I was a member of the team that conceptualized what finally became the good-bank, bad-bank restructuring of Mellon Bank Corp. in 1988. Our goal, simply, was to improve the terms on which a bank could raise equity by quantifying the risk in its porfolio of nonperforming assets and stratifying that risk among different investors.

Over the next 12 months, we worked with legal and accounting advisers to secure regulatory input and to adapt the transaction structure to specific situations.

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