Congress will have a lot on its plate when they return after Labor Day – the Iran deal and, even more important for financial markets, the budget and debt limit are at the top of that list. However, before the August recess, committees in both the House and Senate turned to the long-festering question of how to make giant U.S. financial-services firms resolvable under the Bankruptcy Code. Earlier this summer, the Basel Committee laid out final principles for global banks (see FSM Report RESOLVE33). Aspects of the Congressional approach are compatible with the global framework, but the push to repeal Dodd-Frank’s orderly-liquidation authority (OLA) could put the U.S. very much at odds with global practice. For all the talk of ending too big to fail, most nations outside the U.S. have just a few, very big banks that are so intertwined with the national government and economy as to make them impregnable – or, at least, impregnable once taxpayer support is factored into the backstop equation.

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