The Clearing House Association Issues Title II White Paper and Simulation Report
The Clearing House Association (TCH) has released (1) a report on TCH's recently-concluded Title II OLA-Resolution Simulation exercise; and (2) a white paper detailing how Title II and the single-point-of-entry approach can be used to resolve a large, complex financial institution.
TCH's Title II OLA-Resolution Simulation exercise – which took place on November 8 and 9, 2012 and was attended by over 160 industry leaders, former regulators and legal experts – simulated the failure of a large U.S.-based global banking organization and its resolution under the Title II single-point-of-entry approach. The report details what those who participated in the Simulation Exercise witnessed firsthand – which is that a single-point-of-entry private sector recapitalization can resolve a large, complex financial institution in a manner that is orderly and which preserves financial stability and fully protects taxpayers from loss.
The white paper provides a more detailed analysis of the workability and benefits of a Title II single-point-of-entry approach. The paper argues that Title II provides regulators with an important safety valve to use in the event that a large, complex financial institution fails and ordinary resolution frameworks prove inadequate to protect financial stability. The paper asserts that Title II effectively ends the perceived “Too-Big-To-Fail” problem in the United States by requiring that shareholders lose their entire investment, creditors bear all the remaining losses, culpable management is terminated and no cost is imposed on the taxpayer.
About The Clearing House Established in 1853, The Clearing House is the oldest banking association and payments company in the United States. It is owned by the world's largest commercial banks, which collectively employ more than two million people and hold more than half of all U.S. deposits. The Clearing House Association L.L.C. is a nonpartisan advocacy organization representing – through regulatory comment letters, amicus briefs, and white papers – the interests of its owner banks on a variety of systemically important banking issues. The Clearing House Payments Company L.L.C. provides payment, clearing, and settlement services to its member banks and other financial institutions, clearing almost $2 trillion daily and representing nearly half of the automated-clearing-house, funds-transfer, and check-image payments made in the U.S.
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