U.S. regulators are set to vote next week on a final rule governing the plans large banks must draft on how they can be liquidated if they are heading toward failure.

The 2010 Dodd-Frank financial oversight law requires these "living wills," which are part of the government’s new power to seize and break up large, failing firms.

The Federal Deposit Insurance Corp announced plans on Thursday for its board to vote on the final rule on Tuesday. It is drafting the rule with the Federal Reserve.

Regulators have to approve the plans once banks submit them. They can force changes to the structure of banks or other large financial companies if they believe the institution could not easily be liquidated once in trouble.

Former FDIC Chairman Sheila Bair, who left her post in July, had stressed the need for regulators to force banks to simplify their operations, such as by creating more subsidiaries, if the plans could not be easily executed.

The rule applies to banks with more than $50 billion in assets and to other large financial companies whose sudden failure could roil financial markets.

Proponents of this new power to seize and liquidate firms argue it will curb taxpayer bailouts and limit the sort of market turmoil caused by the 2008 bankruptcy of Lehman Brothers.

But analysts and market participants have expressed skepticism, saying the government would not let a large bank fail out of fear it would wreak havoc on the economy.

The banking industry raised some concerns about the earlier proposed version of the living will rule, which was released in April.

Banks such as Wells Fargo have said regulators need to do more to ensure that the plans remain confidential and not subject to disclosure through lawsuits or Freedom of Information Act requests.

Banking groups have also asked regulators to start off with a pilot program rather than subject all eligible institutions to the requirement right away.

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