Financial policymakers focused on rewriting the rulebook for financial markets have spent months debating issues related to consumer protections, systemic risk regulation and regulatory co-ordination. But none of these is as important as what to do when a large financial institution is failing.

Right now, we are no better off than a year ago, when several major institutions teetered on the edge of total failure, and nearly all of them were granted massive infusions of government and central bank funds. The bailouts were done on an ad hoc basis, as policymakers sought to prevent the catastrophic failure of a few institutions to spare the global economy.

But while better regulation would have helped avert some of the crisis, there is no guarantee that regulators can avoid a similar crisis in the future. We must address the lack of an orderly process for the demise of large financial institutions. Before last year, we were all aware of “moral hazard” and what it meant – we just did not know it referred to far greater swaths of the financial markets.