Current Affairs – 08-01-2018

1. ISRAEL OFFERS AFRICAN MIGRANTS A CHOICE: TICKET OUT OR JAIL

  • Israel is offering a stark choice to tens of thousands of African migrants in the country: Agree to leave voluntarily by the end of March, with a plane ticket and a grant of $3,500, or face possible incarceration.
  • It is the latest phase of Israel’s long campaign to expel tens of thousands of African migrants and asylum seekers, mostly Eritrean and Sudanese, who entered the country illegally. At least 20,000 have already left Israel.
  • The United Nations refugee agency has expressed concern over such proposals. The agency and Israeli rights groups, say they are concerned that people who have gone to Rwanda have not found adequate safety or a durable solution to their plight, and have continued on dangerous journeys within Africa or to Europe.

2. THE FINANCIAL RESOLUTION AND DEPOSIT INSURANCE BILL, 2017

Highlights of the Bill

  • The Bill establishes a Resolution Corporation to monitor financial firms, anticipate risk of failure, take corrective action, and resolve them in case of such failure. The Corporation will also provide deposit insurance up to a certain limit, in case of bank failure.
  • The Resolution Corporation or the appropriate financial sector regulator may classify financial firms under five categories, based on their risk of failure. These categories in the order of increasing risk are: (i) low, (ii) moderate, (iii) material, (iv)imminent, and (v) critical.
  • The Resolution Corporation will take over the management of a financial firm once it is classified as ‘critical’. It will resolve the firm within one year (may be extended by another year).
  • Resolution may be undertaken using methods including: (i) merger or acquisition, (ii) transferring the assets, liabilities and management to a temporary firm, or (iii) liquidation. If resolution is not completed within a maximum period of two years, the firm will be liquidated. The Bill also specifies the order of distributing liquidation proceeds.

Key Issues and Analysis

  • The Resolution Corporation will exercise certain powers including: (i) classification of firms based on risk, and (ii) directing the management of a firm to return their performance based incentive. However, the Bill does not specify a review or appeal mechanism for aggrieved persons to challenge the decision of the Resolution Corporation.
  • A financial firm will have to be resolved within two years of being classified as ‘critical’. However, the point at which the resolution process ends is not specified in the Bill.
  • Under the Bill, the Resolution Corporation will take over a firm classified as ‘critical’. However, it may choose to resolve the firm. It is unclear why the Corporation is given a choice to undertake resolution.
  • The Bill specifies that the Corporation will take over the administration of a firm, and exercise the powers of the board of directors, as soon as the firm is classified as ‘critical’.
  • However, it also allows the Corporation to supersede the board of a firm if it is classified as ‘critical’. The provision allowing the Corporation to supersede the board of a firm classified as ‘critical’ may be redundant.
  • The Bill requires financial firms to pay fees to the Resolution Corporation, including those specified in Clause 33. However, Clause 33 does not specify fees that these firms will be required to pay.
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