By Karey Wutkowski and Kevin Drawbaugh
WASHINGTON (Reuters) - The Federal Deposit Insurance Corp is talking with lawmakers about speedy legislation that could give it the power to wind down troubled bank holding companies, but not a broader range of financial firms, according to a source familiar with agency plans.
The Federal Reserve and U.S. Treasury Department have some disagreement with the FDIC about exactly what new powers the agency should gain, the source said, speaking anonymously because the meetings have been private.
The FDIC has been meeting in recent days with lawmakers' staff, at the request of Congress, about so-called "RESOLUTION (RSL.LO)authority."
The FDIC currently has the power to seize depository banks, but does not have similar authority for non-banks, including bank holding companies such as Citigroup Inc
Treasury Secretary Geithner told Reuters on Friday the government would likely have to provide "substantial" additional capital to GMAC.
The Treasury in March drafted a legislative proposal that names the FDIC as the resolution authority for a broad range of financial firms, but some members of the administration and bank industry groups have opposed such a plan, saying the FDIC is not properly equipped for such a large task.
The White House is expected in the next couple weeks to give Congress a plan for comprehensive financial regulatory reform. That proposal is likely to call for the Fed to play a central role in regulating systemic risk in the economy, sources said last week.
The FDIC is seeking a separate piece of legislation for resolution authority, the source said on Tuesday, as the broad reform legislation will likely not get passed until close to the end of the year.
The more narrow definition of resolution authority would also likely increase the chances the legislation could get quickly passed, as it would calm some concerns the FDIC does not have enough experience to handle complicated companies such as troubled insurer American International Group
"The FDIC has been asked by Congress for our views on this issue and we are obligated to provide them," FDIC spokesman Andrew Gray said.
FDIC Chairman Sheila Bair said at a Senate Banking Committee hearing last week that the ability to resolve bank holding companies would give the FDIC "a vital tool."
She also said the lack of that tool has driven the administration's policy decisions when dealing with large troubled financial firms.
(Reporting by Karey Wutkowski and Kevin Drawbaugh; Editing by Andre Grenon)
