US BANKING regulators yesterday put off proposing how the government would use its new authority to dismantle large, collapsing financial companies, saying they need more time for industry and other regulators to weigh in.
The Federal Deposit Insurance Corp (FDIC)?had tentatively planned to vote yesterday on issuing an interim final rule that would have put in place some aspects of how the agency would handle the winding down of large financial firms previously considered “too big to fail.”
The so-called resolution authority was a main plank in the financial reform legislation, and is designed to avoid massive government bailouts such as the one for AIG, and destructive bankruptcies like Lehman Brothers.
On a separate matter, the board approved yesterday a final rule that gives federal protection to securities backed by home loans and other consumer debt if they meet higher standards and banks retain some of the risk associated with the products.
Industry officials criticised this move, saying the FDIC rule only applied to some parts of the market, creating an uneven and unfair playing field.