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Monday, July 16, 2012

GAO Report on Orderly Liquidation Authority of Dodd-Frank

The GAO issued a report on the Orderly Liquidation Authority (OLA) of the Dodd Frank Act. Under OLA, the FDIC could serve as receiver of a failing financial company instead of the company entering the bankruptcy process.

The report notes that regulators continue to address a number of issues related to FDIC’s new authority, including how creditors will ensure that they receive no less than they would under a Chapter 7 bankruptcy liquidation; how certain assets and liabilities would be treated in a new company created by FDIC under OLA; and what role the Securities Investor Protection Corporation would play in the resolution of a broker-dealer under OLA.

Besides addressing the complexity of OLA, regulators told GAO that coordination and reaching consensus represented a challenge in drafting and issuing OLA-related rules, particularly given the number of rulemakings required of some regulators and resource constraints.

Read more.

1 comment:

Roy Bush said...
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