The House of Representatives passed a bill yesterday that would allow for banks to voluntarily begin bankruptcy, MarketWatch.com reported yesterday. The bill, known as “The Financial Institutional Bankruptcy Act of 2014,” allows financial institutions to voluntarily begin the process of bankruptcy, or, in some cases, allows the Federal Reserve to begin the process. The bill was passed with bipartisan support, and was co-sponsored by Rep. Spencer Bachus (R-Ala.), House Judiciary Committee Chairman Bob Goodlatte (R-Va.), and Ranking Member John Conyers (D-Mich.). The bill uses a “single point of entry” approach to enable a holding company to go into bankruptcy while permitting subsidiaries to stay out of the process. The law builds on attempts to prevent taxpayer bailouts of financial institutions like the ones in 2008. Under the Dodd-Frank financial reform law, there is a provision for an administratively-driven resolution process.
