News & Events

Partner Keith Noreika was quoted in International Financial Law Review on bank resolution in an article titled, “PRIMER: A Comparison of EU and U.S. Bank Resolution Regimes.” The article discusses and compares the rules and guidelines established in both the U.S. and the EU after the 2008 financial crisis. These guidelines focus on reducing the probability and impact of the failure of systemically important financial institutions and firms. Bank resolution provides an insolvency process for a bank that is on the verge of collapse and mitigates the potential for fallout risk.

Regarding the U.S. approach to bank resolution, Keith says, “Congress enacted a resolution authority via the Dodd-Frank Act – the FDIC – and the Fed to require larger, more complex firms to develop plans to facilitate their resolutions.”

The article also states that the U.S. Congress is attempting to adopt changes to the Dodd-Frank Act that include raising the threshold for enhanced prudential standards from $50 billion to $250 billion and the thresholds of resolution planning aspects. On this point, Keith comments, “Even Dan Tarullo conceded that a $50 billion bank is not systemically important. The negative effects far outweigh any potential benefit to financial stability, they basically act as competitive barriers to entry for midsize banks to compete with the largest lenders.”