Bankruptcy

Process would protect taxpayers from bailing out failed banks; bank plans to raze its midtown Manhattan headquarters and build a 2.5 million sq. ft. edifice on the site.

The Trump administration on Wednesday refrained from proposing the elimination of authority to clean up failed financial behemoths, but the Treasury Department still wants substantial reforms to the resolution powers.

A recent failed-bank resolution in Europe may serve as a harbinger of how new authorities could cause problems in the U.S. and highlights the potential need for a modified bankruptcy process.

Heartland Bank had been operating under a regulatory order from the Fed since December.

The Trump administration’s examination of Dodd-Frank Act powers to allow regulators to seize and unwind a failing megabank is drawing criticism from supervisors at home and abroad.

Repealing or modifying regulators’ authority to take over failing banks may actually increase the risk of taxpayer-funded bailouts, said former Federal Reserve Board Gov. Daniel Tarullo.

Bank earnings could be hurt this year as big retailers close stores and file for bankruptcy. The situation has sparked a debate about how much CRE and C&I books will suffer just as lenders were putting other commercial woes behind them.

The pieces of a more equitable fate for troubled financial giants are beginning to come into view as evidenced by this week´s private-sector rescue of CIT. The lender´s salvation may serve as a prop for future government bailout strategies. But its ordeal is also further proof that the government needs more power to seize and resolve large companies.