WASHINGTON — U.S. regulators have made significant progress in reaching agreements with their foreign counterparts on cross-border resolution schemes for big banks, but some experts argue they need a much more powerful tool at their disposal for those efforts to really work.

How countries cooperate to resolve globally active firms is one of the biggest questions facing resolution regimes created to ensure the end of "too big to fail." In the U.S., the Federal Deposit Insurance Corp. has signed memorandums of understanding with foreign jurisdictions and has also developed a wind-down strategy that is designed in part to avoid cross-border disputes.

But while the FDIC and foreign regulators have gained praise for their coordination, some worry that cross-border cooperation could break down in a future emergency without a more formal set of agreements. They are calling for a more binding agreement — a formal treaty between the U.S. and other countries.

"What we need is an independent organization like the Financial Stability Board to raise this issue and perhaps have a forum to develop key provisions for treaty-like arrangements that countries can agree to," Edward F. Greene, senior counsel at Cleary Gottlieb Steen & Hamilton LLP and a former attorney at Citigroup, said in an interview.

For now, a treaty on how the FDIC would work with a host-country regulator seems far from policymakers' radar. A huge obstacle would be getting agreement on a formal accord — a process that could take years — at a time when the desire to set up resolution regimes is urgent. Besides those political challenges, a binding agreement could also run the risk of preventing regulators from acting nimbly in a crisis.

"At the time of failure, both countries might agree on an optimal course of action to take, but because the treaty could have specified an alternate path, they may not have the option of the better course," said James Wigand, former director of the FDIC's Office of Complex Financial Institutions.

But H. Rodgin Cohen, one of the country's premier banking lawyers, said a resolution agreement should be binding if policymakers want to guarantee it works.

"As a general principle, the more binding the international arrangements are, the greater the certainty that the regime will be implemented as intended," Cohen, senior chairman of Sullivan & Cromwell LLP, said at a recent Brookings Institution event, according to a transcript.

"This principle will, however, need to be applied in the context of political reality. It could be best effectuated, I believe, by binding treaties, but if that is not feasible ... there should be a formal written document endorsed by the regulators, central banks, and ideally by the G20 heads of state or finance ministers."

But Paul Tucker, former deputy governor at the Bank of England and now a senior fellow at Harvard University's Kennedy School of Government, was more blunt about the obstacles to forming a treaty. Speaking on the same panel with Cohen at Brookings, he said, "It would be a good thing if there could be an international treaty, but there will not be an international treaty."

For its part, the FDIC is focused on instead getting agreements with other jurisdictions, albeit non-binding ones. The FDIC has MOUs with the United Kingdom and China, among others, and continues to engage in other bilateral and multilateral planning.

Meanwhile, the agency's "single point of entry" strategy for future wind-downs — which other countries have embraced too — envisions that foreign branches would stay open, reducing the likelihood of ring-fencing. The "single point" plan would force holding companies to absorb losses from a failure, helping keep subsidiaries intact.

"A treaty would be useful, but it's not essential," said Randall Guynn, a partner at Davis Polk & Wardwell. "The essential thing is to have a resolution strategy that maximizes the value of the enterprise for both home and host country stakeholders and treats home and host country stakeholders equally."

A treaty would also be difficult to pull off. In the U.S., consideration of a new treaty could mean revisiting sections of the Dodd-Frank Act that established the FDIC's wind-down powers over systemically important companies.

"A treaty might require changes in existing laws that might be difficult to get passed in the Congress, and agencies and the White House may be risk averse to opening up provisions from Dodd-Frank related to the resolution authority," said Donald Kohn, a former Federal Reserve Board vice chairman and now a senior fellow at Brookings.

At a 2011 speech in London, the center of foreign operations for big U.S. firms, Cohen said one option is for a bilateral U.S.-United Kingdom treaty, or a treaty also involving the European Union. Without a formal international agreement, he said, negative fallout from a failure like that which followed Lehman Brothers' bankruptcy could be repeated and regulators may embrace ring-fencing.

"Even a treaty regime could be trumped by national interests, but anything less legally binding is far more problematic," Cohen said then.

Greene, a former general counsel to the Securities and Exchange Commission, expressed similar concerns in a speech that same year.

He said the FSB, which had already outlined model resolution processes for single countries to adopt, could instead oversee the drafting of binding agreements between important home and host country regulators. "Such a treaty-based approach is unlikely in the near term, but it is important to start a dialogue," Greene said in the speech.

In the interview, he said at the very least, written agreements between cross-border regulators on resolution procedures should include remedies for situations where a party chooses to ignore the pact.

"There have to be consequences for not following the agreement and a more formal arrangement could give the market confidence that such consequences would be imposed," Greene said.

But others said the FDIC's single-point-of-entry approach, in addition to its non-binding agreements with other countries, avoids some of the pitfalls of not ratifying treaties.

"The resolution MOUs between the FDIC and other authorities really evidence the development of relationships, an understanding of each party's authorities, incentives, and resolution objectives, and an agreement to build upon this base moving forward," Wigand said. "The paper is not nearly as important as the substance behind it. That is the most promising path for cross-border cooperation because of the challenges of having a workable treaty."

Guynn said the FDIC's SPOE strategy "satisfies" concerns about the treatment of home versus host countries "as long as the host country resolution authority can be confident that the home country authority is committed to using the SPOE strategy in a manner that maximizes value and assures equal treatment.

"That is where a treaty could help because it could bind the home country authority to those principles, boosting the confidence of the host country authority to cooperate and not ring-fence," he said.

Wigand said authorities could pursue a very high-level treaty that still allowed regulators to apply the accord to a unique situation.

"If a treaty could be developed that will work, it will have to be a simple, principles-based agreement," he said. "It would be a positive step, but is a challenging proposition to fulfill."

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