7 Years Into The Financial Crisis, The Fed Finally ReWrites Rules Allowing "Too Big To Fail" Banks To Go Under

The alacrity of their reaction to this epic rip off is akin to watching paint dry.

This tells me that they are finally acknowledging the inevitable economic crash that is coming and are attempting to cover their asses before it gets out of hand again because they know damn good and well if these big financial institutions come begging with their hands out for more money from the citizenry to cover their asses that there will be an armed revolt the next day.

Press Release

The Federal Reserve Board on Friday proposed a new rule that would strengthen the ability of the largest domestic and foreign banks operating in the United States to be resolved without extraordinary government support or taxpayer assistance.

The proposed rule would apply to domestic firms identified by the Board as global systemically important banks (GSIBs) and to the U.S. operations of foreign GSIBs. These institutions would be required to meet a new long-term debt requirement and a new "total loss-absorbing capacity," or TLAC, requirement. The requirements will bolster financial stability by improving the ability of banks covered by the rule to withstand financial stress and failure without imposing losses on taxpayers.

To reduce the systemic impact of the failure of a GSIB, an orderly resolution process should allow a GSIB to fail, and its investors to suffer losses, while the critical operations of the firm continue to function. Requiring GSIBs to hold sufficient amounts of long-term debt, which can be converted to equity during resolution, would facilitate this by providing a source of private capital to support the firms' critical operations during resolution.

"The long-term debt requirement we are proposing today, combined with our other work to improve the resolvability of systemic banking firms, would substantially reduce the risk to taxpayers and the threat to financial stability stemming from the failure of these firms," Chair Janet L. Yellen said. "This is an important step toward ending the market perception that any banking firm is ‘too big to fail.'"

In other words, Yellen is doing her best to avoid the obviously quicker and more permanent solution to this systemic thievery,