Resolution, Orderly and Otherwise: B of A in OLA

35 Pages Posted: 10 Apr 2012 Last revised: 3 Apr 2013

Stephen J. Lubben

Seton Hall University - School of Law

Date Written: April 10, 2012

Abstract

What precisely does it mean to “resolve” financial distress in a complex financial institution? What are the goals – liquidation, reorganization, or simple contagion avoidance? And, more precisely, how might such a resolution look under realistic conditions? This paper begins to examine these issues through a practical exercise: by examining the legal and financial structure of a specific, actual financial institution (Bank of America). What this analysis reveals is that no matter how complex Lehman was, the remaining “too big to fail” financial institutions are infinitely more complex. The exercise reveals some serious doubts about the ability of Dodd-Frank to perform in its most idealized way, it also shows how the Bankruptcy Code, at least as currently drafted, would be equally unsuited to the task. Moreover, this paper explain why adapting the code to the resolution of large financial institutions would involve something far more substantial than a few “tweaks,” as is often suggested. Ultimately it would involve adopting something that takes many features from both OLA and Chapter 11, while applying the name bankruptcy to the resulting beast.

Keywords: Dodd-Frank, OLA, chapter 14, bankruptcy, Lehman, Bank of America, Title II, FDIC

Suggested Citation

Lubben, Stephen J., Resolution, Orderly and Otherwise: B of A in OLA (April 10, 2012). University of Cincinnati Law Review, Forthcoming; Seton Hall Public Law Research Paper No. 2037915. Available at SSRN: https://ssrn.com/abstract=2037915

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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