The global financial crisis of the late 2000s has been the subject of much debate and analysis. The crisis of 2007-2008 had a massive impact on banks and financial institutions as well as the way in which they were regulated. The beginning of the 'trouble' can be traced back to 2007, when a downturn in the United States real estate market fuelled the crisis around the world. The deep integration of global banking, funding and securities markets were the key parameters which led to the spread of the US recession, affecting many European states. Clearly, the most large financial institutions failed to measure and manage the risks to which they were exposed, while the public authorities were proved to be ill-equipped to deal adequately with bank crises.
The financial crisis demonstrated the need for closing the gaps and weaknesses in the system for bank regulation and supervision, demanding a better legal framework. The response to the crisis by the US and European authorities was significant and
unprecedented. The passing of the US Dodd-Frank Wall Street Reform and Consumer Protection Act in July 2010, the biggest reform in the US since the Great Depression, was a timely reflection of the need to promote financial stability and to protect US economy from any abusive financial services practices. Similarly, the European authorities introduced the European Banking Union aimed at providing future guarantees for eurozone banking system, and especially the Bank Recovery and Resolution Directive as a legislative measure to harmonize and improve the tools for
dealing with future bank crises. This paper aims to clearly illustrate the resolution scheme and specifically the resolution tools that are able to be applied to the financial institutions which are failing or likely to fail under the Dodd-Frank Act and the BRRD.
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