We say that a large financial institution is "resolvable" if policymakers would allow it to go through unassisted bankruptcy in the event of failure. The choice between bankruptcy or bailout trades off the higher loss imposed on the economy in a potentially disruptive resolution against the...

Banks may receive a subsidy from deposit insurance or from other components of the government-provided banking safety net. Extension (leakage) of a subsidy to banks' nonbank affiliates will only serve to enlarge it. But subsidy enlargement, since it entails expanded risks to taxpayers and...

Recent years have seen bank loan losses exceeded only by those of the Great Depression. This experience, along with tax and regulatory changes, has triggered changes in the reserve account through which banks provide for such losses

The 1980 enactment of legislation extending authority to offer interest-bearing checking instruments to all depository institutions has brought intensified competition for consumers' transaction balances

In response to the financial crisis of 2007, Congress created the Orderly Liquidation Authority (OLA) as part of its overarching financial regulatory reform bill, the Dodd-Frank Act. The OLA's provisions are aimed at simultaneously addressing two conflicting goals - mitigating systemic risk,...