Recommended reading: The upcoming FDIC quarterly contains a fantastic article on how, if Dodd-Frank were law then, Lehman Brothers might have been liquidated in a more orderly and rapid fashion after its failure. The article is a nice summary of the events leading up to the Lehman failure, the relevant provisions of the Dodd Frank Act, and a description of how these would have been implemented in the case of Lehman. I learned a number of things about how the financial regulation will look going forward. Something I did not know from Dodd-Frank’s orderly liquidation process is that “The Dodd-Frank Act provides that the FDIC may borrow funds from the Department of the Treasury, among other things, to make loans to, or guarantee obligations of, a covered financial company or a bridge financial company to provide liquidity for the operations of the receivership and the bridge financial company.” At least according to current law, any losses on this mini-bailout are born by the industry, not the taxpayer.
How to Have a Successful Failure
April 19, 2011 by Jonathan Parker
Posted in Dodd-Frank Act, Financial Regulation, Lehman Brothers, liquidity | 1 Comment
One Response
Leave a Reply Cancel reply
-
Recent Posts
Twitter: Yael Hochberg
- I don’t get why people who are not wearing masks on the plane still insist on wiping down every inch of surface wit… twitter.com/i/web/status/1… 1 week ago
- @AmericanAir Help! I am on flight 2737 to Dallas connecting to flight 48 to CDG and the first flight out of IAH is… twitter.com/i/web/status/1… 1 month ago
Archives
Recent Comments
- AIG amusing diversions bailout bank regulation Bernanke CDS derivatives Dodd-Frank Act Euro Debt Crisis FDIC Fed Finance & the Public Interest financial crisis Financial Crisis Inquiry Commission financial reform Goldman Sachs GSEs Lehman Brothers MBS mortgages pensions public finance recession regulation SEC securitization TARP too big to fail Treasury Uncategorized
Very interesting information about the FDIC being able to borrow from the Treasury Department under the Dodd-Frank Act. Definitely something to check out.