Big Bank Failure Rules Postponed by FDIC

The Federal Deposit Insurance Corporation postponed its decision on approving a rule that would study failures of mega-banks so that its bankruptcy doesn't affect the markets.

The rule based on the Dodd-Frank Act was expected to be adopted, but instead the agency decided to discuss a proposal on the subject. The proposal is expected to be discussed with the Financial Stability Oversight Council before its approval.

A second proposal on the subject will also be introduced by the agency in Q1 of 2011. This may include methods to examine how funds are deployed in the recovery process and how taxpayer funds will be recovered from the industry.

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