As we're still discovering, failing banks are expensive for taxpayers. The new proposed FDIC regulations are a step in the right direction, though still relatively gentle for the banks. If the big banks didn't own Washington, a few of the banks surely would have (and should have) already been broken apart. Somehow we went from too-big-to-fail to even larger banks, which means even larger collapses should anything go wrong. When you look at the banking climate out there now, it's not an unreasonable concern to wonder about the health of the banking industry. The new proposed regulations are now out there for public review until July. The banking industry is certainly going to kick and scream and maybe even cry about socialism, but again, this is mild stuff.
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.