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A report from the Board of Governors of the Federal Reserve System and the Secretary of the US Department of Treasury, The Feasibility and Desireability of Mandatory Subordinated Debt considers the possibility of using "subordinated debt to increase market discipline at depository institutions and to protect the deposit insurance funds." Along with a clearly written introduction and conclusion, this report concentrates on answering the question "Is a Mandatory Subordinated Debt Requirement of Large Banking Organizations Feasible and Appropriate?" The authors reach three major conclusions: 1) that there is sufficient evidence to continue to use subordinated debt to encourage market discipline, 2) that there is a good possibility that mandatory subordinated debt insurance policies may help market discipline and safety, and 3) that the FRB BOG and the Secretary of the US Department of Treasury will continue to analyze research about subordinated debt gathered from market practices, research, and supervisory experience and will suggest new legislation as needed.
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