Requiring banks to issue subordinated debt may make it easier for regulators to quickly close ailing institutions, according to Joseph G. Haubrich of the Federal Reserve Bank of Cleveland.

Mr. Haubrich writes that regulators would have a tough time keeping a bank open if it could not meet its subordinated debt obligations because the market would know the bank was in default.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.