Category: Historical Perspectives

  • Bankers, pawnbrokers, actors, jugglers, acrobats, quacks, and brothel keepers…in 16th Century Holland

    Posted by

    Adam Levitin

    It's pretty amazing how the status of some professions has changed over time.  I came across this astounding passage in Simon Schama's The Embarassment of Riches:  An Interpretation of Dutch Culture in the Golden Age (now you know what I read for fun): 

    "Bankers were excluded from communion by an ordinance of 1581, joining a list of other shady occupations—pawnbrokers, actors, jugglers, acrobats, quacks, and brothel keepers—that were disqualified from receiving God's grace.  Their wives were permitted to join the Lord's Supper, but only on condition that they publicly declared their repugnance for their husband's profession!  Their families shared the taint and were only permitted to join communion after a public profession of distaste for dealing in money.  It was not until 1658 that the States of Holland [the representatives of the estates of nobles and commoners to the court of Holland] persuaded the church to withdraw this humiliating prohibition on "lombards."

    That's a remarkable shunning of those in finance by a culture that was absolutely obsessed with material goods of every sort (tulips, satin, brocade, damasks, gold, silver, pearls, etc.).  There's a long history of religious discomfort with finance, but to see this in as commercial of an early modern culture as there was surprised me. 

  • Are You a Work Horse?

    Posted by

    Bob Lawless

    Two items of interest . . . .

    First, from West's "headnote of the day" service
    on a case interpreting what it meant for a horse to a "work horse"
    within the meaning of an exemption statute. Given the holding, I wonder how many modern-day householders might fit the description! I, for one, vow never to be broken to gear.

    To entitle a poor debtor to the benefit
    of the act which declares "one work horse," etc., shall be retained for
    the use of every family in this state "free and exempt from levy or
    sale by virtue of any execution or other legal process," it is not
    necessary to prove that the horse had been broken to gear, or used in
    harness; but it is enough if he performed the common drudgery of the
    homestead, either by hauling wood, drawing the plow, carrying the
    family to church, etc., under the saddle or in traces. And he need not
    have performed all these services. If he is intended to be used in any
    or all of them, or in others of a kindred character, he comes within
    the exemption. Noland v. Wickham, 9 Ala. 169 (1846).

    The second item — there is a headnote of the day service? Who knew?

    By the way, I mainly wanted to post this for the benefit of our resident horse expert, Debb Thorne, who I am sure will chastise me for my cavalier attitude toward the comparisons between humans and horses.

    Hat tip to Bob Hiller for pointing the way to this.

  • New English Bankruptcy History Archive on SSRN

    Posted by

    Jason Kilborn

    Actually, it's not really an archive per se, but the long list of collected works by John Paul Tribe, KPMG Lecturer in Restructuring at Kingston University (London) School of Law, is impressive enough to merit its own subject heading in a library collection (also, check out the intriguing ancient bankruptcy images at the Muir Hunter Museum of Bankruptcy, of which Prof. Tribe is the curator). Tribe's work was uploaded to SSRN in January and February, so many may not know of its existence yet–this is a resource not to be missed. Most of the work is historical, a great resource for those of us looking for citations (for academic or persuasive rhetorical purposes) on the earliest history and development of bankruptcy and insolvency in England, including its ever-famous death-penalty roots. Not all of the papers are downloadable (the one entitled Discharge in Bankruptcy: A Comparative Examination of Personal Insolvency Relief is particularly enticing to me, but the full-text paper is not available), but other attractive titles are free for the taking, such as A Definitive Bankruptcy and Related Subject Bibliography: From the Earliest Times to 1899 in Chronological Order and Bacon in Debt: The Insolvency Judgments of Francis, Lord Verulam. Check them out–and Prof. Tribe, if you're reading, please upload the missing papers and share the extraordinary wealth!

  • Contracts in Crisis: Variations in Z and S

    Posted by

    Anna Gelpern

    Luigi Zingales of Chicago GSB put out a mortgage modification proposal about a month ago that got a bit of attention, but deserves more even if it has no political prayer.  It is one of a genre — advocating across-the-board contract change in response to a macro shock — that has at least two other prominent exponents, Randall Kroszner and Joseph Stiglitz.  I am noodling this literature for a U. Conn. symposium paper.

    Zingales proposes legislation to allow homeowners to reduce the loan principal in line with the drop in home prices in their zip code from the time of purchase (as measured by Case-Shiller).  Creditors would get an equity kicker TBD.

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  • T.A.R.P. R.I.P.: Illiquency Watch

    Posted by

    Anna Gelpern

    TARP’s third incarnation as a consumer lending catalyst goes straight to my pet crisis peeve.  I am endlessly flummoxed at the authorities’ insistence on throwing liquidity at a solvency problem — with TARP I, AIG, and now, the consumers.

    I have ranted elsewhere about the perils of drawing a sharp line between illiquidity and insolvency in a financial and macroeconomic crisis.  While the bankruptcy world has moved beyond the distinction in important ways, it still dominates the crisis policy response.

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  • Hands on Their Faces

    Posted by

    Adam Levitin

    Whenever there’s a stock market crash, you can be sure that a bunch of newspapers are going to run cover photos of some broker with his hands on his face. There’s probably an interesting history to this cultural meme. I always figured that there was just a few stock photos that got recycled crash after crash. And what was the story of the actual individual in the photo? Did he lose his shirt in the market? Or perhaps he was rubbing his eyes in disbelief that he’d just made a killing? Or maybe it was allergies?

    Turns out that someone has gathered a collection of photos of brokers with hands on their faces. A little gallows photo humor here.

  • Some Curious Parallels with the 1930s

    Posted by

    Adam Levitin

    There are lots and lots of differences in the financial institutions situation of the Depression and today. And yet there are some remarkable parallels in the problems and government responses. We shouldn’t overread parallels as predictive matters. But some of them are pretty astounding:

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  • Regulation Cannot Depend on Irrational Markets

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    Christian E. Weller

    At this point, it is all too clear that financial markets can get things wrong. This is not an isolated phenomenon. No, getting it wrong tends to be the name of the game for financial markets. Understanding that financial markets regularly underestimate or overestimate the risks of investing is crucial to the proper design of financial market regulations.

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  • Wealth Destruction by the Numbers

    Posted by

    Christian E. Weller

    Financial markets went into free fall in late September and early October. The third quarter of 2008 continued the wealth destruction that took place in the previous nine months. This wealth decline is large, broad, and quick.

    The primary reason for wealth building is retirement. Many families nearing retirement, though, relied primarily on their homes for their retirement income. According to the Federal Reserve, only 62.9% of families between the ages of 55 and 64, had a retirement account, such as a 401(k) or IRA, in 2004. The typical holding in such accounts was $83,000 in 2004 dollars. In comparison, 79.1% of such families owned their own house with a total typical value of $200,000. In other words, policymakers need to take a comprehensive view at restoring family wealth in an effort to strengthen retirement income security. Much of the policy attention has been on protecting housing wealth. Policy responses, though, need to match the problem, specifically by fostering a pension renaissance and by vastly improving existing retirement savings plans in addition to protecting housing wealth.

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  • How Long is the Way Out of the Hole?

    Posted by

    Christian E. Weller

    The stock market just ended its worst week in history. This has sharply eroded families’ financial security. Under rather optimistic expectations it would take about six years before families can hope to achieve the same level of financial security as they had at the end of 2007, before the latest round in the financial market crisis took shape.

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