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Congress·Reported·3 months ago

Congress bill would let FDIC avoid selling failed banks to the biggest banks, even if it costs more

Also known as: Least Cost Exception Act

Legislative Progress

✓ Filed
Review
House
Senate
President

Key Points

  • This bill would let the FDIC pick a bank-failure solution that is not the absolute cheapest for the insurance fund, if it helps avoid more power ending up in the biggest “systemically important” banks.
  • The FDIC could only use this option if the FDIC and the Federal Reserve (after talking with Treasury) decide the extra risk to the deposit insurance fund is worth the benefit of reducing banking system concentration.
  • The FDIC would have to set, by rule within 1 year, a cap on how much of the deposit insurance fund’s net worth can be used for these higher-cost decisions.
  • If the chosen option costs more than the cheapest option, the buyer would have to pay the difference back to the deposit insurance fund through an assessment paid over at least 5 years.
  • Within 30 days of using this option, the FDIC would have to report to Congress explaining how much more it cost than the cheapest alternative and why it was chosen.
EconomyConsumer Protection

Milestones

3 milestones7 actions
Feb 2, 2026House

Placed on the Union Calendar, Calendar No. 405.

Feb 2, 2026House

Reported (Amended) by the Committee on Financial Services. H. Rept. 119-474.

Dec 17, 2025House

Ordered to be Reported (Amended) by the Yeas and Nays: 50 - 0.

Dec 17, 2025House

Committee Consideration and Mark-up Session Held

Dec 16, 2025House

Committee Consideration and Mark-up Session Held

What Happens Next

Projected impacts based on AI analysis

After the bill becomes law, whenever an eligible bank failure happens

FDIC can use the new exception during a bank failure, if it meets the bill’s conditions

If a bank fails, the FDIC could choose a resolution that avoids selling the bank to one of the biggest bank groups, even if that option costs the insurance fund more than the cheapest approach

Related News

1 article
American Banker·3 months ago

Bipartisan agreement emerges on bank resolution reform

Covers House Financial Services Committee action on Rep. Mike Flood’s Least Cost Exception Act, which would let the FDIC deviate from the least-cost bid when the cheapest outcome would further concentrate assets in the biggest banks.

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Source Information

Document Type

Congressional Bill

Official Title

Least Cost Exception Act

Bill NumberHR 6547
Congress119th Congress
ChamberHouse of Representatives
Latest ActionPlaced on the Union Calendar, Calendar No. 405.

Sponsor

Cosponsors

(4)
D: 2R: 2

Analysis generated by AI. While we strive for accuracy, this should not be considered legal or professional advice. Always verify information with official government sources.