It’s about time that they decided to come up with a bank failure plan… Maybe things will start to change this time around. We’ll have to see, but at least its a start. Read full story below.

Stock Market News – US And UK Come Up With a Failing Bank Plan

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U.S. and U.K. regulators will unveil the first cross-border plans to deal with failing global banks on Monday, outlining proposals to force shareholders and creditors on both sides of the Atlantic to take losses and to ensure sufficient capital exists in the banks’ headquarters to protect taxpayers.

Writing in the Financial Times, Martin Gruenberg, chairman of the US Federal Deposit Insurance Corporation, and Paul Tucker, deputy governor of the Bank of England, say this represents the first concrete steps to end the “too big to fail” problem of large international banks.

With Mr Tucker leading international efforts to devise emergency resolution plans, the U.S.-U.K. template for their 12 large international banks will be a template for the 16 systemically important banks (G-Sifis) based in other countries.

“All countries share a very strong public interest in developing the capacity to resolve global systemically important financial institutions in a credible and effective way,” the two bank regulators write.

The strategy paper says shareholders should expect to be wiped out and unsecured bondholders “can expect that their claims would be written down to reflect any losses that shareholders cannot cover”, which did not happen when the U.S. and U.K. had to prop up their international banks in the 2008 crisis.

Senior management would be removed, but critical business functions would continue and healthy operating subsidiaries, both foreign and domestic, would be allowed to keep operating, limiting the damage to the broader economy, the regulators write.

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