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One of my crack research assistants, Scott Cromar, put together electronic versions of the U.S. Bankruptcy Code and Federal Rules of Bankruptcy Procedure (FRBP) that can be read using Amazon Kindle or an ePub reader. Because these books were assembled using public-domain materials from the U.S. government, we are making them available free of charge. Keep reading after the page break for links and more information.

Given what a small part of the web we are, it seemed a little melodramatic for Credit Slips to go dark over the proposed Stop Online Piracy Act (SOPA) and Protect IP Act (PIPA). It did seem appropriate at least to add my own voice to the opposition.

If you are not familiar with these heavy-handed attempts to police intellectual property piracy, plenty of information is available from pedia here (and, yes, that link still works today, January 18). Some of the provisions in these acts could have implications for small sites such as this.

Although the government should stop the theft of intellectual property, these proposed laws go way too far, sacrificing too much freedom in the name of property rights. In particular, it disappoints me that some senators who have been champions of consumer protection have put themselves on the wrong side of this issue. Specifically, Senators Patrick Leahy, Sherrod Brown, Dick Durbin, Charles Schumer, Al Franken, and Sheldon Whitehouse are listed on THOMAS as sponsors or co-sponsors of PIPA (S. 968). It would be great to see these senators lead a retreat from these onerous pieces of legislation.

Those are my personal views as blog administrator. And, that is probably a point we don't emphasize enough on this blog -- everyone is speaking for himself or herself only.

Credit Slips Own Anna Gelpern has a great new article in the Yale Law Journal that very much deserves a plug. It's called "Bankruptcy, Backwards:  The Problem of Quasi-Sovereign Debt." The article deals with the problems of financial distress for quasi-sovereigns, like US states or even to some degree EU member states. As Anna points out, bankruptcy seems to mean all things to all people, and as a result framing discussions of how to deal with quasi-sovereign debt---where there is no bankruptcy regime of any sort--quickly devolves into debates about existing bankruptcy systems, like US Chapter 9, rather than starting from the unique problems of quasi-sovereign debtors and then figuring out what sort of financial restructuring system might make sense.

I highly recommend the article, particularly for those of us who don't regularly deal with sovereign debt issues. There's a strange divide in practice and scholarship between domestic bankruptcy and sovereign debt restructuring. A few people (David Skeel, Steven Schwarcz, Bob Rasmussen, e.g.) have written in both areas, but they remain pretty separate fields. Anna's insights from the sovereign debt field are very useful for domestic bankruptcy scholars, as they help us step back and see the larger picture of what is going on.  

Adam Davidson wrote up an interesting apologia for Wall Street in the NY Times last week, which I think is ultimately a call for better regulation, rather than bank-hating.  I missed the piece originally, but Yves Smith found it and has nothing good to say about it. I think Yves is a little too harsh on Davidson. I've got issues with parts of the piece, but on different grounds, namely that it efuses to engage on the real issue. The problem isn't financial intermediation.  That's a perfectly fine thing that plays a useful role in society.  

Instead, the problem is when financial intermediaries do not treat the intermediating parties (meaning consumer and investors) fairly. The history of US financial services is nothing short of a history of scandals involving financial institutions variously ripping off investors and consumers. I'm not just talking about those scandals we remember, like Milken or Madoff or the recent slew or even the second tier ones like the Salad Oil scam or all of 1920s mortgage bonds. The history of US financial services is largely a history of unregulated innovation resulting in abuse and then follow-up regulatory reform. Lather, rinse, wash, repeat. 

Davidson argues that the reason to "hate the banks" is that 

Wall Street firms enforce the cold rules of capitalism: hostile takeovers, foreclosures, fee increases, defaults. But those rules clearly do not apply to the largest banks themselves. 

Davidson misses the mark here a bit. It's not just that the banks get bailed out, meaning that the rules of market discipline don't apply to them. It's that the banks frequently break the rules when applied to others.  It's fine to do foreclosures or hostile takeovers or sell consumers speculative securities. But it's not ok to foreclose without following the law or to profit on insider knowledge on hostile takeovers or or to sell investors "safe" assets when you know they are junk.

The fundamental rule of American capitalism is "profit, but fairly." Whatever one thinks is "fair", I don't think there should be much disagreement that Wall Street too often disregards the second part of this dictum to focus on the first. But take away the "but fairly" and society quickly becomes a Gilded Age baronial kleptocracy, a post-Soviet (or pre-Soviet) Russia. If we want capitalism to work--meaning that there is social stability, pace OWS--market players must play by the rules. This is where the debate needs to be focused:  ensuring that our financial intermediaries play by the rules. 

At least it’s not Tastykakes, right Philadelphians? But seriously, historians with a sweet tooth should be feeling a little uneasy after Hostess’ chapter 11 last week, precipitated by runaway pension and medical benefits claims and a tough economy. Tough is right. If people are too broke to buy Twinkies, things really have reached an all-time low.Interstate Bakeries, which owns Hostess brands, claims to have over $950 million in pension claims.

Twinkies have an interesting history. According to pedia, Twinkies were invented in Schiller Park, Illinois in 1930 by James Alexander Dewar, a baker for the Continental Baking Company. Realizing that several machines used to make cream-filled strawberry shortcake sat idle when strawberries were out of season, Dewar conceived a snack cake filled with banana cream, which he dubbed the Twinkie. He said he came up with the name when he saw a billboard in St. Louis for "Twinkle Toe Shoes". During World War II, bananas were rationed and the company was forced to switch to vanilla cream. This change proved popular, and banana-cream Twinkies were never widely re-introduced.

In 1988, Fruit and Cream Twinkies were introduced with a strawberry filling swirled into the cream. However, the product never caught on and was soon dropped. Vanilla's dominance over banana flavoring would be challenged in 2005, following a month-long promotion of the movie King Kong. Hostess saw its Twinkie sales rise 2 percent during the promotion, and in 2007 permanently restored the banana-cream Twinkie to its snack lineup.

Twinkie sales for the year ended December 25, 2011 were 36 million packages, down almost 2% from the prior year. Hostess claims that more customers are choosing healthier foods, implying that it may need to invent a healthy Twinkie in order to avoid liquidation and attract new investors.

In putting together a revised syllabus for my consumer finance course this semester, I was struck with how different this nascent field is from established courses like Contracts.  No matter what Contracts casebook one uses to teach, there are a bunch of well-established chestnuts that everyone knows:  Hadley v. Baxendale, for example, or Williams v. Walker-Thomas Furniture, Raffles v. Wichelhaus, Frigaliment, Lucy Lady Duff Gordon, Hawkins v. McGee, or Jacobs & Young v. Kent (and one could go on and on).  It's hard to say the same for Consumer Finance; indeed, I've got very few cases on my syllabus.