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A Better Bailout
ByBy Patrick Appel
Manzi:
Experts disagree about whether a literal application of a Chapter 11 process would work for the Big 3. So, if we could stipulate that we could get all of the effects of an orderly bankruptcy through some government-sponsored process that just had a different name, then of course we should do it.
If we had a process called conservatorship or something, in which a set of government employees called an oversight board, who are insulated from political pressure and have very similar motivations and authorities to the government employee named a bankruptcy judge, makes decisions that force renegotiation of contracts and a change of ownership, we would have a materially identical process to bankruptcy. This hypothetical alternative could – again, in theory – actually be superior if it could reduce some of the inevitable disruption in consumer demand that would very likely be created by bankruptcy.
