We continue our in-depth analysis of the draft bill released by FinServ Chairman Hensarling (R-TX) to rewrite broad swaths of the U.S. financial-regulatory framework. Moving from our analysis of his proposal to sweep away most prudential rules in favor of a ten percent leverage threshold, we turn now to his wholesale rewrite of the law’s orderly-liquidation authority (OLA) provisions and to those detailing how the FSOC may designate SIFIs or stipulate activities or practices that pose systemic risk warranting primary-regulator attention. OLA would be completely repealed in favor of a Bankruptcy Code rewrite similar to one introduced in the Senate. As a result, the FDIC would not manage SIFI or large-BHC failures and there would be limited backstop federal support in systemic situations.
The full report is available to retainer clients. To find out how you can sign up for the service, click here