John C. Dugan, former comptroller of the currency, and T. Timothy Ryan Jr., former director of the Office of Thrift Supervision, insist that, despite some recent assertions to the contrary, the Dodd-Frank Act really does put end to the too-big-to-fail status of big banks.
In a Bloomberg opinion piece they write that the "opponents of the Dodd-Frank financial reform's resolution process" have used the JPMorgan trading losses to "resurrect their belief that the law has not ended 'too big to fail,' but instead codified it into law."
Dugan and Ryan counter that the plan the FDIC released in May of how it would reorganize large institutions under Dodd-Frank would live up to the term "orderly resolution" and, most important, avoid taxpayer losses. They qualify that "there are many practical issues that need to be worked through," but seem optimistic about the usefullness of living wills in such a process.
They conclude that "the FDIC's proposed solution is a credible alternative to the unacceptable choice between a panic-accelerating liquidation or reorganization under the Bankruptcy Code and a taxpayer-funded bailout."
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