The Role of Bankruptcy Reform in Addressing Too Big To Fail

The largest and most complex financial firms need to become much simpler and, most likely, smaller in order for either bankruptcy to work, as required under Title I of Dodd-Frank, or for the FDIC's single point of entry strategy to work, if Title II powers are used. If authorities are unwilling or unable to simplify and downsize too-big-too-fail banks, they should substantially increase the required amount of loss absorbing equity for those firms.