This all sounds wonderfully tidy and neat, right? Problem is it won’t work.
The rather large fly in the ointment is that counteryparties would be concerned that putting the holding company into what Satyajit Das calls “a strange hypnotized state” would trigger cross defaults across agreements, including derivative agreements, where the holding company had guaranteed a contract.Read it at Naked Capitalism
The FDIC Continues to Promote the Fantasy That It Can Resolve Megabanks
by Yves Smith
The short version: We're screwed. The swamp monsters (systematically dangerous institutions aka SDIs) can't be killed by any ordinary means. They really are too big to fail and also too big to exist. Rock meet hard place.