Lesson 6d-iPromspt restolutioln “bankruptcy”
Problem: Bankruptcy resolution is too slow for financial institutions.
Shareholder approval is needed for “forced merger” (bailout)
Prompt resolution framework that was introduced only for commercial banks (and executed by FDIC) after the S&L crisis
Debt-overhang problem Extend prompt resolution framework to all financial institutions (worldwide) Convert long-term debt in equity if needed