Indeed, many called for the Orderly Liquidation Authority (OLA) to be set into motion.
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The business is then taken over by the Federal Deposit Insurance Corporation, with its Orderly Liquidation Authority.
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The proposal establishes an orderly liquidation process that provides creditors of the failing institution with some clarification about filing claims.
Regulatory authorities will be given new powers to seize and conduct an orderly liquidation of large financial firms like Citibank.
The Fed stepped in to the Bear imbroglio "only because no other tools were available" to ensure its orderly liquidation in a fragile market, Bernanke said.
But the government, fearing a run on the banks, believes that it is the only way to maintain stability and proceed with an orderly liquidation of insolvent banks.
The plans also will help inform the FDIC on how to lessen the systemic ripple effects in the event one of these companies must be resolved under the new Orderly Liquidation Authority.
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One provision of the Act, Title II, creates an Orderly Liquidation Panel charged with determining if a company on the brink of collapse can be placed into receivership under the Federal Deposit Insurance Corporation (FDIC).
Readers may recall that this special FDIC power to manage the failure of a financial giant, called "Orderly Liquidation Authority" in Dodd-Frank, was promoted by its backers as a way to rain fire and brimstone upon a failing bank and its creditors.
The bill that Dodd brought before the Senate, after a year of discussions with Democrats and Republicans alike, incorporated the bipartisan plan of Warner and Corker to prevent another bank bailout: setting up a fifty-billion-dollar fund, paid for by the banks, to insure orderly liquidation, and establishing a risk council to detect warning signs of another crisis.
By allowing for swift and orderly bankruptcy proceedings (as opposed to a drawn-out liquidation), the federal aid to Detroit averted the loss of 1.14 million jobs in 2009, and another 314, 400 in 2010, the study found.
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He even called on Congress to consider new ways to assist the orderly unwinding of a big securities company (the way the FDIC handles the liquidation of a bank, for example), urging it to work with the Treasury Department on ideas.
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