Under a new proposal from the Federal Deposit Insurance Corp., banks would draft a "living will" of sorts, The Wall Street Journal reports.
The concept would have banks create a liquidation plan that would take effect in the event of financial difficulties and, as FDIC chairman Sheila Blair said, would be a step toward ending "too big to fail." But, the Journal cautions, the proposal could lead to strife between regulators and banks.
The FDIC proposal may lead to a clash with large banks, which are concerned that regulators are becoming overly prescriptive and might use information provided by the banks to take a more aggressive regulatory stance.
The plan would require large bank holding companies, such as Citigroup Inc., J.P. Morgan Chase & Co., and Bank of America Corp., to show how their bank could be cleanly separated from the parent firm, and then dissolved by regulators. The banks all declined to comment.
They will have several months to lobby to change the proposal before it becomes a regulation.