Title II of the Dodd-Frank Act establishes a new non-judicial receivership al-ternative for resolving troubled financial companies that could threaten the stability of the U.S. financial system (“Covered Financial Companies”), as described further below. The Federal Deposit Insurance Corporation (“FDIC”), on October 12, 2010, issued a notice of proposed rulemaking (the “Proposal”) to begin to implement the provisions of Title II.
The recent financial crisis has resulted in events that once seemed impossible. Recently, in the federal government’s attempts to bail out the auto industry, an event unprecedented in American history almost occurred: the forced subordination of existing secured debt to new loans issued by the federal government. If the government were to revive this concept in future bailouts and attempt to subordinate the liens of secured creditors, a suit challenging the constitutionality of such action would have a good chance of success.
The Potential For Forced Subordination
As the federal government and private markets make progress to quell economic recession and stimulate the engines of financial growth, recent headlines from the commercial real estate industry have focused on certain developments, such as the proposed changes in rating agency methodologies and the repeated false starts with the government’s TALF and PPIP programs.
On Thursday, under pressure from the Obama administration, Chrysler and 24 of its wholly owned U.S. subsidiaries filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York. None of Chrysler’s Mexican, Canadian or other international subsidiaries are part of the filing.
As required by the terms of the emergency assistance provided by Treasury last December, General Motors Corp.
Earlier today, the FDIC announced that the FDIC Board of Directors voted on Friday, October 8, 2010 to approve the issuance of a notice of proposed rulemaking (NPR) regarding the treatment of certain creditor claims under the FDIC’s new orderly liquidation authority established under Title II of the
On Friday, the Washington Department of Financial Institutions closed Shoreline Bank, headquartered in Shoreline, Washington, and appointed the FDIC as receiver. As receiver, the FDIC entered into a purchase and assumption agreement with GBC International Bank, headquartered in Los Angeles, California, to assume all of the deposits of the failed bank.
On Friday, the Washington Department of Financial Institutions closed Washington First International Bank, headquartered in Seattle, Washington, and appointed the FDIC as receiver. As receiver, the FDIC entered into a purchase and assumption agreement with East West Bank, Pasadena, California, to assume all of the deposits of the failed bank.