WASHINGTON D.C. – The Federal Deposit Insurance Corporation (FDIC) is prepping for the inevitable: another potential banking meltdown. The agency’s Board of Directors today greenlit an Advance Notice of Proposed Rulemaking (ANPR) that could force the nation’s largest banks to shoulder more of the burden should they collapse, rather than hitting taxpayers with another multi-billion dollar bailout.
The move, announced October 18, 2022, signals a renewed focus on “resolution-related resource requirements” for these behemoth institutions. Translation: the FDIC and the Federal Reserve are looking at ways to ensure a failing bank can be unwound without triggering a wider financial panic – and without Uncle Sam footing the bill. The agencies are specifically eyeing long-term debt as a potential tool, requiring banks to issue it to bolster their ability to absorb losses.
This isn’t about preventing banks from failing; it’s about *how* they fail. The 2008 financial crisis saw institutions like AIG and Citigroup receive massive government injections to prevent total collapse. The FDIC, still haunted by that era, wants to establish a system where banks have pre-funded resources to cover losses, potentially avoiding the need for emergency government assistance.
Acting FDIC Chairman Martin J. Gruenberg issued a statement accompanying the ANPR, emphasizing the need to improve the “orderly resolution” of large, complex banks. While the details are still being fleshed out, the core idea is simple: if a bank gets into trouble, it should have the means to fix it itself, or at least minimize the damage before it spreads.
The ANPR isn’t a law yet. It’s a call for comment, a request for input from industry insiders, economists, and the public. Interested parties have 60 days from the date of publication to submit their thoughts to both the FDIC and the Board of Governors of the Federal Reserve System. Expect a fierce lobbying battle as the big banks weigh in, likely arguing against any measures that could eat into their profits.
This is a developing story. Grimy Times will continue to track the progress of this rulemaking and report on any attempts by Wall Street to water down these critical safeguards. Brian Sullivan at the FDIC (202-412-1436) is the contact for further inquiries. The full ANPR document and Chairman Gruenberg’s statement are available for review on the FDIC website. Last Updated: October 18, 2022.
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