« Lipson's Back, Is He Going to Be Trouble? (Hey-La, Lipson's Back) | Main | Dodd-Frank Resolution Authority -- the Rules »

Bob's Boyfriend (or Something that Won't Happen)

posted by Jonathan Lipson

I have to say that, while I have had many interesting introductions--and Bob has called me many interesting things over the years--"boyfriend"  (by implication) hasn't been one of them. (If you find the old Angel's version cloying checkout the Raveonettes'). 

Whether or not my return is trouble, I am happy to carry the theme forward, and try to scare off several unwanted suitors, in particular some misconceptions about what a state-bankruptcy amendment is really about.  In the next few days, I will also live-blog the LoPucki Big Bankruptcy Empirical Conference at UCLA.  I also hope to say a few words about the Chapter 11 filing of the Archdiocese of Milwaukee, both because it is sort of in my neighborhood, and because I've written about the church-bankruptcy cases before.

So, start with the biggest trouble of all:  State bankruptcy. 

We all know that this first attained memehood when Newt Gingrich suggested in a speech last fall that Congress should amend the Bankruptcy Code to permit states to go into bankruptcy.  The suggestion acquired some respectability when adopted by David Skeel, who advocates an amendment modeled on chapter 9.

Like Steve Lubben, who discussed this on this site, I am not reflexively pro or con.  As a general proposition, anything that  induces or forces over-leveraged parties and their creditors to renegotiate is probably better than most alternatives.  If a new "chapter 8" does that, maybe that's good.  There are, of course, legitimate concerns that it would be used only to stick-handle public employee unions.

Which leads to a question: If that's what it would do--shaft unions--why would anyone think it will be become law in any way that matters?  It is hard to imagine a Democratic Senate or a Democratic President supporting it.  It's also hard to imagine the Democratic governors of California and Illinois--among the more profligate states--using it. 

Republicans like Newt Gingrich are not naive.  They surely must understand this.  So, if it won't become law, who gains from all the talk about it?  It can't simply be a really good talking point in Gingrich's proto-presidential run.  Saying "no-state bailouts" is the way to get that point across in a more accessible (and saleable) way. 

I have a theory (and it's probably crazy), but before stirring up trouble, I'd be curious to know if anyone else can answer the question:  Why all the talk about something--state bankruptcy--so unlikely to happen?

 

 

Comments

All the talk is out there because "state bankruptcy" is a genteel form of public union bashing. And that's probably what the Republicans plan to run on in 2012.

I do find the constitutionality of state bankruptcy to be an interesting topic, as an abstract exercise in federalism. But I agree--na ga hap pen.

Aw, why ruin all the fun of watching our state institutions incrementally descend into corporate anarchy? There are still so many potential sources of revenue and cooption still untapped:

Start with naming rights to state buildings. The Mass. DOT already provides a 511 traffic info service "brought to you by Safety Insurance." How about the Bank of America State House or the Thomson-West Courthouse in Suffolk County?

The comments to this entry are closed.

Contributors

Current Guests

Follow Us On Twitter

Like Us on Facebook

  • Like Us on Facebook

    By "Liking" us on Facebook, you will receive excerpts of our posts in your Facebook news feed. (If you change your mind, you can undo it later.) Note that this is different than "Liking" our Facebook page, although a "Like" in either place will get you Credit Slips post on your Facebook news feed.

News Feed

Categories

Bankr-L

  • As a public service, the University of Illinois College of Law operates Bankr-L, an e-mail list on which bankruptcy professionals can exchange information. Bankr-L is administered by one of the Credit Slips bloggers, Professor Robert M. Lawless of the University of Illinois. Although Bankr-L is a free service, membership is limited only to persons with a professional connection to the bankruptcy field (e.g., lawyer, accountant, academic, judge). To request a subscription on Bankr-L, click here to visit the page for the list and then click on the link for "Subscribe." After completing the information there, please also send an e-mail to Professor Lawless (rlawless@illinois.edu) with a short description of your professional connection to bankruptcy. A link to a URL with a professional bio or other identifying information would be great.

OTHER STUFF