Panel to Address Too-Big-to-Fail Resolution

June 5th, 2011
in econ_news

Fat Banker Larger image at end of article.

Econintersect:  The FDIC has announced the formation of an 18 member Advisory Committee on Systemic Resolutions.  The purpose of the panel is to make recommendations on how to implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of July 21, 2010.  That act gives significant responsibility to the FDIC to ensure that huge financial institutions will not receive taxpayer funds in the event of future difficulties.  In other words, the goal is to ensure that systemic failure will no longer be a risk of the failure of any one or group of banks.  Plain talk?  Too big to fail should become too big to exist.

Follow up:

Some of the members named to the committee have been outspoken critics of the failure to move more quickly to remove banks from the situation where a failure of one or two behemoths could stop the economy.  Most notable among these are Former Federal Reserve Chairman Paul Volcker,  former Citigroup co-chairman John Reed, BlackRock fixed-income chief Peter Fisher and MIT professor Simon Johnson.

From the FDIC announcement:

The Committee was formed to advise the FDIC on the effects on financial stability and economic conditions from a systemically important company's failure; how resolution strategies would affect stakeholders and customers of these entities; the tools available to the FDIC to wind down the operations of a failed organization; and the tools needed to assist in cross-border relations with foreign regulators and governments when a systemic company has international operations.

James R. Wigand, Director, Office of Complex Financial Institutions has been named the Designated Federal Officer for the Advisory Committee. The committee, which will not have formal decision-making authority, has a two-year charter. The Committee is expected to meet at least semiannually.

The first meeting is scheduled for June 21 at the FDIC's Washington, D.C., headquarters located at 550 17th Street, N.W.

The 18 committee members have a wide range of knowledge and experience, including managing complex firms; administering bankruptcies; working in the legal system, accounting field, and academia; and other relevant expertise.

The Advisory Committee Members are:

  • Anat R. Admati
  • Michael Bodson
  • Charles A. Bowsher
  • Michael Bradfield
  • H. Rodgin Cohen
  • William H. Donaldson
  • Peter R. Fisher
  • Janine Guillot
  • Richard J. Herring
  • Simon Johnson
  • Donald Kohn
  • John Koskinen
  • Jerry Patchan
  • Raghuram G. Rajan
  • John S. Reed
  • Deven Sharma
  • Gary Stern
  • Paul A. Volcker

Source:  Bloomberg and FDIC Press Release

Fat Banker


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