroom and in the Courtroom

Corporate Short-Termism – In the Boardroom and in the Courtroom. Mark Roe, March 14, 2014, Paper. “A long-held view in corporate circles has been that furious rapid trading in stock markets has been increasing in recent decades, justifying corporate governance and corporate law measures that would further shield managers and boards from shareholder influence, to further free boards and managers to pursue their view of sensible long-term strategies in their investment and management policies. Here, I evaluate the evidence in favor of that view…” Link verified June 19, 2014

Tags: , , , , , , , , , , , , , , , , , , , ,

Breaking Bankruptcy Priority: How Rent-Seeking Upends the Creditors’ Bargain

Breaking Bankruptcy Priority: How Rent-Seeking Upends the Creditors’ Bargain. Mark Roe, February 25, 2014, Paper. “Bankruptcy reallocates value in a faltering firm. The bankruptcy apparatus eliminates some claims and alters others, leaving a reduced set of claims to match the firm’s diminished capacity to pay. This restructuring is done according to statutory and agreed-to contractual priorities, so that lower-ranking claims are eliminated first and higher ranking ones are preserved to the extent possible. Bankruptcy scholarship has long conceptualized this reallocation as a hypothetical bargain among creditors…” Link verified June 19, 2014

Tags: , ,

Another Way to Make Finance Safer

Another Way to Make Finance Safer. Mark Roe, December 3, 2013, Opinion. “Since the financial crisis erupted in 2008, policymakers have sought to make the world’s banks safer, mainly via detailed instructions: use more capital, avoid specified risky activities, provide more transparency, and punish reckless behavior. But this approach to financial regulation, while laudable, requires officials to make, or shape, banks’ most important strategic decisions: capital levels, liability structure, and the scope of their business activities. And, while regulators often target bank executives’ incentives, they often leave intact the organization’s…” Link verified March 28, 2014

Tags: , ,

JPMorgan Inside the Whale

JPMorgan Inside the Whale. Mark Roe, October 7, 2013, Opinion. “It has been a bad few weeks for JPMorgan Chase (JPM), the multinational financial-services firm that by some measures is America’s biggest bank. Two of its traders were indicted, and the bank agreed to a billion-dollar fine for failing to report the extent of its “London Whale” losses fast enough and accurately enough. Now it faces even bigger fines – perhaps exceeding $10 billion – for mortgage activities, mostly by two of the financial firms, Bear Stearns and Washington Mutual, that it bought up during the financial crisis. The conventional wisdom is that the United States government…” Link verified March 28, 2014

Tags: , ,

How the Chrysler Reorganization Differed from Prior Practice

How the Chrysler Reorganization Differed from Prior Practice. Mark Roe, September 4, 2013, Paper. “Chrysler, a failing auto manufacturer, was reorganized in a controversial chapter 11 in 2009. Financial creditors were paid a quarter of the amount owed them, while other creditors were paid more. The reorganization’s defenders asserted, among other things, that the proceeding and the sale structure was typical of prior practice. To see if this view fits the evidence, we examine all prior large section 363 sales for key financial ratios…” Link verified June 19, 2014

Tags: , , , , , ,

Derivatives Markets in Bankruptcy

Derivatives Markets in Bankruptcy. Mark Roe, September 2013, Paper. “By treating derivatives and financial repurchase agreements much more favorably than it treats other financial vehicles, American bankruptcy law subsidizes these arrangements relative to other financing channels. By subsidizing them, the rules weaken market discipline during ordinary financial times in ways that can weaken financial markets, thereby exacerbating financial failure during an economic downturn or financial crisis emanating from other difficulties, such as an unexpectedly weakened housing and mortgage market in 2007 and 2008…” May require purchase or user account. Link verified June 19, 2014

Tags: , ,

Did Taxes Cause the Financial Crisis?

Did Taxes Cause the Financial Crisis? Mark Roe, August 21, 2013, Opinion. “After the financial crisis erupted in 2008, many observers blamed the crisis in large part on the fact that too many financial firms had loaded up on debt while relying on only a thin layer of equity. The reason is straightforward: whereas equity can absorb a business downturn – profits fall, but the firm does not immediately fail – debt is less forgiving, because creditors do not wait around to be paid. Short-term creditors cash out or refuse to roll over their loans, denying credit to financially weakened firms. Long-term creditors demand to be “made whole” and…” Link verified March 28, 2014

Tags: , ,