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Abstract

I. Introduction

II. Background Concepts ... A. Banks, Shadow Banks, and Bank Holding Companies ... B. Capital and Liquidity ... C. Bankruptcy, Bank Resolution, and the Orderly Liquidation Authority

III. Trigger Problems ... A. The Wrong Trigger: Liquidity ... B. Capital and Timeliness ... 1. The Costs of Delay ... 2. Causes of Delay

IV. The Path Ahead ... A. Bolstering the Public Liquidity Backstop ... B. Promoting Timeliness ... 1. Background: Prompt Corrective Action ... 2. Establishing Clear Guidelines and Addressing Capital’s Shortcomings ... C. Right-sizing the Loss-Absorbing Buffer ... D. Regulatory Discretion

V. Conclusion

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