The Trump administration recommended retaining the government’s power to seize and unwind a failing financial firm in a crisis, departing from some conservative Republican lawmakers and endorsing a plank of the 2010 Dodd-Frank financial law, the Wall Street Journal reported. The Treasury Department, in a report yesterday, called for changes to correct what it described as “serious defects” around how and when orderly liquidation authority (OLA) would be used. As expected, it said that the authority should be retained as a tool for the government if a huge financial firm were on the brink of failure. “Treasury shares many of the concerns raised by critics of OLA,” the report said, adding the authority is “a far preferable alternative to destabilizing financial contagion or ad hoc government bailouts.” The report also recommended changes to the bankruptcy code to make it easier for such a failure to be resolved in bankruptcy court, without the government taking over the failing firm. Read more. (Subscription required.)
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