Senator Warner introduced bipartisan legislation today with Tennessee Senator Bob Corker that would allow the Federal Deposit Insurance Corporation (FDIC) to takeover and "wind down" banks owned by larger financial firms known as bank holding companies. 

A bank holding company is an institution that controls one or more banks. The FDIC currently has the authority to assist a failing bank, but it does not have clear authority to sell-off failing banks or thrifts within the holding company.  

This legislation would place a bank holding company into the hands of the FDIC if a particular insured depository institution within the holding company structure needs to be resolved.  This authority will help prevent the government from having to prop-up failing institutions, as we've seen in the past year.

Senators Warner and Corker, both members of the Senate Banking Committee, said the legislation is neccesary to fill a glaring regulatory gap in the current system.  They see this as an interim step as Congress and the Obama administration continue work on broader regulatory reform. 

Senator Warner said:

“While the Banking Committee continues working to fix what is broken in our hodge-podge system of financial regulation, this legislation represents an interim step to patch a problem with the existing regulatory structure.

"While the FDIC has the authority to resolve failing banks, it does not have the authority to resolve bank holding companies, and that creates complications which places deposit holders and the deposit insurance fund at greater risk. Senator Corker and I believe that is a risk we cannot afford and should not allow to continue.”

The Resolution Reform Act of 2009 is the second piece of bipartisan legislation jointly sponsored Senators Warner and Corker. The senators also have introduced The TARP Recipient Ownership Trust Act of 2009, designed to quickly relinquish the federal government’s ownership stake in private companies such as AIG, General Motors and Citibank in a responsible, orderly manner that will protect and maximize the taxpayer’s investment.