On July 21, President Barack Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act. Empowered by the new law, the Federal Deposit Insurance Corp. has created a special regulator to oversee massive financial institutions.
Approval for the new regulator, the Office of Complex Financial Institutions, was granted today by the FDIC Board of Directors.
Dubbed the CFI, the new regulator will oversee bank-holding companies with more than $100 billion in assets.
Based on FDIC data, banks exceeding this threshold include JPMorgan Chase Bank, N.A., where assets were $1.675 trillion as of March 31; Bank of America, N.A., with $1.496 trillion in assets; and Wells Fargo Bank, N.A.’s, $1.066 trillion in assets.
Also within the new regulator’s jurisdiction will be non-bank financial companies designated as systemically important by the new Financial Stability Oversight Council.
“The FDIC plans to vigorously implement its new authorities under the Dodd-Frank Act, which ends the presumption of ‘too big to fail’ for the largest and most complex financial institutions,” FDIC Chairman Sheila C. Bair said in a statement.
The CFI will have the authority to liquidate bank-holding companies and non-bank financial companies that fail.
“The absence of such authority exacerbated the recent financial crisis, when such firms as AIG, Lehman Brothers, and Bear Stearns became insolvent,” the news release said.
Today’s statement also indicated that the board approved the creation of the Division of Depositor and Consumer Protection. The new division will improve the FDIC’s ability to examine and enforce compliance “with a myriad of consumer protection and fair lending statutes and regulations.”
