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Regulation of Financial Institutions – Fall 2015

Class Twenty-Five: November 12, 2014

Orderly Liquidation Authority (OLA) and the New World. In today’s class, we will explore the changes that the Dodd-Frank Act made to the FDIC’s authority over insolvent financial conglomerates. To introduce the subject, read the Randall Guynn's article: Are Bailouts Inevitable? The Bipartisan Policy Center paper titled Too Big to Fail: The Path to a Solution (pages 1-35) provides a good introduction to the FDIC's current thinking on single point of entry (SPOE). OLA has been criticized by both the right and the left for enshrining taxpayer bailouts and by the bankruptcy bar for its lack of due process. We will discuss the reasoning behind all of these perspectives in class. Students should also review the research paper on Living Wills posted on the Course iSite and skim the October 2014 Bipartisan Policy Center paper on Bank Breakup Arguments. Readings: Randall D. Guynn, Are Bailouts Inevitable?, 29 Yale J. Reg. 121 (2012) Bipartisan Policy Center, The Big Bank Theory: Breaking Down the Breakup Arguments (Oct. 2014) Failing to End “Too Big to Fail”: An Assessment of the Dodd-Frank Act Four Years Later (July 2014) Research Paper on Living Wills (to be posted on iSite)