US Treasury: future of liquidation authority is limited

Author: John Crabb | Published: 26 Feb 2018

The US Department of the Treasury has released a report suggesting that the administration maintains the orderly liquidation authority (OLA) as a precaution. But the government agency says the future of the resolution regime created by title II of the Dodd-Frank Act in 2010 should be limited.  

In line with previous issuances by the Treasury, the report makes a number of recommendations about how the OLA can be improved. The agency shares many of the same concerns of the OLA’s critics, but - somewhat surprisingly - does not go as far as to suggest that it should be completely removed.

The OLA offers a process to liquidate large and complex financial companies that are close to failing, acting as an alternative to bankruptcy. The Federal Deposit Insurance Corporation (FDIC) is appointed as a receiver to carry out the liquidation and wind up the company.

In a statement...