For example, with pension liabilities amounting up to $ billion, General Motor’s pension obligations roughly equalled its market capitalization, which amounted to $ billion at the end of 2005. In fact, some US companies (including some airline companies) had to renege on their pension promises by entering into Chapter 11 insolvency protection.
Last week the Board proposed another reform that would establish long-term debt and total loss-absorbing capacity (TLAC) requirements for U.S. GSIBs. We see these requirements as critical to avoiding the choice that authorities faced in the most recent crisis between bailing out large financial firms and allowing those firms to fail in a manner that would impose large costs on the broader economy.