The FDIC (federal deposit insurance corporation) voted unanimously today to require banks with $50 billion plus in assets to write “living wills to the FDIC” should their institution face the potential of bankruptcy in the event of another financial meltdown.
According to this Associated Press article featured on Yahoo News, “The largest U.S. banks will be required to show regulators how they would break up and sell off their assets if they are in danger of failing.”
On top of this measure, these banks will need to rework their “wills” and send their revisions to the FDIC annually. These revisions will be kept on file and essentially treated as contracts should any of the FDIC-insured institutions begin to show signs of imminent bankruptcy in the wake of another financial crisis.
If the balance sheets and assets of the reported 126 financial institutions participating in this measure are compromised, regulators would then have the power to seize and dismantle the bank(s) that threaten the broader financial system.
Furthermore, the FDIC will also have the power to designate other financial firms as potentially threatening to the financial system and require them to submit plans.