FDIC's Second Notice of Proposed Rulemaking under the Orderly Liquidation Authority
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On March 23, 2011, the FDIC published its second notice of proposed rulemaking to implement its new Orderly Liquidation Authority (OLA) under Title II of the Dodd-Frank Act. The Second NPR strikes a more balanced tone between how the FDIC will use its new authority to end taxpayer-funded bailouts of creditors and other stakeholders, while avoiding the sort of “disorderly” liquidation or reorganization under the Bankruptcy Code that could trigger a chain reaction of panic and failures that could result in a severe destabilization or collapse of the U.S. financial system. While it is too early to tell whether the Second NPR signals a permanent change in the tone of the FDIC’s rulemakings and other public statements, it is an important first step.