Bo Peng

The Wonderful World of Self-Insurance

Thanks for the link, emerald! Do you know the date of the paper by any chance?

Effectively, so-called "senior debt" of all bond issuers who're derivatives counterparties are subordinated. I wonder if rating agencies and regulators have taken this into consideration when giving such bonds their seniority labels and credit ratings. I wonder when somebody will sue them on such ground...

Senior debt holders of Lehman have been wiped out, without ever knowing the risk they were taking nor getting the reward for taking such risk.

From now on, bond cost for banks should be much higher, if people have learned the Lehman lesson.