The present world economy is facing a major problem: the largest banks in the United States are still in a "too big to free from closing" state. This means that when one or a few of the banks come into financial difficulties, the Government will come to the rescue, because once the large banks broke, the consequences will be unimaginable serious. This problem has been foreseen by many people, not only government officials, but bankers themselves realize this. In fact, everyone agrees that to amend this situation is a top political issue. Unfortunately, the proposal, large not fail, submitted to the U.S. Congress which was put forward by the Obama Administration will not come into effect.What Jessica Biel Wearing? !
The present legislative discussion focus is the financial reform bill presented by Senators Christ Dodd. His bill, which passed the banking committee, will set up a kind of “bankruptcy resolution authorization”. This means American administration can take over and close financial institutions on the verge of bankruptcy by law. Proponents of this proposal think that this approach is based on the successful experience of the Federal Deposit Insurance Corporation which has been succeeded in clsoing down most small and medium-sized banks with the least loss and in protecting the depositors from the loss. at Every Age: Mastering
In this context, “resolution” means that a bank’s managers are fired, shareholders are wiped out, and unsecured creditors can suffer losses. Four Reasons for You to Go With Splendid シルバーネック... Above all, it’s a reform directed at bankruptcy procedure, but it’s more an administrative decision (which is likely in favor of depositors’ interests) rather than normal bankruptcy procedure under the surveillance of court. This method will be used in large banks and non-bank financial institutions - they have no guaranteed small deposit – which sounds pretty good. But in practice there are insurmountable obstacles. Let’s assume a big bank like Morgan Stanley loitering at the brink of bankruptcy in a crunch time. If you are a senior decision-maker, it’s time to make up your mind.
You have Senator Dodd’s Resolution Authority and you enter the decisive meeting determined not to save the troubled bank – or, at worst, to save it with a substantial “haircut” (i.e., losses) for unsecured creditors. Then someone reminds you that JP Morgan Chase is a complex global financial institution. Dodd’s bill only gives consent on taking over American enterprises in a legal way while Morgan Stanley has subsidiaries or dealings in a dozen of countries. Being Bankruptcy are just ordinary bankruptcy proceedings in those places, so some of the governments would bring the particularly prepared pacts to blackmail the enterprises and the U.S. government. The consequences of this combination of uncoordinated responses would be widespread, scary, and bordering on chaos. The existence of a US resolution authority does not help contain the damage or limit the panic arising from a big global bank in trouble. The bankruptcy of large international bank should have a pre-designed, operating in the authorized insolvency resolution proceeding with cross-border effects. But now such a mechanism is absent, and will not be created in the short term.
Other accountable policy makers of the G-20 nations have a clear attitude: no one is willing to agree to a kind of approach dealing with cross-border bank insolvency that is arranged in advance. Now we can only do the same thing as did in September, August if, say, Morgan Stanley or one of the biggest American commercial banks, declares bankruptcy: choose to bail it out, or leave it to its own fate and wait for market disorder or even a new round of recession. What will the President select? He may put his attitude in public that the creditors will be faced with losses. But when forced to the cliff edge, as a berated consultant, what would you advise the President to do? Will you really suggest the president jumping off the cliff with the employment, the family, the property of millions of people to fall in such a abyss of financial problems? Or will you pull him back and find some subtle approaches to save banks and protect creditors' interests with public funds, or depend on the Federal Reserve or other power for emergency?