This familiarity can facilitate crossborder cooperation and coordination in the event of a failure of a systemically important institution, and stem competing insolvency proceedings in multiple jurisdictions and the ringfencing of assets. This last point shouldn’t be discounted. It’s worth remembering that after Lehman Brothers’ parent company initially filed for bankruptcy in the US, many foreign proceedings were initiated for Lehman affiliates around the world. It took over six months to establish a cross-border protocol among the representatives of the more significant Lehman Brothers affiliates. The protocol was meant to improve communication and cooperation among the representatives as well as minimize costs and maximize recoveries for creditors. In the case of one of the most significant Lehman Brothers affiliates, Lehman Brothers International Europe located in the UK, no agreement was ever reached. OLA also provides for backstop liquidity through the OLF, a feature not available in the ordinary bankruptcy process. During the financial crisis, lender of last resort liquidity from the Fed was critical to promoting faith in the financial sector. So, too, will backstop liquidity be important for restoring faith in a recapitalized institution in resolution under OLA and preventing a run. The bankruptcy process also offers many positives. The US Bankruptcy Code is admired around the world and has been the model for similar regimes in other countries. The court-administered nature of bankruptcy provides transparency and predictability to parties and provides stakeholders with a meaningful opportunity to be heard.

However, as many have noted, the current bankruptcy laws were not designed to resolve systemically important financial institutions. Although firms have worked within the existing bankruptcy framework for purposes of resolution planning, revisions to bankruptcy law could be a means of facilitating the orderly bankruptcy resolution of a major financial institution. However, the devil is, of course, in the details. The bills that passed the House earlier this year include many helpful changes regarding current bankruptcy law. They may help facilitate the resolution strategies of most of the systemically important financial institutions. Notably, however, these proposals do not include a credible source of backstop liquidity. Congress recognized the importance of such a facility in the OLF. Any bankruptcy regime without one may lack the scale and speed needed to bolster market confidence and may not be as effective in preventing contagion, particularly with respect to a systemically important firm. Conclusion In conclusion, I believe the legislative and regulatory reforms to the financial system over the last 10 years have made the system more flexible and resilient. At the same time, it is entirely appropriate to revisit these reforms now and assess their efficacy. In doing so, though, let’s keep my aphorisms in mind and not risk history repeating itself. I say this because the American public 5/6  BIS central bankers' speeches  does not deserve to have history repeated. Improved resilience should permit financial institutions to weather another shock and, if needed, fail under the Bankruptcy Code as contemplated by the living will process.