Least Cost Exception Act
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Progress
Where this bill stands in the legislative process.
- Introduced
- Passed House
- Passed Senate
- To President
- Became Law
Overview
The Least Cost Exception Act allows the FDIC to deviate from its standard practice of choosing the least-cost resolution method for failed banks. Specifically, it enables the FDIC to select an alternative resolution approach, even if it’s more expensive, if doing so helps prevent further concentration of the U.S. banking system within global systemically important banks. This exception requires a cost analysis and consultation with the Federal Reserve and Treasury, and may involve assessments from parties involved in the alternative resolution.
Key provisions
- Allows the FDIC to select a resolution method that isn’t the least costly to the Deposit Insurance Fund.
- This exception is only available if the alternative method is less costly than a resolution involving a global systemically important bank.
- The FDIC must consult with the Federal Reserve and the Secretary of the Treasury before selecting an alternative.
- A person involved in the alternative resolution must pay an assessment to the FDIC.
- The FDIC must report to Congress on the economic impact of the chosen alternative.
- The FDIC will establish a rule specifying a maximum cost to the Deposit Insurance Fund for this exception.
- The definition of ‘Covered Alternative’ is defined as a method involving a sale of all or substantially all assets of a bank to a global systemically important bank.
- The definition of ‘Global Systemically Important Banking Organization’ is defined as a global systemically important BHC.
Bill text
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