Capital rules no longer apply to banks taken over by the FDIC

Now the FDIC can keep a failed bank open without the pressure of selling it off. This is possible for preparation of a large bank failing that could not be sold in a timely manner to the nationalization of some of the US banking system.

FDIC Request

The exemption in the new law, which was requested by the FDIC without objection by the Fed's Board of Governors, was aimed at making clear that once banks are taken over by the FDIC, capital rules no longer apply because they are effectively owned, operated and in liquidation by the government.

Once banks are taken over by the FDIC, capital rules no longer apply. The Fed will no longer have to pay penalties on loans it makes to institutions taken over by the Federal Deposit Insurance Corp. The Federal Reserve Act's Rule 10B penalizes the Fed for loans to undercapitalized institutions exceeding specific time periods. The original provision was aimed at preventing the central bank from keeping failing banks open.