WASHINGTON BUREAU — The Federal Deposit Insurance Corp. (FDIC) says it will avoid interfering with state resolution of any troubled insurer it ends up controlling except in extremely unusual circumstances.
The FDIC discusses those unusual circumstances in a proposed rule in which it seeks to implement provisions in Title II of the Dodd Frank Wall Street Reform and Consumer Protection Act that relate to federal efforts to handle troubled nonbank financial institutions that appear to pose a threat to the stability of the financial system.
The FDIC would try to let recoveries by policyholders take precedence over FDIC liens on the assets of an insurance company, an insurance company subsidiary or an insurance company affiliate, officials say in a preamble to the proposed rule, which appears today in the Federal Register.
But the FDIC says the Dodd-Frank Act gives it the power to liquidate a subsidiary or affiliate of an insurance company – including a parent company – if the subsidiary or affiliate is not itself an insurance company.
The FDIC says it is proposing that “it will not unduly impede or delay the liquidation or rehabilitation” of an insurance company it