FedFin Assessment: OLA in the Trump Administration
In this report, we build on our prior alert on Treasury’s latest reform report focused on ways to redesign resolutions in crises that threaten financial-market stability. Treasury’s approach includes a new Chapter 14 of the Bankruptcy Code to handle most, if not all, of these cases along with a series of changes designed to ensure that any resolution costs the market, not taxpayers. Although the President last April (see Client Report RESOLVE44) rejected use of Dodd-Frank’s orderly-liquidation authority (OLA) and Secretary Mnuchin cast considerable doubt on whether Treasury would ever authorize it, the new report stands by OLA even as it recommends significant changes to reduce the chances of creditor, counterparty, or acquirer advantage.