"So, I say to myself, Self, things could be worse. And, sure enough!"

Don't blame the home mortgage mess on the Bankruptcy Code.

Section 11 USC 109 excludes insurance companies and "lending institutions" from title 11. Why? Because it is regulated under some other state and/or federal law.

For the past year or so, regulators and investors have been eyeing the subprime-mortgage industry as spectators on an expressway might a fender bender or a flat tire. Although onlookers usually don’t know what they’re slowing down to see, it’s more often than not a harmless event, rather than a major catastrophe. Nonetheless, the viewing continues, and so do the endless commutes.

Corporate failures (at the risk of stating the obvious) usually result in the realization by creditors of the failed enterprise in less – often far less – than the par value of their claims. Unsurprisingly, this often leads to aggressive efforts to ascribe responsibility for the failure of the enterprise and to seek recovery from those deemed blameworthy (and deep-pocketed).

Buyers of claims in bankruptcy have long feared that their claims (including syndicated bank loan claims) may be tarnished by the conduct of a previous owner. Standard legal documentation used to purchase claims strives to protect buyers from "bad actors" in the upstream chain of title.