Abstract

http://ssrn.com/abstract=2353035
 


 



OLA after Single Point of Entry: Has Anything Changed?


Stephen J. Lubben


Seton Hall University - School of Law

November 11, 2013

Seton Hall Public Law Research Paper No. 2353035

Abstract:     
This "white paper," written for the Roosevelt Institute, looks at the Dodd-Frank Orderly Liquidation Authority, as currently conceived of by regulators. The existence of OLA is crucial to the idea that the Dodd-Frank Act has actually ended "too big to fail." Since financial institutions remain very big, it is up to OLA to provide a means for them to fail. The real question is whether OLA will work and, as OLA was originally presented, there were good reasons for doubt.

The FDIC has figured out a clever way to avoid the problems with OLA. Under the new "single point of entry" approach, only the holding company would be placed in OLA, and the FDIC would then continue to prop up the operating subsidiaries, wherever located. The new question is: Will single point of entry work?

This short essay explores this question and what remains to be done to create a workable bankruptcy system for global banks. In short, I argue that while single point of entry is a great improvement, it still has its potential faults, and the excitement over it obscures many lingering questions. And nothing has been done to improve the ability of chapter 11 to handle a large financial institution, despite the fact that OLA is only supposed to "backstop" the normal bankruptcy process.

Number of Pages in PDF File: 8

Keywords: Dodd Frank, OLA, Title II, Chapter 11, Lehman, Resolution, Dodd-Frank Act, systemic risk resolution, SIFI

JEL Classification: E44, E53, E58, F30, G18, G20, G21, G24, G28, K20, K22, K23, N20

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Date posted: November 13, 2013 ; Last revised: January 31, 2014

Suggested Citation

Lubben, Stephen J., OLA after Single Point of Entry: Has Anything Changed? (November 11, 2013). Seton Hall Public Law Research Paper No. 2353035. Available at SSRN: http://ssrn.com/abstract=2353035 or http://dx.doi.org/10.2139/ssrn.2353035

Contact Information

Stephen J. Lubben (Contact Author)
Seton Hall University - School of Law ( email )
One Newark Center
Newark, NJ 07102-5210
United States
973-642-8857 (Phone)
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