In the aftermath of the recent economic crisis a remarkable political consensus developed that no financial firm in America should be immune from failure. Operationally, that consensus begins with hostility to providing government bailouts. The Dodd-Frank Act requires mandatory "living wills" for systemically important financial companies in addition to limiting the power of government officials to provide bailouts while granting the FDIC "orderly liquidation authority." Other proposals have been offered to "bust up" the biggest banks or to require enhanced capital for the largest banks, which most likely would force them to downsize.
Which of these steps will be effective? Which might have unpleasant side effects or even be counterproductive? Will government officials really stand back when confronted with the failure of a systemically important institution and risk "bad headlines," or worse? Does TBTF put smaller financial institutions at a competitive disadvantage? What about the lack of due process in Dodd-Frank's orderly liquidation authority? Is there a bankruptcy procedure that would be fairer and better suited to the liquidation of a large financial firm? How would the ability of the U.S. to be competitive in international finance be affected by some of these proposals? Our panel will address these and other important legal and policy issues that remain unanswered as the economy struggles to return to normal.
The Financial Services & E-Commerce Practice Group hosted this panel on "Too Big To Fail - What Now?" on Friday, November 15, during the 2013 National Lawyers Convention.
--Mr. Martin N. Baily, Bernard L. Schwartz Chair in Economic Policy Development, Brookings Institution
--Mr. Timothy P. Carney, Visiting Fellow, Culture of Competition Project, American Enterprise Institute and Senior Political Columnist, Washington Examiner
--Mr. Randall D. Guynn, Partner and Head of the Financial Institutions Group, Davis Polk & Wardwell LLP
--Mr. Robert E. Litan, Director of Research, Bloomberg Government, Bloomberg News
--Moderator: Hon. Paul S. Atkins, Chief Executive Officer, Patomak Global Partners LLC and former Commissioner, Securities and Exchange Commission
