According banking regulators in the United Kingdom and the United States, the largest global banks would be broken apart without issues by governmental authoritites should the banking failure of 2007 occur again today.
An existing plan to seize and liquidate a major bank would occur, but it would not be easy, according the Federal Deposit Insurance Corp Senior officer Art Murton. He is the official in charge on how to take apart complex banking arrangements, together with Bank of England's Deputy Governor Paul Tucker.
The two, speaking before the annual Institute of International Finance symposium currently being held in Washington. According to Tucker, "I think US authorities could do it today and I mean today. A global financial system will not survive if we don't crack this problem." He had worked with US regulators on cross border issues in taking apart an international firm.
The 2010 Dodd-Frank Act had given the FDIC authority to seize a firm and dismantle it if regulatory authorities determine that bankruptcy would only result in a significant threat to the financial system. This the so-called resolution authority is still to be tested. Regulators also have not completely relayed to banks the system on how this process would work.
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