AIMA

Resolution of Financial Institutions

The implosion of the sub-prime bubble during 2007/2008 and subsequent collapse of numerous financial institutions, most notably Lehman Brothers, had widespread impacts across the financial world. The sheer size of these institutions, when combined with the economic importance of the services which they provide, resulted in many being designated as ‘too-big-to-fail’ and bailed out using public funds.

In September 2009, in response to this, world leaders at the G20 Summit in Pittsburgh committed to develop legislative tools and frameworks for the effective resolution of large financial institutions and groups.

These tools and frameworks were agreed as necessary in order to: (1) hold large global firms to account for the risks they take; (2) mitigate the systemic impacts of large financial institution failures; and (3) reduce the potential for future moral hazard arising from the use of taxpayer funds to support failing private sector entities.

Subsequent Summits of the G20 developed and confirmed these targets upon which work is currently being undertaken at both a national and international level.

International

• CPSS-IOSCO 
• Financial Stability Board

EMEA

• Europe
• UK

USA

• Dodd-Frank Act Title II

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