Committee backs bill giving FDIC limited discretion to consider competition in failed-bank resolutions
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Summary
The Committee adopted HR 6547 as amended, a bill that would allow the FDIC, in coordination with the Federal Reserve and Treasury, to select resolution options other than the least-cost choice when justified to limit further concentration, subject to rulemaking guardrails and recoupment requirements.
Rep. Mike Flood (chair of the Housing and Insurance Subcommittee) described HR 6547, the Least Cost Exception Act, as a targeted reform to give the FDIC flexibility in bank resolution scenarios. Flood said the current "least cost" statutory mandate can compel the agency to select the lowest-cost bidder even if that choice increases market concentration by favoring very large institutions. The bill would allow regulators to approve an alternative bid if the FDIC and the Federal Reserve Board, in consultation with the Treasury, determine the broader public benefits outweigh marginal costs to the Deposit Insurance Fund, subject to constraints established by a rulemaking process and recoupment mechanisms.
Ranking members and other supporters framed the change as a way to protect competition and the resilience of the banking system following high-profile failures in 2023. Witnesses and committee members emphasized several guardrails in the bill: any alternative bid must be the least costly among alternatives, regulators must set a maximum permissible cost through rulemaking, and a smaller bidder choosing an alternative route must agree to a repayment plan to cover the gap to the least-cost option.
The committee adopted the amendment in the nature of a substitute and ordered the bill to be reported; a recorded vote was requested and postponed for tabulation.
Representative remarks included praise for bipartisan collaboration and a recognition that the least-cost framework originally addressed costs linked to the 1980s thrift crisis but may not account for modern concentration risks.
Action: The committee adopted the amendment in the nature of a substitute to HR 6547 and ordered the measure favorably reported; recorded vote requested and postponed.