US Government Debt Different - Finance Department - University of ...

Charles W. Mooney, Jr 16913United States Sovereign Debt:A Thought Experiment On DefaultAnd RestructuringCharles W. Mooney, Jr.*I. IntroductionI have quite self-consciously styled this essay a “thought experiment”on the default and restructuring of United States (U.S.) sovereigndebt. The U.S. debt addressed here is the obligation of the U.S. onits Treasury Securities. I make no claim that a default by the U.S onits Treasuries is likely or imminent. Nor do I argue that a restructuring,whether based on bilateral or multilateral negotiations or onunilateral imposition, would be in the interest of the U.S. if a defaultwere likely or imminent or in any other circumstances. Instead, thisessay assumes, without demonstrating, that at some time in the futureconditions might be such that restructuring of U.S. obligations* Charles A. Heimbold, Jr. Professor of Law, University of Pennsylvania LawSchool. I wish to thank Haley Wojdowski, J.D. 2012, University of PennsylvaniaLaw School, for excellent research assistance. This paper was prepared in connectionwith “Is U.S. Government Debt Different?”, a conference sponsored by theWharton Financial Institutions Center of the University of Pennsylvania and theUniversity of Pennsylvania Law School which was held on May 5, 2012 (the “Conference”).I also wish to thank Donald S. Bernstein, William W. Bratton, Steven L.Schwarcz, David A. Skeel, the other participants at the Conference, and the participantsat the University of Pennsylvania Law School 2012 annual faculty retreat forhelpful comments on a draft of this paper.