Sure it might make sense to have a rule, set to be finalized this week, requiring banks to have resolution plans for quick liquidation in the event of a liquidity crisis. But why does it have to be all about failure?
Banking executives and consultants working for large banks say the rule should include room for what a financial institution would do to nurse itself back to health and avoid having to be liquidated. …
"What we would like to say and what we are trying to encourage in the rule is: Don't have a rule that is biased toward failure, have a rule that presumes recovery," said Wayne Abernathy, a top executive at the American Bankers Association.
That idea is being met skeptically by regulators, at least as a component of the living will rule.