Abstract

http://ssrn.com/abstract=2351025
 


 



The Bankruptcy-Law Safe Harbor for Derivatives: A Path-Dependence Analysis


Steven L. Schwarcz


Duke University - School of Law

Ori Sharon


Duke University - School of Law

December 16, 2013

Washington and Lee Law Review, Vol. 71, No. 3, 2014

Abstract:     
U.S. bankruptcy law grants special rights and immunities to creditors in derivatives transactions, including virtually unlimited enforcement rights. This article argues that these rights and immunities result from a form of path dependence, a sequence of industry-lobbied legislative steps, each incremental and in turn serving as apparent justification for the next step, without a rigorous and systematic vetting of the consequences. Because the resulting “safe harbor” has not been fully vetted, its significance and utility should not be taken for granted; and thus regulators, legislators, and other policymakers — whether in the United States or abroad — should not automatically assume, based on its existence, that the safe harbor necessarily reflects the most appropriate treatment of derivatives transactions under bankruptcy and insolvency law or the treatment most likely to minimize systemic risk.

Number of Pages in PDF File: 27

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Date posted: November 8, 2013 ; Last revised: December 17, 2013

Suggested Citation

Schwarcz, Steven L. and Sharon, Ori, The Bankruptcy-Law Safe Harbor for Derivatives: A Path-Dependence Analysis (December 16, 2013). Washington and Lee Law Review, Vol. 71, No. 3, 2014. Available at SSRN: http://ssrn.com/abstract=2351025 or http://dx.doi.org/10.2139/ssrn.2351025

Contact Information

Steven L. Schwarcz (Contact Author)
Duke University - School of Law ( email )
Box 90360
Duke School of Law
Durham, NC 27708
United States
919-613-7060 (Phone)
919-613-7231 (Fax)
Ori Sharon
Duke University - School of Law ( email )
Box 90360
Duke School of Law
Durham, NC 27708
United States
9196053737 (Phone)
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