FDIC enhances backup role at large, risky banks
U.S. bank regulators would have more power to examine the largest and riskiest institutions, under a new interagency memorandum approved on Monday.
The agreement by the board of the Federal Deposit Insurance Corp addresses problems seen in 2008 when the FDIC was left scrambling for access to information about Washington Mutual, as the nation's then-largest thrift was failing. The Office of Thrift Supervision was Washington Mutual's primary regulator.
The memorandum would enhance the FDIC's role as back-up authority for any bank with federally insured deposits.
It would allow the chairman of the FDIC to order a special examination of troubled or large, risky banks, to ensure the agency can fully understand the threat to the FDIC's insurance fund and let it better prepare for any dismantling of an institution, if necessary.
It would also give the FDIC a higher profile and presence at a larger universe of banks.
Currently there are four main federal bank regulators in the United States: the FDIC, the OTS, the Office of the Comptroller of the Currency, and the Federal Reserve.
The disjointed regulatory system was criticized during the financial crisis for preventing the quick sharing of information about troubled firms.
The financial reform bill that is expected to soon become law would rework the bank regulatory structure, including folding the OTS into the OCC.
(Reporting by Karey Wutkowski; Editing by Tim Dobbyn)
© Copyright Thomson Reuters 2024. All rights reserved.