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FDIC outlines new strategy for failing banks

10:07 AM, May 11, 2012   |    comments
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WASHINGTON (AP) - The head of the Federal Deposit Insurance Corporation says regulators plan to employ a strategy for handling big failing banks that would help stabilize the financial system by preserving the banks' healthy operations.

FDIC Acting Chairman Martin Gruenberg outlined the agency's strategy in a speech Thursday. Under the 2010 financial overhaul law, the agency has the authority to seize and dismantle big financial firms that could collapse and threaten the broader system. The aim is to avoid another taxpayer bailout of Wall Street banks in the event of another financial crisis.

Gruenberg said that under the strategy, the FDIC would take over a failing bank's parent company but allow its healthy subsidiaries to continue operating. He says that would reduce disruption and enable many financial transactions to continue normally.

(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

Associated Press

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