Published: Tuesday, 17 Jan 2012 | 1:05 PM ET
The largest banks must show how they would break up their assets if they were in danger of failing, under a rule approved Tuesday.
The Federal Deposit Insurance Corp voted to require banks with $50 billion or more in assets to submit so-called living wills. Seven banks with more than $250 billion in assets will have to show their plans by July. The other 30 affected by the rule have until 2013.
The FDIC also proposed a separate rule that would require banks with more than $10 billion in assets to conduct annual stress tests.
The tests show how each bank is positioned to handle worsening economic conditions, such as increasing unemployment and falling home prices. The regulator put the rule out for public comment and is expected to finalize it by July. It will affect roughly 190 banks.
Both rules were mandated under the 2010 financial overhaul.
By requiring banks to have living wills, the government is trying to reduce the need for another Wall Street bailout like the one that took place during the 2008 financial crisis. The 37 banks
affected by the rule hold roughly $4.1 trillion in insured deposits, or about 61 percent of U.S. insured deposits as of Sept. 30, 2011.
The largest include JPMorgan Chase [JPM 34.91 -1.01 (-2.81%) ], Bank of America [BAC 6.48 -0.13 (-1.97%) ], Citibank [C 28.215 -2.525 (-8.21%) ], Wells Fargo [WFC 29.825 0.215 (+0.73%) ], U.S. Bank, PNC [PNC 61.24 -0.49 (-0.79%) ] and Bank of New York Mellon [BK 21.27 -0.18 (-0.84%) ].
To read entire story, click here.