ABA and several trade groups expressed their support for the FDIC’s proposed "single point of entry" recapitalization strategy for resolving a systemically important financial institution. The SPOE strategy, proposed under Title II of the Dodd-Frank Act, imposes losses on a financial firm’s shareholders and unsecured debt holders but not on taxpayers.
The groups urged the FDIC to state that the SPOE strategy is its preferred approach if a U.S. SIFI needs to be resolved under Title II. They also called for the FDIC to confirm that it will use loss-absorbing resources to recapitalize foreign and U.S.-based subsidiaries equitably, as well as treating creditors equitably consistent with the Bankruptcy Code. The groups added that the FDIC should not require U.S. SIFIs to convert overseas branches into separately incorporated subsidiaries.
Read the letter.