When the next crisis brings a major financial firm to its knees, U.S. regulators will seize the parent company but allow its units around the globe to keep operating while the mess is cleaned up, according to a planned announcement Thursday from the Federal Deposit Insurance Corp, The Wall St Journal reports..
The equity stakeholders of the large bank or other financial
firm will be wiped out, and bondholders will face losses as their holdings are
swapped for equity in a new entity, as a part of the FDIC's plan.
Nearly four years after the massive government bailouts of
the financial crisis, regulators are looking to chip away at the tacit
understanding that the government will step in to save top financial
institutions seen as vital to the economy or banking system….
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