Reforming "Too Big to Fail"

The financial reform bill creates a new liquidation process that would allow the FDIC to seize control of large, interconnected financial companies, including broker-dealers, whose imminent failure threatens the stability of the U.S. financial system as a whole.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the Wall Street Reform Act), was signed into law by President Obama on July 21. Among the Wall Street Reform Act's many sweeping changes, including provisions addressing consumer protection and executive compensation (both of which are the topics of prior LawFlash Alerts), Title II, titled Orderly Liquidation Authority, creates a new scheme, separate and apart from existing federal bankruptcy and state dissolution laws, through which a financial company can be liquidated.