US FDIC to Propose New Bank Resolution and Long-Term Debt Rules on August 29, Reports Reuters

U.S. bank regulator, the Federal Deposit Insurance Corporation (FDIC), is set to propose new rules on August 29 aimed at redefining how large regional banks prepare for potential failures, according to a notice released late Tuesday.

This move comes as U.S. regulators intensify their oversight of the banking system, especially following a series of high-profile collapses this year, including three of the largest in American history.

The upcoming proposal is expected to mandate banks with $100 billion or more in assets to issue long-term debt that could be utilized to absorb losses before affecting depositors and the FDIC’s deposit insurance fund, as stated by FDIC Chair Martin Gruenberg in a recent speech.

Additionally, the proposal will require banks to develop recovery and resolution plans, commonly referred to as “living wills.” These plans would provide the FDIC with more strategies for managing a failed bank’s receivership, including identifying sections of the institution that could potentially be sold off separately.