by Jesse Hamilton (Bloomberg)

Excerpt:

Even one of the largest global banks could be taken apart safely by U.S. government authorities if it were to fail today, according to banking regulators from the U.S. and U.K.

A U.S. plan for seizing and liquidating a major bank would work if necessary, although it would be messy, according to Art Murton, a senior Federal Deposit Insurance Corp. official in charge of planning how to dismantle complex firms, and Bank of England Deputy Governor Paul Tucker.

They spoke yesterday at an Institute of International Finance event in Washington.

“I think U.S. authorities could do it today -- and I mean today,” said Tucker, who has worked with U.S. regulators on cross-border hurdles to taking down an international firm.

“A global financial system will not survive if we don’t crack this problem.”

The 2010 Dodd-Frank Act empowered the FDIC to seize a firm and dismantle it if regulators think it can’t pass through bankruptcy without posing a significant threat to the financial system.

This so-called resolution authority hasn’t yet been tested, nor have the regulators finished telling banks how it will work.

“We are prepared,” Murton said, adding that the agency is still trying to work out the difficult cross-border issues and will be even more ready in another year.