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

38 Pages Posted: 16 Oct 2008

See all articles by Christine Bradley

Christine Bradley

U.S. Federal Deposit Insurance Corporation (FDIC)

Kenneth D. Jones

State Street Corporation

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Abstract

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.

Suggested Citation

Bradley, Christine and Jones, Kenneth D., 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. Financial Markets, Institutions & Instruments, Vol. 17, Issue 4, pp. 249-286, November 2008. Available at SSRN: https://ssrn.com/abstract=1284018 or http://dx.doi.org/10.1111/j.1468-0416.2008.00141.x

Christine Bradley (Contact Author)

U.S. Federal Deposit Insurance Corporation (FDIC) ( email )

550 17th Street NW
Washington, DC 20429
United States

Kenneth D. Jones

State Street Corporation ( email )

1 Lincoln Street
Boston, MA 02111
United States
617-662-0370 (Phone)

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