When a bank fails, the FDIC is normally required to resolve it in the cheapest way possible — which often means selling it to the biggest bank willing to buy. The problem is that this keeps making the largest banks even larger. This bill would give the FDIC a new option: it could choose a slightly more expensive resolution if doing so avoids further concentration of the banking system among the biggest global banks, as long as the extra cost stays within limits the FDIC sets by rule. The acquiring bank in these cases would have to pay back the difference to the FDIC over at least five years. The FDIC and the Federal Reserve, after consulting with the Treasury Secretary, would need to agree that the benefits of avoiding further consolidation outweigh the additional cost.
Congressional Summary
Least Cost Exception ActThis bill allows the Federal Deposit Insurance Corporation (FDIC) to waive the least-cost resolution requirement for failed insured depository institutions and use alternative methods of resolution, particularly alternatives that do not involve global systemically important banks (G-SIBs).Under current law, the FDIC must use the resolution method (such as a deposit payoff or the purchase and assumption of a bank’s assets and liabilities) that costs the FDIC's Deposit Insurance Fund the least to implement when an insured depository institution fails.The bill provides an exception to this requirement if the following criteria are met:the alternative method is the least costly of all alternatives that do not involve a G-SIB and that do not exceed the cost of liquidation;the difference in cost between the selected alternative and the cost of a resolution involving a purchase and assumption by a G-SIB is less than a maximum cost as established by rule;if the alternative involves a person purchasing assets or assuming liabilities, that person must pay an assessment to the FDIC; andit is determined that the risks to the fund are outweighed by the benefits of limiting the concentration of U.S. banking under G-SIBs.FDIC must issue a report on any use of the exception established by this bill containing an analysis of the economic impact of cost differences between the selected alternative and the least-cost alternative.
Legislative Subjects
Details
- Congress
- 119th
- Chamber
- House
- Status
- summarized
- Action
- Reported to House
- Action Date
- 2026-02-02
- Date Added
- 2026-04-09