WASHINGTON — A top banking industry trade group said it opposes giving the Federal Deposit Insurance Corp. the authority to wind-down large nonbank financial institutions.

The American Bankers Association said in a letter to Treasury Secretary Timothy Geithner that it was concerned about the possible cost to banks if the FDIC's authority to deal with struggling firms was expanded.

"The FDIC would likely have ongoing costs to be in a position to deal with nonbank resolutions," which would probably fall on the banking industry to pay, ABA President Edward Yingling said in Tuesday's letter to Geithner.

Additionally, the group questioned whether the FDIC had the expertise necessary to wind-down a major financial institution on the brink of collapse. The agency currently deals with resolving failed banks, but Yingling noted that many of those firms are smaller than the systemically important financial firms that have been in trouble over the last year.

"Only once has the FDIC handled what might be considered a systemically important resolution...and by today's standards that was small and not at all complex," Yingling said.

The Obama administration and members of Congress are in the process of significantly broadening the federal government's ability to deal with major financial firms that fail. Lawmakers are expected to hold a number of hearings on the issue beginning in the next few weeks, with legislation likely to follow.

Yingling said the ABA favors creating a new agency that would be made up of various federal regulators and would have the authority to resolve large nonbank financial institutions that pose a systemic risk.

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