Assessing Continental’s resiliency under new loss absorption rules

Author: | Published: 15 Dec 2016

A retrospective analysis of the now-defunct commercial lender’s fate under the current financial regulatory regime shows that it would likely not have needed a federal bailout

Noted political scientist and scholar, Alexis de Tocqueville, once famously asserted that 'history is a gallery of pictures in which there are few originals and many copies'. This proclamation is no more accurate than when considered in the context of financial crises. While the recent financial crisis has engendered a broad and comprehensive set of regulatory changes in the US and internationally, financial crises have a long history. In the US, that history includes the Currency Panic of 1907, which prompted the creation of the Federal Reserve System, and the Great Depression, which led to the creation of the Federal Deposit Insurance Corporation (FDIC), the Securities and Exchange Commission (SEC) and the enactment of the Glass-Steagall Act. In addition, history is littered with...


 

 

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