Not a Bank, Not a SIFI; Still Too Big to Fail

This outstanding Article by Professors Oscar Couwenberg and Stephen J. Lubben explores the financial collapse of too big to fail non-bank firms. The Article analyzes the level of government involvement in various large insolvencies around the world, placing each case into one of four categories: standard bankruptcies, bankruptcies with government support, ad hoc solutions, and full bailouts. After considering the benefits of each approach, this Article concludes that either a standard bankruptcy procedure or a bankruptcy procedure with government support is preferable to an ad hoc solution or a full bailout. The authors artfully balance the moral hazard associated with the 'too big to fail' argument, and present a forceful argument for a bankruptcy procedure that is capable of handling extremely large debtors.