Failed Bank Resolution and the Collateral Crunch: The Advantages of Adopting Transferable Puts
AbstractCurrent methods of failed bank resolution are unnecessarily expensive for taxpayers and impose substantial costs on borrowers at failed banks. This situation is the result of distorted incentives imbedded in the standard contract between the government and acquirers of failed banks, which result in more loan foreclosures than if the loan were held by a well-capitalized bank. This paper proposes a modification to the standard contract in the form of a transferable put, which would introduce market-based incentives to the disposition of failed bank assets. Copyright American Real Estate and Urban Economics Association.
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Bibliographic InfoArticle provided by American Real Estate and Urban Economics Association in its journal Real Estate Economics.
Volume (Year): 22 (1994)
Issue (Month): 1 ()
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Other versions of this item:
- Eric S. Rosengren & Katerina Simons, 1992. "Failed bank resolution and the collateral crunch: the advantages of adopting transferable puts," Working Papers 92-5, Federal Reserve Bank of Boston.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Pacific Basin Working Paper Series
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