On a number of occasions, I have advocated a new bankruptcy mechanism suitable for all financial firms, whether systemically important or not, to alleviate most of the potential problems caused by the discretionary and targeted nature of Title II.1 A bankruptcy process tailored for financial institutions would restore the incentives of market participants and creditors, in particular, to monitor risk taking by these institutions.
I find this a more appealing and effective path to ending too big to fail. Conclusion To conclude, simplicity and transparency are important principles to enhance prudential standards in financial regulations and financial stability. Simple, transparent regulatory mechanisms make it easier for market participants to predict how regulators are likely to behave.