quot;Too big to failquot; is one of the most frequently used but misunderstood terms in banking in the U.S. Except for a brief period in the mid-1980s after the insolvency of the large Continental Illinois National Bank caught the bank regulators unprepared and they did not fail the bank but...

Recent evidence suggests that bank regulators appear to be able to resolve insolvent large banks efficiently without either protecting uninsured deposits through invoking quot;too-big-to-failquot; or causing serious harm to other banks or financial markets. But resolving swap positions at...

Bank failures are widely feared for a number of reasons, including concern that depositors may suffer both losses in the value of their deposits (credit losses) and, possibly more importantly, restrictions in access to their deposits (liquidity losses). In the United States, this is not true for...

Following the costly banking and thrift crises of the 1980's and early '90s, the United States dramatically reformed the federal government safety net for depository institutions, which many blamed for the outbreak and high cost of the crises. The reforms, highlighted by the 1991 Federal Deposit...

Banking reform has always been a part of the political agenda, although policy tends to focus on the specific concerns of the public at the time of crisis; as times (and crises) change, so does the direction of public policy. The result has often been that change instituted in answer to one...

This paper extends the literature on bank capital structure by modeling capital structure as a function of important public policy and bank regulatory characteristics of the home country, as well as of bank specific variables, country macro-economic conditions and country level financial...

Derivatives and certain other off-balance sheet contracts enjoy special legal protection on insolvent counterparties through a process referred to as close-out netting. This paper explores the legal status and economic implications of this protection. While this protection benefits major...

In the U.S., the insolvency resolution of most corporations is governed by the federal bankruptcy code and is administered by special bankruptcy courts. Most large corporate bankruptcies are resolved under Chapter 11 reorganization proceedings. However, commercial bank insolvencies are governed...

This paper focuses on the strong links between macroeconomic stability and bank soundness and argues that if the first is not achieved the second is not likely either with serious adverse consequences. Instability in banking is most often the result of actions by governments directed at the...

Losses may accrue to depositors at insolvent banks both at and after the time of official resolution. Losses at resolution occur because of poor closure rules and regulatory forbearance. Losses after resolution occur if depositors' access to their claims is delayed or frozen. While the sources...