“…the government will bail you out, if you are stupid but medium sized, you die,” said Wilbur Ross at the Reuters Restructuring Summit. ”That’s going to encourage some very bad behavior by some big institutions.”

Ross, known as ‘the bankruptcy king,’ said he was disturbed by what he called ad-hoc government decisions about which firms to rescue. 

“In some was, there’s a certain randomness to it,” he said.

Listen to his full comments here.

Lehman Brothers is the latest high-profile bankruptcy to rock Wall Street but this could be just the beginning of corporate bankruptcies across the United States.Ruben Ramirez reports from New York.

    Last year the lending business was as frothy as a head on a Guinness beer and many financial firms spent a little too long hanging out at the bar.
    Now, says Rob McMahon, managing director for restructuring, financial firms are looking around and trying to figure out exactly what happened, and who can still stand.
    “It’s kind of like the drunken sailors. They left the boat to take their weekend leave and now they went back to the boat and they are all talking about what they did and they are realizing after sobering up, “Ok what did you do what did I do? Ok. Oh you are 25 times levered? Yeah really, you think that’s bad? Man i’m 35 times levered.”
    Financial firms increased leverage - or debt - in recent years as money became very cheap, and they relaxed lending rules for themselves and their customers.
    Now comes the tough part. Figuring out who had so much to drink that they’ll need to check into the financial equivalent of the Betty Ford Center - bankruptcy protection. 
     
To hear the audio clip, please click here