and the fdic last summer. the initial round has yielded valuable information that is being used to identify and assess key challenges to resolvability under the bankruptcy code ( title i plans ). the title i plans will help to focus firm efforts to mitigate those challenges so that bankruptcy may be a viable resolution strategy for large institutions. these plans will also support development of the fdic ’ s backup resolution plans under ola ( title ii plans ). the resolution plan process is iterative by design. there is still much work to be done by firms, domestic and foreign regulators, and national governments. we remain committed to ensuring that this work is done quickly but responsibly in the coming years. that brings us to the question of special resolution regimes. in october 2011, immediately before i was nominated to the federal reserve board, i helped design a public simulation of the failure of a large financial institution under ola. the cast included former senior government officials as well as leading experts from the private sector. the fdic, the federal reserve, and the industry offered their assistance as we developed the simulation. from the outset, my earlier experience had led me to be skeptical about the possibility of resolving one of the largest financial companies without destabilizing the financial system. today ’ s global financial institutions are of staggering size and complexity. i believed that an attempt to resolve one of these firms – a firm with multiple business lines carried out through see ben s. bernanke ( 2012 ), “ banks and bank lending : the state of play, ” speech delivered at the 48th annual conference on bank structure and competition, chicago, illinois ( via satellite ), may 10. bis central bankers ’ speeches countless legal entities, across many jurisdictions and different legal systems – could easily spin out of control. the result could be greatly increased uncertainty for creditors and counterparties, which could trigger or accelerate a run on the failed institution that could quickly spread and destabilize the whole system. as we developed the simulation, however, i came around to the view that it is possible to resolve a large, global financial institution. what changed my mind was the fdic ’ s innovative “ single - point - of - entry ” approach, which was just coming into focus in 2011. this approach is a classic simplifier, making theoretically possible something that seemed impossibly complex. under single point of entry, the fdic will be appointed receiver of only the top - tier parent holding company of the

the likelihood of failure through a broad range of stronger regulation, including higher capital and liquidity standards, stress tests and recovery planning among other reforms. second, it is intended to minimize the externalities from failure by making it possible to resolve a large financial institution without taxpayer exposure and without uncontainable disruption. if these reforms achieve their purpose, in my view they would be preferable to a government - imposed break - up, which would likely involve arbitrary judgments, efficiency losses, and a difficult transition. see daniel k. tarullo ( 2012 ), “ industry structure and systemic risk regulation, ” speech delivered at the brookings institution conference on structuring the financial industry to enhance economic growth and stability, washington, d. c., december 4. see joseph p. hughes and loretta j. mester ( 2011 ), “ who said large banks don ’ t experience scale economies? evidence from a risk - return - driven cost function ( pdf ), ” working paper 11 – 27 ( philadelphia : federal reserve bank of philadelphia ) ; richard davies and belinda tracey ( 2012 ), “ too big to be efficient? the impact of implicit funding subsidies on scale economies in banking ( pdf ), ” bank of england, june ; david c. wheelock and paul w. wilson ( 2009 ), “ do large banks have lower costs? new estimates of returns to scale for u. s. banks, ” working paper series 2009 - 054e ( st. louis : federal reserve bank of st. louis, october ) ; andrew g. haldane ( 2012 ), “ on being the right size ( pdf ), ” speech delivered at the institute of economic affairs ’ 22nd annual series, the beesley lectures, london, october 25. see dean baker ( 2010 ), “ why we must break up the banks, ” the guardian, april 7 ; and bruno j. navarro ( 2012 ), “ neil barofsky : breaking up big banks ‘ necessary ’ ( http : / / www. cnbc. com / id / 48328948 / neil _ barofsky _ breaking _ up _ big _ banks _ lsquonecessaryrsquo ), ” cnbc, july 25 ( accessed september 11, 2012 ). see also, richard w. fisher ( 2013 ), “ ending ‘ too big to fail ’ : a proposal for reform before it ’ s too late ( with reference to patrick henry, complexity and reality ), ”