Increasing FDIC’s powers could penalise senior debt holders

Knutson, Legal & General: FDIC rule will reprice bank capital

One of the additional powers granted to the Federal Deposit Insurance Corporation in the Dodd-Frank Wall Street Reform and Consumer Protection Act could remove the differences between senior and subordinated bonds, according to David Knutson, senior research analyst at Legal & General Investment Management America.

The act, signed into law by President Barack Obama on July 21, would give the FDIC the authority to determine the priority of creditor claims in systemically failing financial

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