In this report, we provide in-depth analysis of the impact of President Trump’s Friday memorandum to the Treasury on orderly-liquidation authority (OLA). As noted Friday, public and private statements from global regulators at the IMF meeting made it clear last week that even this memo, let alone action on it, has shaken confidence that the U.S. would implement OLA in an emergency; comments Saturday at the Fund meeting continued to express alarm. To be sure, the memo states that the U.S. could deploy OLA. However, under Dodd-Frank (see FSM Report SYSTEMIC30), all decisions on deploying OLA ultimately rest only with the Secretary of the Treasury in consultation with the President. As discussed in this report, the President’s memorandum signals that the White House does not believe it likely that any emergency would meet the statutory criteria warranting use of OLA.
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