The History and Rationale for a Separate Bank Resolution Process

Everyone recognizes the need to have a credible resolution regime in place for financial companies whose failure could harm the entire financial system, but people disagree about which regime is best. The emergence of the parallel banking system has led policymakers to reconsider the dividing line b...

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Bibliographic Details
Published in:Economic commentary (Cleveland) 2012-02 (2012-1), p.1-4
Main Authors: Fitzpatrick, Thomas J., IV, Kearney-Marks, Moira, Thomson, James B
Format: Article
Language:English
Subjects:
American history
Bank failures
Banking industry
Banking law
Bankruptcy law
Bankruptcy laws
Bankruptcy reorganization
Comptrollers
Deposit insurance
Evaluation
Financial services
Insolvency
National banks
Receivership
Regulation of financial institutions
Travelers checks
Wall Street Reform & Consumer Protection Act 2010-US
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Summary:Everyone recognizes the need to have a credible resolution regime in place for financial companies whose failure could harm the entire financial system, but people disagree about which regime is best. The emergence of the parallel banking system has led policymakers to reconsider the dividing line between firms that should be resolved in bankruptcy and firms that should be subject to a special resolution regime. A look at the history of insolvency resolution in this country suggests that a blended approach is worth considering. Activities that have potential systemic impact might be best handled administratively, while all other claims could be dealt with under a court-supervised resolution.
ISSN:0428-1276
2163-3738
DOI:10.26509/frbc-ec-201201