Bankruptcy for Banks: A Tribute (and Little Plea) to Jay Westbrook

Abstract

In this brief essay, to be included in a book celebrating the work of Jay Westbrook, I begin by surveying Jay’s wide-ranging contributions to bankruptcy scholarship. Jay’s functional analysis has had a profound effect on scholars’ understanding of key issues in domestic bankruptcy law, and Jay has been the leading scholarly figure on cross-border insolvency. After surveying Jay’s influence, I turn to the topic at hand: a proposed reform that would facilitate the use of bankruptcy to resolve the financial distress of large financial institutions. Jay has been a strong critic of this legislation, arguing that financial institutions need to be resolved by regulators and an administrative process, not bankruptcy. As an advocate of bankruptcy-for-banks, I ask Jay if he might reconsider his opposition if the legislation were amended to respond to several of his primary concerns.

Keywords: Bankruptcy, banking, insolvency, legislation, administrative law, Dodd-Frank, bailouts, single point of entry, SPOE, financial institutions, finance, banks, Chapter 11, Chapter 15, bankruptcy amendments

JEL Classification: G21, G33, K22, K23