The Federal Deposit Insurance Corp. plans to use Dodd-Frank's "orderly liquidation authority" to dismantle a troubled megabank, but experts worry the single-point resolution may be perceived as a stealth bailout by the government.

"Concerns about the perception of the FDIC plan — known as 'single point of entry' — came up during an engaging discussion Wednesday before a committee of top names in the financial services arena that advises the agency on resolution issues," writes American Banker's Joe Adler.

Under a plan detailed on Tuesday, the agency will wipe out a failed parent company along with shareholders while preserving and restructuring subsidiaries.

"This doesn't look like a liquidation. It looks like a restructuring or reorganization in which the systemically important financial institution survives to fight another day," said Arthur Wilmarth, a law professor at George Washington University. "Instead of liquidating or breaking up the institution it comes out the other end … looking much like it did before in terms of its functions and operations."
 
For the full piece see "Is the FDIC's 'Single-Point' Resolution Plan a Stealth Bailout?" (may require subscription).