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.

Explore More on CFR

Russia

Russia's information warfare operations, aimed to weaken adversaries' social cohesion and political systems, are complex and adaptive, but Western governments can take steps to guard against them.

Zimbabwe

Lebanon

Saudi Arabia pressed Lebanese Prime Minister Saad Hariri to resign to try to weaken Iran-backed Hezbollah in Lebanon. The path to resolving the crisis could run through Yemen.