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F.D.I.C. Approves ‘Too Big to Fail’ Plan

March 16, 2011 Comments off

nytimes.com

A top banking regulator approved a plan to seize and unwind big banks — a proposal that will help address those “too big to fail” firms whose collapse could imperil the financial system.

The board of Federal Deposit Insurance Corporation voted unanimously on Tuesday to approve a set of proposed rules intended to create an orderly process to unwind large financial institutions. The rules outline how creditors can file a claim and how those claims will be addressed, hopefully bringing some clarity to a previously murky situation.

The vote moves the proposal into a 60-day public comment period, after which the agency will have to settle on final rules. The rule would apply to big banks, financial firms and large nonfinancial companies that pose a systemic risk to the broader economy.

“Today’s action is another significant step toward leveling the competitive playing field and enforcing market discipline on all financial Read more…