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Part II Bank Resolution, 8 Resolution of US Banks and Other Financial Institutions

Rodrigo Olivares-Caminal, John Douglas, Randall Guynn, Alan Kornberg, Sarah Paterson, Dalvinder Singh

From: Debt Restructuring (2nd Edition)

Rodrigo Olivares-Caminal, Alan Kornberg, Sarah Paterson, John Douglas, Randall Guynn, Dalvinder Singh

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved.date: 27 February 2024

Financial system — Claims

The chapter starts by looking at resolution as understood in the United States. ‘Resolution’ refers to the way bank failures are dealt with in the United States. Similar to the traditional bankruptcy model, the chapter explains, two of the main goals of resolution are to maximize the value and minimize the losses of an institution for the benefit of its depositors and other stakeholders and, at least in a receivership situation, to determine who receives the residual value of the institution in satisfaction of their claims. However, resolution is also aimed at promoting a third goal: to deal with a failed institution in a manner that reduces the risk of contagion, preserves or restores public confidence in the banking or wider financial system, and otherwise promotes financial stability. The chapter then describes the history of financial resolution in the United States and outlines the fundamentals of resolution authority.

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