Dodd releases details on ‘too big to fail’ provisions

Most banks will still be expected to be resolved through the bankruptcy process. 

It will require shareholders and unsecured creditors to take losses and remove management. Regulators will still have the authority to break up a company if it poses a grave threat to the U.S. economy. 

Also, large bank holding companies that have received Troubled Asset Relief Program funds won’t be able to avoid supervision by the Federal Reserve by dropping their banks. It also won’t let the Fed prop up failed firms such as AIG. 

“These measures represent a fundamental change in our country’s ability to protect taxpayers from the economic fallout of having a large, interconnected firm collapse,” Dodd said in a release.