Too Big to Fail? Congress Rewrites Bankruptcy Legislation

Lawmakers are hoping to avoid another financial crisis by reforming bankruptcy rules for large banks. Legislation advanced in Congress that would support Wall Street's biggest banks and insurance companies. The main sponsors of the bill said that it will create a more efficient system of bankruptcy. The FDIC will still have power to seize and dismantle big banks but healthy subsidiaries of a failing firm will be allowed to continue operating, reducing disruptions. Banks would also be relieved from some legal obligations to their trading partners and other banks. Critics said that the rewrite of the law does nothing to prevent another tax payer bailout of banks in the future. They also raised concerns that the law favors banks at the expense of their trading partners.