First Republic, Other Failures Cast Doubt on Unwinding Banks

The recent failures of First Republic and other large regional banks have raised questions about the effectiveness of, and regulators’ willingness to use, tools Congress put in place to wind down giant financial institutions after the 2008 financial crisis.

The 2010 Dodd-Frank Act set up a process to resolve systemically important financial institutions without, theoretically, triggering a taxpayer bailout or requiring an even larger bank to swallow up a competitor. The law also directed the biggest banks and smaller financial institutions to write out resolution plans, or living wills, outlining how to safely unwind them.

But the May 1 sale ...