Cuckoo for CoCos: Bernanke endorses contingent capital
December 14, 2009 12:00:00 AM
Fed Chairman Ben Bernanke recently endorsed the idea of contingent capital, or CoCos as some call this newfangled form of capital. The idea is to help “systemically important institutions” maintain adequate capital levels in the worst of economic or business circumstances. Problem is cocos would be an irresponsible investment for most market participants and are, therefore, bad public policy.