Learn from South America on bank failures
History repeated itself at the International Bar Association
conference as delegates from Argentina compared notes with
Chile on the restructuring methods that solved their various
banking crises, in the nineties and now.
Roberto Silva of Marval O'Farrell & Mairal in Argentina
and Cristobal Eyzaguirre of Claro & Cia in Chile told the
packed room about sucessful government intervention in
financial systems. "I'm not saying this will work for every
nation but it did work for us," Silva said.
Argentina's method included reorganising assets into good
and bad loans, then forming a so-called white knight to take on
the good assets, placing them in an untouchable trust that the
white knight could not access.
After that the government allowed bad creditors unassociated
with the white knight to fail, with a lot of shareholders
receiving little value on stocks. "There is not enough gold to