Least Cost Exception Act

FDIC could favor smaller bank buyers

This bill would let the FDIC pick a resolution that is not the cheapest for the Deposit Insurance Fund in some failed-bank cases. The FDIC and the Federal Reserve would have to jointly find, after consulting Treasury, that limiting big global banks is worth the extra DIF risk. The chosen option would have to be the cheapest among alternatives that do not involve a large global bank and must not cost more than liquidation. FDIC would have to write a rule within one year capping allowable DIF charges and set rules for calculating purchaser assessments. If a buyer takes assets or deposits, that buyer would need to pay an assessment equal to the DIF cost difference, paid over at least five years under FDIC rules. FDIC would follow existing FDIA cost accounting and would report to two congressional committees within 30 days after using the exception.