In the wake of the widespread chaos that accompanied the bankruptcy of Lehman Brothers last September, regulators have sought to find a better way to unwind global financial giants. One approach is that the banks themselves should prepare for their own orderly demise -- a kind of "living will".

That idea has been gathering steam of late. The G20 group of finance ministers and central bankers meeting in London over the weekend agreed to require "systemic firms to develop firm-specific contingency plans."

The concept has wide appeal. The crisis has convinced politicians and regulators of all colours that even large financial institutions must be allowed to fail without imposing a huge burden on taxpayers. Many bankers see such a regime as a preferable alternative to more intrusive regulation.

However, drawing up a detailed "living will" is easier said than done.

Simon Gleeson of Clifford Chance argues that it is more important for regulators and legislators to establish a cross-border crisis-management and resolution regime than it is for individual firms to prepare for their own demise.

The mandate of the Financial Stability Board (FSB), the international body comprising finance ministries, central banks and financial regulators, was recently expanded to include contingency planning for cross-border crises. It published a series of relevant principles in April. However, as the Institute of International Finance (IIF) noted, it is "clear from the high-level nature of the principles and the aspirational language [that] there remains a lot to be done."

The IIF is calling for the FSB to develop a convention on crisis management that would include detailed rules, including on early intervention. It also wants the FSB to run cross-border crisis simulations of the sort routinely carried out by domestic regulators.

But crisis-handling is only half the battle. Once a bank collapses, national priorities currently kick into action, not least because the responsibility for a bail-out rests with elected finance ministers rather than the technocrats who run financial regulators or central banks.

Politicians' instincts will always be to minimise the harm to their own depositors, creditors and banking systems, regardless of the global cost.

Solvency law reinforces these nationalistic instincts. Like financial markets law, it is bounded by national borders. Administrators allocate the bank's remaining assets among local creditors, regardless of the claims of creditors overseas. Indeed, they are often prohibited from cooperating with their foreign counterparts, even if they wanted to.

Solvency law is also wholly inadequate to the task of unwinding huge, interconnected financial firms.

One solution, as floated by Adair Turner, chairman of Britain's Financial Services Authority, would be to require international banks to simplify their corporate structures. But this is likely to be resisted by the banks as it would eradicate all the efficiency benefits of a cross-border structure, as well as exposing tax-minimising schemes.

Instead, the IIF advocates that governments agree criteria for burden-sharing ahead of another crisis. A common fund could be established across borders, though the IIF sensibly recognises that the political challenges would be huge.

More pertinently, the IIF advocates that banks should be subject to a special resolution regime separate from those of regular commercial companies. Central to such a regime would be a cross-border agreement that governments could step in and override normal insolvency practices in order to avoid systemic disruption of the banking and payments systems.

Some of the issues posed by the financial crisis are intellectually difficult; some politically challenging. Devising a legal framework for "living wills" manages to be both. Any solution for dealing with a future Lehman remains a long way off.

The Year Since Lehman -- related columns:

Banking? Keep it simple, stupid

A year on, it's still a housing story

Procrastination is not a virtue, except when it involves billions of dollars of debt.

A mantra has taken hold of lenders sitting on loan piles: amend and extend. Or as lawyers involved in negotiations between borrowers and lenders say: delay and pray.

The $6.7 trillion U.S. commercial real estate market has been a standout for such tactics and in part explains why, despite the rapid deterioration in property prices and cash flow, delinquencies and defaults so far have been relatively low.

In the smaller but once-powerful leveraged loan market, such tactics have also allowed some companies, many of whom tapped this market to finance some of the biggest leveraged buyouts this decade, to avoid default this year. That's a good thing because rapid-fire defaults could have kept credit markets clogged for longer and the financial system on precarious footing.

But such tactics just postpone the day of reckoning. They don't avoid it.

Amend and extend is essentially a short-term deal that allows a company to extend loan maturities that it can't possibly pay off in the current climate, while it agrees to stiffer terms such as adopting tougher loan covenants and paying higher interest payments.

Though areas of the credit markets are cranking out new debt deals, the leveraged loan market is a shadow of its former self. Collateralized debt obligations, which had accounted for roughly 60 percent of loan demand during the years of LBO madness, have vanished, as have hedge funds that used a healthy amount of leverage to snap up this secured debt.

That has left many companies with little choice but to go back to lenders and ask for more time to pay off debt that saddled many leverage buyout targets with debt ratios well above 6 to 1 -- traditionally seen as the do-or-die threshold.

