“They concentrated exposure, but not enough to sink the system,” says Anna Gelpern, a law professor at the American University Washington College of Law, who specializes in international finance, debt, and regulation. “They weren’t interconnected enough to bring down the rest of the world.”
On Monday came the eighth largest bankruptcy filing in U.S. history from the overleveraged company that had bet on how the European debt crisis would play out—and lost. It counted about $40 billion in assets. The collapse spooked markets and incited prompt scrutiny from regulators. It also conjured some of the major themes that emerged from the 2008 financial crisis: namely, the risk factors that can affect one company and then jeopardize the entire financial system.
