Perceptions and the politics of finance: Junk bonds and the regulatory seizure of First Capital Life

• 成果类型: Article
• 署名作者: DeAngelo, H; DeAngelo, L; Gilson, SC
• 署名单位: Harvard University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/0304-405X(95)00866-D
• 发表日期: 1996
• 页码: 475-511
• 关键词: politics of finance; Bank runs; Junk bonds; insurance; Financial distress

摘要

In May 1991, one month after seizing Executive Life, California regulators seized First Capital Life (FCLIC). Both insurers were Drexel clients with large junk bond holdings, and both had experienced 'bank runs'. FCLIC's run followed regulators' televised comments that its poor condition necessitated a substantial cash infusion. Yet FCLIC's statutory capital - with junk bonds, real estate, and mortgages marked to market - was far from lowest among major insurers with California policyholders. It becomes lowest if junk bonds alone are marked to market at year-end 1990 (ignoring larger market declines in real estate/mortgages and the junk bond market's 21% return in early 1991). Our findings suggest a regulatory bias against junk bonds in the political backlash against the 1980s.