Resolution Triggers for Systemically Important Financial Institutions

I. Introduction II. Background Concepts ... A. Banks, Shadow Banks, and Bank Holding Companies ... B. Capital and Liquidity ... C. Bankruptcy, Bank Resolution, and the Orderly Liquidation Authority III. Trigger Problems ... A. The Wrong Trigger: Liquidity ... B. Capital and Timeliness ... 1. The Costs of Delay ... 2. Causes of Delay IV. The Path Ahead ... A. Bolstering the Public Liquidity Backstop ... B. Promoting Timeliness ... 1. Background: Prompt Corrective Action ... 2. Establishing Clear Guidelines and Addressing Capital’s Shortcomings ... C. Right-sizing the Loss-Absorbing Buffer ... D. Regulatory Discretion V. Conclusion