# kaal:claim:1998455-029

**Claim.** The social welfare maximization potential of contingent capital securities is lower if their design features are left entirely to private ordering, because private parties do not necessarily structure those features with a view toward the common good, the avoidance of future bailouts, or the limitation of systemic risk and contagion.

**Type.** failure  **Support.** argued

**Holds when.**

- where regulators leave CCS design features entirely to industry groups and private parties

**Source quote.**

> The social welfare maximization potential of CCS could be lower if the design features are entirely left to private ordering.

**From.** Wulf A. Kaal, *Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance* (2012), VII.A. A Quasi-Public Good, page 42

**Cite as.** Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455

**Verify.** sha256 of source PDF `1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20-%202012%20-%20Initial%20Reflections%20on%20the%20Possible%20Application%20of%20Contingent%20Capital%20in%20Corporate%20Governance.pdf

**Failure mode.** private-ordering-welfare-shortfall  (family: trigger-design-failure)

**Topics.** risk-and-incentives, contingent-capital, dynamic-regulation

**Keywords.** private-ordering, social-welfare, contingent-capital, regulatory-design, failure-modes

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