The FDIC has resolved around 480 smaller banks since the start of the crisis, and it is probably no coincidence that there a few concerns there about “zombie banks”. Dodd-Frank has created a similar resolution framework for larger banks, strengthening market discipline and reducing distorted incentives linked to “too big to fail”.
This is what we should be aiming for in Europe: we cannot afford to have a regime that is too weak or too complicated. The process of building a stronger resolution framework has now begun with the recent agreement by the ECOFIN Council on the Bank Recovery and Resolution Directive (BRRD), which now needs to be agreed with the European Parliament.