Date: December 4, 2014
Creator: Carpenter, David H.
Description: One of the chief objectives of the Dodd-Frank Wall Street Reform and Consumer Protection Act (DFA) is to promote financial stability within the United States, without the need for emergency governmental assistance to troubled firms. To achieve this goal, the DFA establishes a heightened regulatory regime for certain, generally large "covered financial institutions." A pillar of this heightened regulatory regime is that each covered financial institution must submit "credible" plans to the Board of Governors of the Federal Reserve System (FRB) and the Federal Deposit Insurance Corporation (FDIC) detailing how the firm could be quickly resolved in an orderly fashion under the U.S. Bankruptcy Code or other applicable insolvency regime "in the event of a material financial distress or failure." These resolution plans are commonly referred to as "living wills." This report reviews the legal structure of the DFA's living will requirements, pursuant to both DFA Section 165(d) and the regulations and guidance issued jointly by the FRB and FDIC, and explains the August 2014 joint announcement of the FRB and FDIC regarding the inadequacies of the 2013 living wills filed by the 11 largest, most complex financial institutions in the country. This report also examines some of the steps ...
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