In July, I wrote about the Basel Committee’s proposal to impose a capital surcharge on systemically important financial institutions (SIFIs).1 However, if the capital surcharge and any other remedial measures imposed by the appropriate regulator in order to rehabilitate the SIFI to a safe and sound condition do not work, then the final step is intervention by the appropriate regulator, which, depending upon the law in that jurisdiction, can liquidate the company or rehabilitate and sell it. This month’s column will explore new resolution proposals that may be adopted by the G20 later this year, and discuss the SIFI resolution model adopted by the United States in the Dodd-Frank Wall Street Reform and Consumer Protection Act.2

Financial Stability Board

The Financial Stability Board (FSB) is composed of regulators responsible for financial stability in the world’s financial centers and works, along with other international regulators, to promote international standards for regulation and supervision of the financial markets.3 In mid-July it issued for comment a proposal on resolutions of SIFIs in order to develop final recommendations for the G-20 Leaders Summit in Cannes on Nov. 3-4, 2011.4 The comment period ended Sept. 2, and the FSB is now reviewing the comments and developing its final recommendations.

Specific Elements

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