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"The silly war on vulture funds"

Felix Salmon notes efforts by lawmakers in both the U.S. (Rep. Maxine Waters) and the U.K. to ban "vulture" investing in international debt, that is, the buying up of debt at a steep discounts from par value in hopes of collecting on it:

In other words, the single greatest innovation in the history of debt capital markets -- the idea that obligations can be traded, rather than just being held to maturity or litigated upon default -- is destroyed at a stroke.

It's just posturing with no chance of enactment, he argues -- but it betrays at best a well-intentioned paternalism, especially since developing countries "want no part of any act which might hinder their access to capital or their equal-player status on the world stage."



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.