Short of defaulting on the formal guarantees it had provided to the depositors and bondholders, however, the Government had to acknowledge a large additional bank-related debt. To be sure, the repayments of exiting bondholders and depositors (especially during early 2009 and late 2010) were financed by central bank liquidity support, but this merely changed the identity of the banks’ creditors.
In fact, comprehensive, consolidated supervision by the home country supervisor is a legal requirement for foreign banks operating in the U.S. Some foreign supervisors are now beginning to question the consolidated supervision of U.S. firms operating in their countries. Now, I suspect some nonbank firms may feel apprehension at having an umbrella supervisor evaluate their operations.