daniel k tarullo : supervising and resolving large financial institutions speech by mr daniel k tarullo, member of the board of governors of the us federal reserve system, at the institute of international bankers conference on cross - border insolvency issues, new york, 10 november 2009. the original speech, which contains various links to the documents mentioned, can be found on the us federal reserve system ’ s website. * * * proposals for the creation of a special resolution process for large financial firms have rightly assumed prominence in the wake of the financial crisis. some events during the crisis have also focused attention on the difficult problems often created by the failure of a large, internationally active financial firm. in my remarks this afternoon i want to elaborate a bit on the relationship between resolution processes and an effective overall system of financial regulation and supervision in both the international and domestic spheres. 1 at the risk of some oversimplification, i would state that relationship as follows : first, an effective domestic resolution process is a necessary complement to supervision that would bring more market discipline into the decisionmaking of large financial firms, their counterparties, and investors. second, the high legal and political hurdles to harmonized cross - border resolution processes suggest that, for the foreseeable future, the effectiveness of those processes will largely depend on supervisory requirements and cooperation undertaken before distress appears on the horizon. i would further suggest that the importance of proposed requirements that each large financial firm produce a so - called living will is that this device could better tie the supervisory and resolution processes together. a resolution regime for large, interconnected firms during the financial crisis, serious distress at a large financial firm presented authorities in the united states and many other countries with only two realistic alternatives. first, they could try to contain systemic risk by stabilizing the firm through capital injections, extraordinary liquidity assistance, or both. second, they could allow the firm to fail and enter generally applicable bankruptcy processes. faced with the possibility of a cascading financial crisis, most governments selected the bailout option in most cases. yet this option obviously risks imposing significant costs on the taxpayer and supports the notion that some firms are too - big - to - fail, with consequent negative effects on market discipline and competitive equality among financial institutions of different sizes. indeed, too - big - to - fail perceptions undermine normal regulatory and supervisory requirements. however, as the lehman brothers experience demonstrated, permitting the disorderly failure of a large, interconnected firm

one whose statute, rules and procedures expressly state its commitment to the principles of islamic shari ’ ah and to the banning of the receipt and payment of interest in any of its operations. as you are aware, the current regulatory regime does not permit financial institutions to engage in islamic banking. to close this gap, bank of uganda has proposed amendments to the financial institutions act, 2004 to permit the licensing of and transacting by financial institutions in islamic banking in uganda. the proposed amendments to the law were submitted to the finance minister for consideration by cabinet and subsequently parliament for enactment. this amendment will bring uganda in line with other eac member countries that have licensed islamic banking and finance. it will increase the depth, breadth and range of finance products bank customers can use to access banking services. let me conclude by wishing you once again happy celebrations. it is now my pleasure to invite hon ali kirunda kivejinja to address the congregation. god bless you all. asalaam aleikum, eid mubarak, eid mubarak, eid mubarak