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Strengthened bankruptcy laws are giving bankers leverage against politically powerful debtors loathe to part with assets.
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Mr. Mottola, two people close to the company said, has been meeting with investment bankers and leveraged-buyout executives in recent months to discuss different financial structures for the company, perhaps with an eye on taking it private.
This is because getting into high levels of debt in the assurance that you will make enough to repay it later is the sort of approach that appeals to investment bankers looking for leverage, not people of modest income whose principle is always to avoid debt.
The fact of the matter is that without leverage, bankers cannot justify their existence.
Rubbish: by historical standards – ie norms prevailing 20 or 30 years ago, before bankers saw that more leverage and more risk was the easiest way to improve returns on capital and pay themselves more – it is not excessive at all.
Of course, the bankers want this high leverage because it juices their returns on the upside and they figure they will always have the taxpayer to bail them out when things go wrong.
Weinberg had enormous leverage: a banker in the same position today would have held Ford for ransom.
It was the high level of leverage that allowed bankers to make big bets, ultimately with taxpayers' money.
Fama and Becker both endorsed limits on bank leverage, so that bankers are playing with more of their firm's own money.
This could be based on an institution's size and leverage, so that bankers could pay for their cleanups — the finance equivalent of a pollution tax.
The financial data could also give negotiating leverage to investment bankers who broker ownership stakes, advertisers who sell ads and naming rights in stadiums and critics of public subsidies for sports teams.
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