Financial Scholars Oppose Eliminating “Orderly Liquidation Authority” As Crisis-Avoidance Restructuring Backstop

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Posted by Mark J. Roe, Harvard Law School, on Friday, May 26, 2017

Editor’s Note: Mark Roe is a professor at Harvard Law School This post summarizes the text of a letter by Professor Roe and Professor Jeffrey N. Gordon of Columbia Law School to the chairs and ranking members of the Senate and House Banking and Judiciary committees and co-signed by more than 100 other academics whose work and teaching deal with bankruptcy and financial regulation. The letter explains why a bankruptcy structure should not be allowed to substitute for the Dodd-Frank Act’s regulator-driven “orderly liquidation authority. The complete letter is available here

Last week, Jeff Gordon and I wrote to the chairs and ranking members of the Senate and House Banking and Judiciary committees, analyzing reasons why a bankruptcy structure should not be allowed to substitute for the Dodd-Frank Act’s regulator-driven “orderly liquidation authority.” Our letter was joined by more than 100 other academics whose work and teaching deal with bankruptcy and financial regulation.

The Financial CHOICE Act of 2017, H.R. 10, would replace the “Orderly Liquidation Authority” (“OLA”), Title II of Dodd-Frank, with a new bankruptcy procedure, the Financial Institution Bankruptcy Act (“FIBA”), as the exclusive means for addressing the failure of systemically important financial institutions (“SIFIs”). The House Banking committee reported out the bill several weeks ago. A stand-alone version of FIBA has already passed the House.

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May 26, 2017 at 06:47PM

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