from Greenberg Center for Geoeconomic Studies

An Expedited Resolution Mechanism for Distressed Financial Firms

Regulatory Hybrid Securities

April 01, 2009

Report

More on:

Economic Crises

Financial Markets

Overview

This Working Paper, the third in the Squam Lake Working Group series distributed by the Center for Geoeconomic Studies, recommends support for a new regulatory hybrid security that will expedite the recapitalization of distressed financial companies. The new instrument resembles long-term debt in normal times, but converts to equity when the financial system and the issuing bank are both under financial stress. The regulatory hybrid security the authors envision would be transparent, less costly to taxpayers, and more effective than the ad hoc measures taken in the current crisis.

More on:

Economic Crises

Financial Markets

Top Stories on CFR

Italy

Italy’s populist government has relished defying the European Union, and its latest showdown with Brussels could threaten the continent’s fragile recovery—and the global economy.

Women and Economic Growth

Closing the gender gap in the workforce could add a staggering $28 trillion to the global GDP.

Cybersecurity

Deep fakes are a profoundly serious problem for democratic governments and the world order. A combination of technology, education, and public policy can reduce their effectiveness.