I wanted to draw your attention to something I have yet to see thoroughly discussed: How the Media covers different types of bankruptcies.
The City of Detroit filing was what reminded me of this subject, but it has been on my mind since the 2008 collapse.
Consider the following failures:
• Bear Stearns
• Fannie Mae & Freddie Mac
• Lehman Brothers
• Citigroup, Bank of America
• Washington Mutual, Wachovia
• Morgan Stanley, Merrill Lynch
• Home Owners
• GM, Chrysler
• New York City
• Spain, Greece
These all were treated very differently. The circumstances of each were different, but one would hope there is some over-arching guiding principles to both the financial and legal aspects of these.
We cannot remotely suggest that is what occurred. The response to each of these were a function of how politically connected these entities were; the ideological biases of various observers; who the Treasury Secretary was; how important some of these were to the overall economy; how much contagion potential existed; and of course, the old standby, Human Fear.
I cannot help but wonder how different things might have turned out id the Treasury Secretary at the time of the crisis was not the former CEO of Goldman Sachs, and his post–crisis successor was not another creature of the banks, the former President of the NY Fed.
Imagine instead if an Industrialist and a Technologist held the position of Treasury Secretary from 2005-08 and then 2009-13. Would GM and Chrysler have been bailed out and the major financial institutions sent in for Reorg?
These can be complex subjects, requiring some level of expertise to plow through. Perhaps I should not be surprised that much of the coverage has been uneven, emotional, biased and uninformative.
Welcome to the 21st Century . . .