FDIC could reduce resolution costs by 17% – Bank of Canada paper
Eliminating uncertainty over auction process could reduce multiple bidding, researchers say
The Federal Deposit Insurance Corporation could reduce resolution costs by becoming more transparent in its auction process, a paper published by the Bank of Canada finds.
Jason Allen and co-authors analyse the cost-effectiveness of the auction mechanism typically used by the FDIC when resolving failing banks.
The organisation provides deposit insurance and resolution services to the US financial system, and also regulates roughly 4,000 chartered banks.
Resolution auctions often involve a
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