Access the full text.
Sign up today, get DeepDyve free for 14 days.
Loading next page...
/lp/wiley/principal-agent-problems-in-s-l-salvage-QdaH6k0Chb
References (4)
-
G. Stigler, P. Samuelson (1948)
Foundations of Economic Analysis.Journal of the American Statistical Association, 43
-
James Barth, Philip Bartholomew, Michael Bradley (1990)
Determinants of Thrift Institution Resolution CostsJournal of Finance, 45
-
Charles Hegji, E. Kane (1989)
The S & L insurance mess : how did it happen?Southern Economic Journal, 56
-
E. Kane (1989)
Changing incentives facing financial-services regulatorsJournal of Financial Services Research, 2
- Publisher
- Wiley
- Copyright
- 1990 The American Finance Association
- ISSN
- 0022-1082
- eISSN
- 1540-6261
- DOI
- 10.1111/j.1540-6261.1990.tb05104.x
- Publisher site
- See Article on Publisher Site
Abstract
ABSTRACT New legislation and traditional FDIC insolvency‐resolution procedures transform and intensify the principal‐agent problems most responsible for the FSLIC mess. These problems explain counterproductive constraints on the governance and operating policies of the agency responsible for rescuing and salvaging assets in insolvent thrifts: the RTC. The constraints slow insolvency resolution, increase interim financing costs, and undermine RTC recovery of asset value. Operationalizing its task as preserving evanescent and economically misconceived “franchise values,” the RTC allows insolvents to seek financing on an unconsolidated basis, initiates bidding for one institution at a time, holds back seriously troubled assets, and recruits an overly narrow range of bidders.
Journal
The Journal of Finance – Wiley
Published: Jul 1, 1990