Banks required to set up 'living wills'

WASHINGTON -- The largest U.S. banks and financial firms will be required to show regulators how they would break up and sell off their assets if they are in danger of failing.

The Federal Deposit Insurance Corp. voted 3-0 yesterday to approve the rules, which were mandated under the financial overhaul passed by Congress last year. They are designed to reduce the chances of another government bailout of Wall Street banks in the event of another financial crisis.

The rules require banks with $50 billion or more in assets to submit so-called living wills to the FDIC, the Federal Reserve and the Financial Stability Oversight Council and send revised plans annually. Among the banks affected are Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc. and JPMorgan Chase & Co.

Regulators would have the power to seize and dismantle banks that threaten the broader financial system. They also have the power to designate other firms as potentially threatening the financial system and require them to submit plans.