WASHINGTON — The largest banks would need to submit "living wills" to federal regulators under a new proposal, as policymakers work on multiple fronts to more easily deal with large failing financial firms.

Federal Deposit Insurance Corp. staff on Tuesday proposed requiring roughly the 40 largest banks to submit detailed plans of how they could be split off from their parent company and be wound down by federal regulators. The plans would include detailed information on a bank's exposure to various counterparties, its capital structure and whether it is systemically important to the broader economy.

"It's designed to help us to deal with the resolution of the largest banks," an FDIC official said.

The proposal is part of a broader effort by regulators to respond to their inability at the height of the financial crisis to quickly and effectively stem problems at individual financial firms without affecting the broader economy. Legislation currently being debated by the U.S. Senate would require the largest non-bank financial firms to submit what Sen. Christopher Dodd, D-Conn., has called "funeral plans."

An FDIC official said their proposal, which will be open for public comment, would dovetail with the Senate bill if enacted. Banks with greater than $10 billion in assets that are part of a holding company with assets over $100 billion would be required to submit the plans. The FDIC said that covers roughly 40 banks with total assets of $8.3 trillion.

Separately, FDIC also proposed to continue its safe-harbor for its treatment of securitized assets in the event of a bank failure through Sept. 30. The agency has sought to make banks more accountable for asset-backed securities in the wake of recent accounting changes and the contribution of securitization to the growing number of bank failures. The new proposal would require sellers of securitized assets to retain 5% of the risk on securitized assets, as well as set new standard for certain types of assets.

Specifically, the FDIC proposal would require new disclosure and documentation on residential mortgage-backed securities to qualify for the safe harbor, as well as set new standards on the origination and compensation relating to loans included in a securitized asset.

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