Dinosaur Derivatives and Other Trades

11 What is a Bankrupt?A Financial Institution

“How did you go bankrupt?” “Two ways. Gradually, then suddenly.”

The Sun Also Rises, Ernest Hemingway (1899–1961)

In this final chapter let me tell you just a little bit more detail of my own career. Most of it, as indicated elsewhere, has been spent providing a range of financial services to other financial services companies. In the industry parlance I have been a “Financial Institutions” (sector specialized) banker, investor, or adviser where my clients have always been other banks or non-bank finance companies of all sorts—as opposed to companies, say, in the telecom, healthcare, or manufacturing sectors. The services, products, and investment solutions that I have been involved in with this client base is very wide, but one activity has been a regular feature of my career—dealing with bankrupt banks and finance companies.

These bankruptcy-related dealings have themselves been various, including investments into busted banks and finance companies; providing or arranging for bankrupt finance companies access to new sources of capital; or advising these bankrupt entities on their options and best route to recovery. It's actually a fascinating business because these bank failures raise so many interrelated financial issues and problems. ...