WASHINGTON — The next time a Wall Street giant is teetering on failure federal regulators will be more likely to close it, Goldman Sachs chief executive Lloyd Blankfein said Thursday.

"There would be an orderly liquidation, emphasis on orderly," Blankfein said when asked what he thought regulators would do if his bank were on the brink of failure.

During a wide-ranging question-and-answer session hosted by Politico, Blankfein backed Federal Deposit Insurance Corp. efforts — mandated under the Dodd-Frank Act — to build a regime for smooth and orderly closures of big firms. But he criticized other potential moves by policymakers, including a ban on banks' proprietary trading, and he downplayed the continued debate over whether large banks have unfair funding advantages over small ones.

The FDIC, echoing ideas discussed in other countries, has embraced a resolution model of creating a bridge entity to hold the subsidiary of a failed parent, with some creditors having the option of converting debt into equity.

"My guess is there would be some extension of liquidity as the equity and part or all of the debt were being wiped out," Blankfein said. "Now if you were an investor in our company, you would consider that a failure. But it would be kept liquid long enough so people who owe contracts to and from it would be able to get out on an orderly basis."

Blankfein said Washington's appetite for bailouts is long gone.

"Anybody who thinks there is political will to rescue failing financial institutions are not reading the same papers I'm reading, and certainly aren't getting the same stimulus that I'm getting on the regulatory side or my connection with the political body," he said.

He added that if the largest institutions have a funding advantage over community banks — a central charge by big-bank critics — that is due to the structure and management of the firm, not investors' view that it will be bailed out in the event of a crisis.

"There are advantages for big companies in an industry versus small companies in an industry. In any industry big companies that are big, diverse, very well capitalized, are operating in different regions with different products, are safer credits and generally fund at a lower price than smaller companies in that industry, whether that's chemicals, oil or finance," Blankfein said.

He also praised other regulatory changes coming out of Dodd-Frank, including heightened industry stress tests, higher capital requirements, increased transparency and the greater use of clearinghouses.

"Some things I applaud and would lobby for if it wasn't otherwise there," Blankfein said.

But the executive was less complimentary of regulators' proposal for implementing the Volcker rule, a provision in Dodd-Frank named for former Federal Reserve Board Chairman Paul Volcker that would ban banks from proprietary trading. The regulatory agencies have struggled to finalize the rule after receiving more than 18,000 comment letters on their proposal.

Blankfein said the pending rule, which would continue to allow certain trades focused on market-making, is still too restrictive.

"The second" that trading "crosses over from making markets to trying to exploit the value of the position, it's now a bad thing," he said, calling such provisions "bad" for markets.

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