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25 April 2011

FDIC published report on Lehman failure under Dodd-Frank


The report examines how the FDIC could have structured an orderly resolution of Lehman Brothers under the orderly liquidation authority of Title II of the Dodd-Frank Act, had that law been in effect in advance of Lehman's failure.

The report concludes that the powers provided to the FDIC under Dodd-Frank to act decisively to preserve asset value and structure a transaction to sell Lehman's valuable operations to interested buyers — which are drawn from those long used by the FDIC in resolving failing banks — could have promoted systemic stability, while recovering substantially more for creditors than the bankruptcy proceedings and at no cost to taxpayers. While there remains no doubt the orderly liquidation of Lehman would have been incredibly complex and difficult, the report concludes that it would have been vastly superior for creditors and systemic stability in all respects to the bankruptcy process as it was applied.

 



© FDIC - Federal Deposit Insurance Corporation

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