In a valedictory appearance before she leaves office, FDIC Chair Sheila Bair today testified before the FinServ Financial Institutions Subcommittee. Much of the session focused on the orderly-liquidation authority (OLA) provided in Dodd-Frank (see Client Reports in the RESOLVE series), with Ms. Bair defending it on grounds that pure bankruptcy could permit financial institutions to “blackmail” their regulators. She also stated that resolution plans (see FSM Report LIVINGWILL4) will break up too-big-to-fail (TBTF) firms – sought by both Democrats and Republicans during the session – by requiring restructuring and subsidiarization (especially for international financial institutions). This report analyzes the hearing, which also covered risk retention and other pending rules.
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