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Mr. Stern said the bill in the Senate is vague about how such creditors would be treated if the government were to seize and dismantle a failing bank.
Since their investment is not guaranteed and their time horizon is long term, such creditors have interests closely aligned with those of government regulators, says Mr. Pozen, who is also a lecturer at Harvard Business School.
Borrowers found that such creditors, in their hunger for higher yields at a time of low interest rates, were quite willing to drop safeguards altogether, leading to a surge of "covenant-lite" loans.
But such creditors are just as keen on extracting their pound of flesh (in terms of economic reform) as the private sector.Vague plans for a fiscal union seem to depend on a bargain in which Germany agrees to transfer money to debtor countries but the debtors agree to limits on their ability to run a deficit.
Left out after some $3 billion was set aside to pay the WorldCom bondholders were holders of junior MCI bonds and other subordinated MCI debts -- a group representing more than $2 billion in debt, said Edward S. Weisfelner, one of the lawyers who will be opposing WorldCom's plan on behalf of such creditors.
"The club need all such creditors to contact us with names, addresses and email addresses immediately as a matter of great importance.
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One such creditor is Roy Spencer, who teaches at the University of Alabama, Huntsville.
In such circumstances, creditors could always shift up the yield curve.
It might seem madness for such small creditors to pursue their claims.
Although duties to shareholders are well settled, duties to other participants such as creditors or employees are heavily debated.
The interviewees perceived uncertainty as low because being a smart follower is the clear strategy for the target; the semiconductor sector is business-to-business, so that marketing and sales are less subject to the whim of high tech retail consumers, and the monitoring and support from external stakeholders such as creditors and the government can reduce uncertainties.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com