Academic

Cross-border resolution authority is a form of bankruptcy, and getting the sovereigns to agree on bankruptcy coordination rules is difficult, as Stephen Lubben explains in DealBook.  Chapter 15 was amended in 2005 to try to encourage more coordination in international bankruptcies.  Here's Lubben:

But Chapter 15 does nothing to address the crucial problem an international enterprise faces upon bankruptcy. Before a bankruptcy, the enterprise might operate seamlessly across borders, but after the filing,  each corporation that makes up the enterprise becomes a separate case. When all the constituent corporations are from the United States, for example, these cases are easily consolidated in a single forum with a motion for ?joint administration.? Thus, all of MGM?s 160 bankruptcy cases are pending before a single court in New York.

But if the various corporate pieces of a debtor are spread across several countries, the problems of dueling bankruptcy cases are not easily addressed. Even after the passage of Chapter 15, and the enactment of similar laws in other developed economies, international corporate bankruptcy largely remains a country-by-country affair.

Similar concerns, of course, apply to resolution authority, which is one reason it has become a matter of international diplomacy for financial regulators, rather than merely a matter of extraterritorial application of the FDIC's resolution rules.  Hence the entrance of the Basel Committee, and I'll address that a bit tomorrow.