Least Cost Exception Act
Summary
What This Bill Does
The Least Cost Exception Act amends the Federal Deposit Insurance Act's least-cost resolution rules. It allows FDIC to select a resolution method that is not the least costly to the Deposit Insurance Fund when the alternative avoids further concentration among global systemically important banking organizations. To use the exception, FDIC and the Federal Reserve Board, after consulting the Treasury Secretary, must determine that the additional Deposit Insurance Fund risk is outweighed by the benefits of limiting concentration in the U.S. banking system.
FDIC must also issue a rule within one year establishing criteria for the maximum allowable cost or maximum allowable Deposit Insurance Fund net-worth impact of using the exception. The alternative must be the least costly eligible option among non-G-SIB alternatives and stay within FDIC's cost cap. The bill is aimed at failed-bank resolutions where the lowest-cost bid would otherwise increase concentration in the largest banking organizations.
Who Benefits and How
Regional bank acquirers benefit because FDIC may choose a viable non-G-SIB bid even if a G-SIB bid is cheaper. Community banks benefit from a resolution policy that values limiting concentration in the banking system. Banking-market competitors benefit if failed-bank assets are not repeatedly steered to the largest institutions. Deposit Insurance Fund stakeholders benefit from a required FDIC cost cap and formal weighing of concentration benefits against fund risk. Consumers and small businesses benefit if banking services remain available through a more competitive market structure.
Who Bears the Burden and How
FDIC resolution staff must evaluate non-G-SIB alternatives, quantify Deposit Insurance Fund risk, and conduct rulemaking within one year. Federal Reserve financial-stability staff must participate in the concentration-benefit determination. Treasury Secretary staff must consult on whether the exception is justified. Global systemically important banks bear a burden because their lowest-cost bids may be bypassed to avoid further concentration. Deposit Insurance Fund assessment payers may bear risk if FDIC selects a more costly alternative under the exception.
Key Provisions
- Adds a least-cost resolution exception to avoid further concentration among global systemically important banking organizations.
- Allows FDIC to choose a non-G-SIB alternative when extra Deposit Insurance Fund risk is outweighed by concentration benefits.
- Requires FDIC and the Federal Reserve Board to make the determination after Treasury consultation.
- Requires FDIC rulemaking within one year on maximum allowable cost or Deposit Insurance Fund net-worth impact.
- Requires the selected non-G-SIB alternative to be the least costly eligible option within the cost cap.
- Applies the exception to failed insured depository institution resolution decisions.
Evidence Chain:
This summary is generated from the full bill text using AI analysis. Expand "Detailed Analysis" below for identified beneficiaries/burden bearers with clause-level evidence links.
At a Glance
What This Bill Does
Creates a least-cost resolution exception that allows FDIC to choose a non-G-SIB resolution alternative for a failed insured depository institution when FDIC and the Federal Reserve, after Treasury consultation, determine the extra Deposit Insurance Fund risk is outweighed by limiting concentration in global systemically important banking organizations, and requires FDIC rulemaking on cost limits.
Key Policy Areas
Banking, FDIC Resolution, Financial Stability, Competition
Primary Purpose
Creates a least-cost resolution exception that allows FDIC to choose a non-G-SIB resolution alternative for a failed insured depository institution when FDIC and the Federal Reserve, after Treasury consultation, determine the extra Deposit Insurance Fund risk is outweighed by limiting concentration in global systemically important banking organizations, and requires FDIC rulemaking on cost limits.
Policy Domains
House resolution provisions
Identified Gains
- Regional bank acquirers
- Community banks
- Banking-market competitors
- Deposit Insurance Fund stakeholders
- Consumers of banking services
- Small businesses using banks
Identified Costs
- FDIC resolution staff
- Federal Reserve financial-stability staff
- Treasury Secretary staff
- Global systemically important banks
- Deposit Insurance Fund assessment payers
Sponsors
Legislative Progress
ReportedPlaced on the Union Calendar, Calendar No. 405.
Reported (Amended) by the Committee on Financial Services. H. Rept. …
Additional sponsors: Mr. Foster, Mr. Rose, Mr. Moskowitz, and Mr. …
Reported with an amendment, committed to the Committee of the …
Ordered to be Reported (Amended) by the Yeas and Nays: …
Committee Consideration and Mark-up Session Held
Committee Consideration and Mark-up Session Held
Introduced in House
Referred to the House Committee on Financial Services.
Mr. Flood introduced the following bill; which was referred to …
Stakeholder Effects
cui bono?How this legislation distributes effects. Mention counts reflect frequency, not effect magnitude.
Community banks, Global systemically important banks, Regional bank acquirers
Positive-direction: Community banks, Regional bank acquirers
Negative-direction: Global systemically important banks
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
- "fed"
- → Board of Governors of the Federal Reserve System
- "fdic"
- → Federal Deposit Insurance Corporation
- "treasury"
- → Secretary of the Treasury
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
Learn more about our methodology