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Working Paper
The role of warrants in corporate reorganizations
An argument that informational asymmetries explain why the original shareholders of some firms emerge from Chapter 11 bankruptcy proceedings with stock in the reorganized company, while others receive warrants. By proposing a reorganization plan in which they receive warrants, the original stockholders of a firm with good future prospects can signal their superior information to the creditors in a way that firms with poor prospects will not wish to mimic.
Conference Paper
The importance of bank seniority for relationship lending
Working Paper
Absolute priority rule violations, credit rationing, and efficiency
A demonstration that violations of the absolute priority rule exacerbate credit rationing problems by reducing the payment lenders receive in default states.
Working Paper
A note on absolute priority rule violations, credit rationing, and efficiency
An argument that APR violations exacerbate credit rationing problems by reducing the payment lenders receive in default states.
Journal Article
PMI reform: good intentions gone awry
An argument that the legislation aimed at making private mortgage insurance more fair and affordable for homeowners could actually hurt the very borrowers it is intended to help by restricting the availability of mortgage loans and making them more costly.
Working Paper
Self-selection and discrimination in credit markets
This paper increases understanding of the causes and consequences of discrimination in credit markets. It develops an underwriting model in which lenders use a simple Bayesian updating process to evaluate applicant creditworthiness. It also models individuals' self-selection behavior to show how market frictions can affect application decisions.
Journal Article
Rooting out discrimination in home mortgage lending
An argument that racial discrimination in the home mortgage market arises not only from bigotry, but from statistical discrimination (wherein race is correlated with some hard-to-measure determinants of creditworthiness) and from a lack of cultural affinity between lenders and minorities. The author argues that each of these causes may require a different remedy.
Working Paper
Protection for whom? creditor conflicts in bankruptcy
Revised. In this article we provide a rationale for bankruptcy law that is based on the conflicts among creditors that occur when a debtor?s liabilities exceed its assets. In the absence of a bankruptcy law, the private debt-collection remedies that creditors pursue when a debtor is insolvent result in an ad hoc disposal of the debtor?s assets, thereby reducing the aggregate value of creditors? claims. We show that coordination clauses can be used by creditors in their loan agreements that will result in coordination, ex post. Although all creditors would benefit from including these clauses ...
Working Paper
Anatomy of a fair-lending exam: the uses and limitations of statistics
In this paper, we consider the role of statistical analysis in fair lending compliance examinations. We present a case study of an actual examination of a large mortgage lender, demonstrating how statistical techniques can be a valuable tool focusing examiner efforts to either uncover illegal discrimination or exonerate an institution so accused. Importantly, our case also highlights the limitations of such statistical techniques. The study suggests that statistical analysis combined with comparative file review offers a balanced and thorough approach to enforcement of fair lending laws.