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Loss Sharing Rules for Bank Holding Companies: An Assessment of the Federal Reserve's Source-of-Strength Policy and the FDIC's Cross Guarantee Authority

Author

Listed:
  • Bradley, Christine
  • Jones, Kenneth D.

Abstract

In this article, we critically examine two policies designed to protect the deposit insurance funds—the Federal Reserve Board’s source-of-strength policy and the FDIC’s cross-guarantee authority. We discuss why each of the policies was adopted and how effective each has been in practice since its implementation. We then evaluate the future application and usefulness of the two policies in light of the structural changes that have resulted from industry consolidation and the financial modernization of the 1990s.

Suggested Citation

  • Bradley, Christine & Jones, Kenneth D., 2007. "Loss Sharing Rules for Bank Holding Companies: An Assessment of the Federal Reserve's Source-of-Strength Policy and the FDIC's Cross Guarantee Authority," MPRA Paper 14116, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:14116
    as

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    File URL: https://mpra.ub.uni-muenchen.de/14116/1/MPRA_paper_14116.pdf
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    References listed on IDEAS

    as
    1. Susan Schmidt Bies, 2006. "Supervisory perspective on current bank capital, market risk, and loan product issues: a speech at the Bank Administration Institute Treasury Management Conference, Orlando, Florida, May 4, 2006," Speech 194, Board of Governors of the Federal Reserve System (U.S.).
    2. Adam B. Ashcraft, 2008. "Are Bank Holding Companies a Source of Strength to Their Banking Subsidiaries?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(2-3), pages 273-294, March.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    source-of-strength; cross guarantees; bank closure policy; bank holding companies;
    All these keywords.

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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