Remarks by
Martin J. Gruenberg
Chairman
Federal Deposit Insurance Corporation
Progress on Cross-Border Resolution Cooperation
to
The Single Resolution Board Conference
Brussels, Belgium
September 29, 2017
Martin J. Gruenberg
Chairman
Federal Deposit Insurance Corporation
Progress on Cross-Border Resolution Cooperation
to
The Single Resolution Board Conference
Brussels, Belgium
September 29, 2017
1
Introduction
Good morning, and thank you for inviting me to take part today.
I view the opportunity to speak with you this morning as the continuation of our ongoing work to
foster cross-border cooperation to achieve a common objective: the orderly failure of
systemically important financial institutions, or SIFIs.
The theme for the 2017 Single Resolution Board conference—Building Resolvability Together—
couldn’t be more appropriate. Tackling the issue of resolution of a systemically important
financial institution requires the commitment of all of the groups represented here today on a
global scale: resolution authorities, supervisors, central banks, finance ministries, legislators,
standard setters, policy experts, and financial firms. Together, in my view, we are building a
solid foundation to address this critically important issue. More work remains to be done, but we
shouldn’t lose sight of how far we have come. So, if I may, I would like to set the stage for
today’s discussions by reviewing the significant progress we’ve made.
SIFI Resolution in the United States and Europe
Broadly speaking, prior to the recent financial crisis, we in the United States—and, fair to say,
other major jurisdictions around the world—had not envisioned that globally active, systemically
important financial institutions could fail. These institutions, although large and complex, were
considered well-diversified with operations spanning global markets and different business lines,
putting them, it was thought, at a low risk of failure. It was assumed that these institutions had
ready sources of liquidity and, should problems arise, that they would be able to raise large
amounts of equity or debt.
In hindsight, those proved to be mistaken assumptions. After Lehman Brothers filed for
bankruptcy in the fall of 2008, market liquidity dried up and the capital markets were unwilling
to provide additional capital to other financial firms whose viability appeared uncertain. The
ensuing disruptions triggered the worst financial crisis since the Great Depression.
Introduction
Good morning, and thank you for inviting me to take part today.
I view the opportunity to speak with you this morning as the continuation of our ongoing work to
foster cross-border cooperation to achieve a common objective: the orderly failure of
systemically important financial institutions, or SIFIs.
The theme for the 2017 Single Resolution Board conference—Building Resolvability Together—
couldn’t be more appropriate. Tackling the issue of resolution of a systemically important
financial institution requires the commitment of all of the groups represented here today on a
global scale: resolution authorities, supervisors, central banks, finance ministries, legislators,
standard setters, policy experts, and financial firms. Together, in my view, we are building a
solid foundation to address this critically important issue. More work remains to be done, but we
shouldn’t lose sight of how far we have come. So, if I may, I would like to set the stage for
today’s discussions by reviewing the significant progress we’ve made.
SIFI Resolution in the United States and Europe
Broadly speaking, prior to the recent financial crisis, we in the United States—and, fair to say,
other major jurisdictions around the world—had not envisioned that globally active, systemically
important financial institutions could fail. These institutions, although large and complex, were
considered well-diversified with operations spanning global markets and different business lines,
putting them, it was thought, at a low risk of failure. It was assumed that these institutions had
ready sources of liquidity and, should problems arise, that they would be able to raise large
amounts of equity or debt.
In hindsight, those proved to be mistaken assumptions. After Lehman Brothers filed for
bankruptcy in the fall of 2008, market liquidity dried up and the capital markets were unwilling
to provide additional capital to other financial firms whose viability appeared uncertain. The
ensuing disruptions triggered the worst financial crisis since the Great Depression.