Financial Stability Improvement Act

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The Financial Stability Improvement Act was passed by the House Financial Services Committee on December 2, 2009 to put an end to “too big to fail” financial firms, and help prevent the failure of such institutions from becoming a systemic crisis.

The bill would subject systemically risky firms to increased scrutiny and ensure that the collapse of a large, interconnected company such as American International Group (AIG) would not lead to another taxpayer bailout. It would hold the financial industry, rather than taxpayers, responsible for the cost of winding down a company. [1]

It also created the Financial Stability Oversight Council to identify and monitor financial firms. The FSOC is chaired by the Treasury secretary and includes the heads of the major financial regulators.

References

  1. House Committee Passes "Too Big To Fail" Bill. Securities Industry News.