Fed proposes rule to scale back emergency lending powers

The U.S. Federal Reserve Board of Governors unveiled a proposal on Monday that would limit the scope of its authority to bail out a large financial company on the brink of collapse through its emergency-lending programs. The Fed's proposal would implement a key provision in the 2010 Dodd-Frank Wall Street reform law that sought to prevent future big bailouts after the Fed extended more than $1 trillion in emergency credit during the height of the financial crisis. Prior to the passage of the Dodd-Frank law, the Fed had broader powers to extend emergency loans to "any individual, partnership or corporation" that met certain conditions. Dodd-Frank limits this authority to ensure that the Fed's emergency lending program cannot be used to aid a failing financial company by helping it avert bankruptcy.

via Business News - Yahoo Finance http://finance.yahoo.com/news/fed-proposes-rule-scale-back-192716119.html