Federal Deposit Insurance Corporation Chairman Sheila Bair on Wednesday defended the creation of a liquidation authority for systemically important financial institutions and the plans of US and global regulators for higher capital requirements for banks.
Bair's comments came at a hearing on the changing role of the FDIC at the House Oversight and Government Reform Committee troubled asset relief program, financial services and the bailouts of public and private programs subcommittee.
The Dodd-Frank Wall Street Reform and Consumer Protection Act in July 2010 gave the liquidation authority to the FDIC.
Bair said that the resolution process is better than an enhanced bankruptcy option urged by some of the critics of the Dodd-Frank Act. She supported her position by saying that the firm managing the bankruptcy of Lehman Brothers claims that $75bn in value was destroyed by the bankruptcy process, on top of the losses resulting solely from the investment bank's failure.
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