A report by Federal Financial Analytics concludes that the Federal Deposit Insurance Corp has made admirable progress implementing the part of the Dodd-Frank Act that gives it the authority to unwind large financial companies in trouble, but "still has a long way to go before it can be ready for the next financial crisis," reports American Banker’s Joe Adler.

One of the priorities on the to-do list is to the creation of "bankruptcy-equivalence test," according to Karen Shaw Petrou of Federal Financial Analytics. The test would demonstrate creditors would fare just as well under the resolution authority as they would have in a bankruptcy.

"That's an empirical question that is very hard to know because there have been very few Chapter 11 bankruptcies of giant financial firms," she said. "Ultimately what I think is going to happen there is the FDIC will make a decision, and creditors won't like it, and then some of the creditors will sue. That will lead to litigation risk for the FDIC, but not too-big-to-fail risk."

For the full piece see "A To-Do List for the FDIC on Wind-Down Regime" (may require subscription).