O’Neill supports bankruptcy mechanism

In September US Treasury Secretary, Paul O’Neill, told the Senate Banking Committee that he would favour establishment of an international bankruptcy law as an alternative to IMF bailouts. “I think … we need to take the action that’s been talked about for years… We need an agreement on international bankruptcy law so that we can work with governments that need to go through bankruptcy instead of socialising the costs of bad decisions,” he said. The mechanism would allow countries with excessive debt burdens to work out agreements with foreign creditors to reduce their debts through a formal process. Similar proposals have previously been rejected.