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The history and rationale for a separate bank resolution process

Author

Listed:
  • Thomas J. Fitzpatrick
  • Moira Kearney-Marks
  • James B. Thomson

Abstract

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.

Suggested Citation

  • Thomas J. Fitzpatrick & Moira Kearney-Marks & James B. Thomson, 2012. "The history and rationale for a separate bank resolution process," Economic Commentary, Federal Reserve Bank of Cleveland, issue Feb.
    • Handle: RePEc:fip:fedcec:y:2012:i:feb2:n:2012-1
    DOI: 10.26509/frbc-ec-201201
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    Cited by:

    1. Ignatowski, Magdalena & Korte, Josef, 2014. "Wishful thinking or effective threat? Tightening bank resolution regimes and bank risk-taking," Journal of Financial Stability, Elsevier, vol. 15(C), pages 264-281.
    2. Clas Wihlborg, 2012. "Developing Distress Resolution Procedures for Financial Institutions," SUERF Studies, SUERF - The European Money and Finance Forum, number 2012/5, May.

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