But it has also been hampered by the limitations imposed on riskbased pricing by the requirement that the reserve ratios of the FDIC's insurance funds for banks and savings associations be capped at 1.25 percent. The so-called "systemic risk exception" in FDICIA has been one of the act's most controversial provisions.
Under this provision, resolution of a failed depository need not be least-cost, and uninsured creditors may be protected if it is determined that a least-cost resolution would "have serious adverse effects on economic conditions or financial stability" and that a resolution that is not least-cost would "avoid or mitigate such adverse effects."