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Daily Archives: November 4, 2011

Fed Reserve Gov. Speech: The International Agenda for Financial Regulation

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The International Agenda for Financial Regulation, Governor Daniel K. Tarullo, American Bar Association Banking Law Committee Fall Meeting, Washington, D.C., November 4, 2011

  • “Basel 2.5, Basel III, and the G-SIB surcharges can only reduce the chances of highly disruptive failure, not eliminate them. A necessary supplement is a strong resolution mechanism for systemically important firms, both to counter too-big-to-fail perceptions and to contain the harm to the financial system that would be caused by the failure of one of these firms. Thus, my first candidate for a priority area of work in 2012 is to take concrete steps to advance the useful analytic work that has been done in the Basel Committee and the Financial Stability Board (FSB) on the resolution of financial firms with substantial international presence. Here in the United States, the Dodd-Frank Act provides for an orderly liquidation process. Some other jurisdictions have, or are planning to, put in place comparable special- resolution mechanisms. But the co-existence of internationally active firms with nationally based insolvency regimes means that there can be potentially important transborder legal complications when a home jurisdiction places into receivership a firm with significant assets, subsidiaries, and contractual arrangements in other countries. A comprehensive, treaty-like instrument for a global bank resolution regime is almost surely not achievable in the foreseeable future, and perhaps well beyond that. But there should be room for more limited cooperation agreements, coordinated supervisory work on resolution plans, and other devices to make the orderly resolution of a large internationally active firm more feasible.”
  • Related postings on financial system

    • BLS – Employment Situation Summary, October 2011

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    News release: “Nonfarm payroll employment continued to trend up in October (+80,000), and the unemployment rate was little changed at 9.0 percent, the U.S. Bureau of Labor Statistics reported today. Employment in the private sector rose, with modest job growth continuing in professional and businesses services, leisure and hospitality, health care, and mining. Government employment… Continue Reading