U.S. Bank Regulator to Propose New Rules for Large Regional Banks
August 29, Washington – The Federal Deposit and Insurance Corporation (FDIC), a U.S. bank regulator, will introduce new rules aimed at overhauling how large regional banks prepare for their own failure. The proposal comes as U.S. regulators strive to strengthen oversight of the banking system, following a series of collapses this year, including three of the largest in U.S. history.
The new rules are expected to require banks with assets of $100 billion or more to issue long-term debt that can absorb bank losses before depositors and the FDIC’s deposit insurance fund. FDIC Chair Martin Gruenberg mentioned in a speech earlier this month that the proposal will also mandate bank recovery and resolution plans, commonly referred to as “living wills,” to provide the FDIC with more options when overseeing a failed bank’s receivership, including identifying parts of the lender that could be sold separately.
These proposed rules are part of the ongoing efforts to strengthen the financial system and mitigate risks associated with bank failures. The FDIC’s proposal is expected to provide additional protection for depositors and reduce the potential impact on the FDIC’s deposit insurance fund in the event of a bank failure.
The complete details of the new rules will be published soon by the FDIC.
