Loss Sharing Rules for Bank Holding Companies: An Assessment of the Federal Reserve's Source-of-Strength Policy and the FDIC's Cross Guarantee Authority
48 Pages Posted: 7 Dec 2007
Date Written: December 2007
In this article, we critically examine two policies designed to protect the deposit insurance funds - the Federal Reserve Board's source-of-strength policy and the FDIC's cross-guarantee authority. We discuss why each of the policies was adopted and how effective each has been in practice since its implementation. We then evaluate the future application and usefulness of the two policies in light of the structural changes that have resulted from industry consolidation and the financial modernization of the 1990s.
Keywords: source of strength, cross-guarantees, deposit insurance
JEL Classification: G2
Suggested Citation: Suggested Citation