The trouble is, the extensions have dumped many of these companies into the 2012 to 2014 hot zone when competition will be fiercest for refinancing dollars.

Bank of America Merrill Lynch analysts have found that the bulk of loans getting a new lease on life are now slated to mature between 2012 and 2014, when 85 percent of outstanding loans are due to mature.

Yet, the leveraged loan market is unlikely to return to its former glory, given the moribund state of CLOs, so borrowers will have to find the funding elsewhere. The lucky ones this year have found some solace in the high-yield bond market, where they've been able to refinance about $40 billion. But there's a wall of $545 billion of loans coming due between 2012 and 2014, according to Thomson Reuters data. It's going to take a strong economic recovery to get investors interested in snapping up the debt that needs to be refinanced in addition to the new loans that companies will need to fuel the expansion.

"If the economic recovery is not strong and these companies can't refinance, you're going to see an increase in defaults," said King Penniman, president and high-yield debt analyst at bond research shop KDP Investment Advisors.

So far, markets don't seem too bothered by the prospect but they should be. Such an overhang could mean the excesses of the credit boom will take much longer to wring out. And the road to recovery will be much longer than investors currently believe.

- Glenda Stone is chief executive and founder of Aurora, a recruitment advertising and market intelligence company, and co-chairs the UK Women's Enterprise Taskforce established by Prime Minister Gordon Brown. The opinions expressed are her own. -

Most venture capital and angel investment tend to go to a specific breed of entrepreneur - innovative, well networked, intelligent, confident ... male. Is this the result of deep-rooted discrimination or is this simply an issue of supply and demand? Women-owned businesses are largely under-capitalised and this leads to inhibited growth.

Access to finance is cited by numerous sources as the greatest barrier to the growth of women's enterprise but "access" is only the consequence and "education" is the cause. More women need to participate in business education addressing business growth, technology, revenue models, and securing correct types of finance.

Globally women-led businesses receive less than 5 percent of venture capital. Women business owners also seek less bank loans and overdraft facilities. Regardless of country, women are more frugal - they do more with less, for less. Is this a flattering positive or is this a naive flaw that perpetuates women's relegation to micro enterprise?

I co-chair a taskforce established by Prime Minister Gordon Brown. We advise on strategy relative to increasing the quantity and scalability of women's enterprise. If women started and grew businesses at the same rate as their male counterparts, the economy would experience greater wealth and job creation and, needless to say, generate further substantial tax revenues for government.

The private sector is keen to encourage emerging markets of women entrepreneurs because this can result in an expanded customer base and vertical cross-selling opportunities. One of the biggest challenges facing the Taskforce is the disproportionate interest in micro versus fast-growth businesses, not so much from the private sector or senior experts in central government, but from business support providers and the actual women themselves. Perhaps the fast-growth female led businesses are simply busy doing business and do not view gender-based networks as relevant.
In addition to government programmes and private sector support typically from finance and technology corporations, thousands of businesswomen's networking groups also exist around the world to encourage and support the rise of female entrepreneurs. Serving an important need, many of these networks provide various training programmes and events but the networks themselves usually lack revenue models and so each month many new networks launch while others simply disappear.

Although recent years have seen an emergence of women's funding networks predominantly in the US, Canada and the UK, most networks tend to focus on micro-enterprise and social networking rather than on formal business education. In addition, media coverage tends to focus on small women-owned businesses in retail that have a good story for high audience appeal rather than on the more scalable and complex business-to-business enterprises that may be of less interest to mainstream media audiences.

Media coverage of women starting their business from the kitchen table in an area they have always enjoyed as a consumer, all while working flexibly caring for children, certainly predominate both online and offline media. Such stereotypes, while important for their inspiration, simply reinforce a narrow concept of women's enterprise. "Women's enterprise" is often acknowledged as one homogenous group with little market segmentation. Is this ignorance or because it is a market not considered to be worth pursuing?

International Women's Day on March 8, celebrated annually since 1911, provides an excellent opportunity for reinforcing the importance of women's equality through economic advancement - and creating wealth through enterprise is key to this. With around 15 per cent increase in the level of International Women's Day activity year on year around the world, there is certainly considerable energy for positive change.

The credit crunch has left little of the globe unaffected and few sectors of the world economy untouched. The interlinkages between economics and finance are at the core of discussions at the World Economic Forum in Davos. Reuters News asked delegates for their analysis of the roots of the problem and prescriptions for recovery.