FDIC Issues Proposed Rule To Implement "Too Big To Fail"

On October 8, 2010, the FDIC approved a Proposed Rule that would implement certain provisions of its authority granted by Congress in Title II of the Dodd-Frank Act ("Title II") to act as receiver for covered financial companies (failing financial companies that pose significant risks to the financial stability of the United States) when a Bankruptcy Code proceeding is found to be inappropriate. Prior to the enactment of the Dodd Frank Act on July 21, 2010, no unified statutory scheme for the orderly liquidation of covered financial companies existed. Rather, there was a disparate group of liquidation schemes: insured depository institutions were subject to receivership in accordance with the Federal Deposit Insurance Act administered by the FDIC, insurance companies were subject to individual state laws on insolvency, registered brokers and dealers were subject to the Bankruptcy Code and proceedings under the Securities Investor Protection Act, and other companies,