Least Cost Exception Act

FDIC could limit big-bank takeovers

This bill would let the FDIC pick a resolution option that is not the least costly in some failed-bank cases. The FDIC would only do this if it and the Federal Reserve Board, after consulting the Treasury, determine the benefits of limiting further concentration in large global banks outweigh the extra risk to the Deposit Insurance Fund. The chosen option would have to be the least costly among alternatives that avoid a sale to a global systemically important banking organization and that do not cost more than liquidation. Not later than 1 year after enactment, the FDIC would adopt a rule setting the maximum extra DIF cost it can accept. If a buyer purchases assets or assumes deposits, that buyer would pay an assessment over at least 5 years equal to the allowable cost difference. The FDIC would have to report to the House Financial Services Committee and the Senate Banking Committee within 30 days after selecting a non-least-cost option. The bill would also define covered alternatives and global systemically important banking organizations by referencing 12 CFR 217.402, and it would say section 13(c)(4)(H) does not apply to these amendments.