A possible approach would be to give an agency – the Treasury seems an appropriate choice – the responsibility and the resources, under carefully specified conditions and in consultation with the appropriate supervisors, to intervene in cases in which an impending default by a major nonbank financial institution is judged to carry significant systemic risks.
The implementation of such a resolution scheme does raise a number of complex issues, however, and further study will be needed to develop specific, workable proposals. A stronger infrastructure would help to reduce systemic risk.