WASHINGTON (Reuters) - Large banks considered “too big to fail” could now be safely wound down if they experienced distress, one of the top U.S. banking regulators said on Thursday
“In my view, we are at a point today that if a systemically important financial institution in the United States were to experience severe distress, it would be resolved in an orderly way under either bankruptcy or the public Orderly Liquidation Authority,” said Martin Gruenberg, chairman of the Federal Deposit Insurance Corporation, at a seminar in Amsterdam.
The liquidation authority is a part of the 2010 Wall Street reform law that gives the FDIC a way to help liquidate a “systemically important financial institution,” typically a bank that could bring down the financial system if it fails, with measures that are not typically available under the bankruptcy code, such as providing temporary liquidity, Gruenberg said.
“In the years since enactment of Dodd-Frank, the FDIC has made significant progress in developing the operational capabilities to carry out a resolution if needed,” he also said, according to a copy of his remarks.
Reporting by Lisa Lambert; Editing by James Dalgleish