UK and US bodies create plan for collapsed banks

11 December 2012

Regulators in the UK and US have put forward the idea of creating a new transatlantic body that would be responsible for collapsed major banks.

Yesterday (10 December), the Bank of England (BoE) and the Federal Deposit Insurance Corporation published a joint paper in which they outlined plans to deal with financiers seen as too big to fail.

Under the terms of the organisations' proposals, a single entity would be set up to take over the powers held by individual national bodies over subsidiary divisions of a failing institution.

It is thought such a measure would avoid any repeat situations such as that seen with the Royal Bank of Scotland, whereby the government had to bail the bank out using UK taxpayers' money.

Paul Tucker, deputy governor for financial stability at the BoE, commented: "The too-big-to-fail problem simply must be cured. We believe it can be and that this joint paper provides evidence of the serious progress that is being made."

By Claire Archer

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