...of a financial institution?
Nouriel Roubini thinks so.
My sense is that, for financial companies, one is either in business or not. Is there a ... halfway?
A special insolvency regime would give the Treasury time to figure out whether the unsecured debt of the institutions should be worked out, and how it should be worked out; it also allows a more orderly workout of CDS and other credit derivatives issued by the financial institution.
Why an institution fails is, perhaps, more important than how.
In some circumstances, a failure, no matter how well managed, will cast contagious doubt wide and far, including associated speculative "attacks".
On the other hand, the FDIC regime for banks is really stunningly efficient, even when it ruffles feathers.
