Can orderly liquidation solve the problems of bailouts and bankruptcies?

Betty Joyce Nash, Sabrina Pellerin and John Walter ()

Richmond Fed Economic Brief, 2012, issue Sep, No 12-09

Abstract: In response to the financial crisis of 2007?09, Congress created the Orderly Liquidation Authority (OLA), a new regime for winding down systemically important financial institutions (SIFIs) that become troubled. The OLA provisions address two conflicting goals: mitigating threats to the financial system associated with bankruptcy and minimizing moral hazard associated with government bailouts. This Economic Brief compares OLA provisions to bankruptcy procedures. Although the OLA process could be quicker and more flexible than bankruptcy, it may not limit systemic risk without increasing moral hazard.

Keywords: Financial markets; Moral hazard (search for similar items in EconPapers)
Date: 2012
References: Add references at CitEc
Citations:

Downloads: (external link)
https://fraser.stlouisfed.org/files/docs/historica ... frbrich_eb_12-09.pdf Full text (application/pdf)
http://www.richmondfed.org/publications/research/e ... ef/2012/eb_12-09.cfm (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedreb:y:2012:i:sep:n:12-09

Ordering information: This journal article can be ordered from

Access Statistics for this article

More articles in Richmond Fed Economic Brief from Federal Reserve Bank of Richmond Contact information at EDIRC.
Bibliographic data for series maintained by Christian Pascasio ().