Template:Erisa netting

====ERISA netting==== Famously, ERISA plans tend to be set not to net, and for the unholiest of reasons, courtesy of the phantasmagorical imagination of some wise counsel at Cadwalader, upon whom the whole market relies.

This gentleman’s opinion is predicated on the risk that a court would interpret the ERISA act as requiring the US Bankruptcy Code as it stood in 1971 to be applied to the insolvency of an ERISA plan, rather than as it stands at the time of insolvency. The reason that’s a problem is that the “safe harbors” for closing out swaps in the Bankruptcy Code were only enacted in the 1980s.

Let me say that again:

• The Bankruptcy Code, today, contains a safe harbor allowing you to close out an ISDAs without fearing for your netting.
• The ERISA legislation, today, allows you to apply safe harbours contained in the Bankruptcy Code.
• The very wisest tiger in the jungle thinks that this might mean just the safe harbors that were there in 1971, even if they don’t exist today, and none of the safe harbors that have been enacted since, even if they do, because when referring to the Bankruptcy Code, ERISA doesn’t say “as amended from time to time”.

Seriously. That’s it.

It is a frankly fantastical fear: Not only is it impossible to be certain, at this remove, exactly how the US Bankruptcy Code stood in 1971 much less how it might have been interpreted in those days, but many of the institutions and concepts it relies on — including per chance, some old hippyish safe harbors from the 1960s — will have since been abolished or materially changed.

Utterly, totally, stupid.