FDIC’s Bair pushes for regulatory changes

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MANHATTAN, Kan. | The head of the Federal Deposit Insurance Corp. on Monday said Congress needs to provide regulators greater tools to control the risky financial behavior that helped trigger the recession and to unwind major firms on the verge of collapse.

FDIC Chairwoman Sheila Bair said she supports such a winding-down process for financial institutions other than banks. But she has reservations with a proposal before the House that would cover the government’s costs for dissolving troubled companies with fees charged to businesses after the firms melt down.

Bair says that fund should be created before a financial institution is engulfed in a crisis.

“Building the fund in advance would help prevent the need for assessments during an economic crisis and ensure that the firm that failed paid something into the fund,” she said at Kansas State University as part of the Landon Lecture series.

The process would be overseen by a systemic risk council, which would have the authority to force large companies in danger of becoming unstable to sell off assets or stop business practices the council members consider risky.

| The Associated Press

Posted on Mon, Nov. 02, 2009 10:15 PM

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