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House passes bill for new bankruptcy system for $50B financial holding companies

The U.S. House of Representatives passed a bill that allows fora new bankruptcy system for financial companies with more than $50 billion in assets.

The bill, called the Financial Institution Bankruptcy Act of2016, was passed April 12. The bill is designed to shift the burden of risk andlosses to a company's shareholders and creditors in the event of a failure.

The legislation also allows bankruptcy judges to transfer theassets of a failed bank to a new, more stable owner in less than 48 hours.

In an April 13 news release, Representative Dave Trott, R-Mich.,stated, "This legislation is an important step toward reforming the nation'sbankruptcy laws and protecting American taxpayers from having to shoulder more governmentbailouts of failed banks."

Trott introduced the bill, which was co-sponsored by RepresentativesJohn Conyers Jr., D-Mich.; Tom Marino, R-Pa.; and Dennis A. Ross, R-Fla.

The bill has now moved on to the U.S. Senate for consideration.