[Pen-l] Query:Bond holders and failed banks and funds

[Gar Lipow <gar.lipow@xxxxxxxxx>]

An acquaintance claimed that if there had been a temporary
nationalization or formal receivership of the failed banks, most of
the unpayable debt could have been wiped out by wiping out the
bondholders. (This would be complicated by the necessity of not wiping
out major institutions holding those bonds, but you could have at
least negotiated  a reduction in that debt to less than 100% on the
dollar.) So one of the big objections to the way the bailout is being
done is not making the bondholders take any share in the losses.

Is the premise correct? Is debt to bondholders anywhere close to the
total excess of debt over assets in failed institutions? What about
the the conclusions drawn from this.
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