On Wednesday, the Senate Banking National Security and International Trade and Finance Subcommittee convened a poorly-attended hearing to examine regulatory efforts on cross-border resolution. The purpose of the session was to evaluate the extent to which TBTF has been resolved in Dodd-Frank, with the verdict mixed due to the incomplete stage of many rules and ongoing difficulties coordinating cross-border resolutions. Testimony from the banking regulators largely summarized work already underway, although FRB Director for Banking Supervision Michael Gibson noted that significant obstacles to cross-border resolution remain, including the strength of foreign resolution regimes and regulatory cooperation. He also supported the pending FRB rule for foreign banking organizations (see FSM Report SYSTEMIC64) as a vital plank in eliminating systemic risk. Discussion, led solely by Chairman Warner (D-VA), focused on the measures needed for a successful single-point-of-entry (SPE) resolution (see FSM Report RESOLVE15), as well as on work to implement Dodd-Frank’s living wills. Other topics discussed included the treatment of derivatives contracts and the pending requirement for whole sale unsecured debt issuance by the largest BHCs. Sen. Warner, although pleased with the regulators’ progress thus far, urged them to speed up their work. This report analyzes today’s hearing.
The full report is available to retainer clients. To find out how you can sign up for the service, click here